Cooperative Disability Housing
Housing is one of the biggest expenses for all of us… doubly so for disabled adults and for long term planning for disabled children.
Long-term financial planning can often consist of “save what you can, as soon as you can”… planning for housing can be more complicated.
… and, perhaps, an opportunity to have an outsized financial impact as housing is treated differently for disability benefits.
I’ve been personally rather obsessed with Disability Housing for quite a while as I’ve done a modest amount of real estate investment and therefore I came to look at this problem from a different perspective.
In my previous articles, I’ve focused on individual strategies. Today, I’d like to dive into what we may be able to do if we work together.
To quickly recap the core Disability Housing challenge:
The Big Problem
One of the scariest long-term challenges for disabled people is the lack of housing (and, like everyone else, the cost of housing). There just isn’t much dedicated housing for disabled adults and in this time of tight budgets and benefit cuts… there isn’t going to be a lot added on the public sector side, and today there isn’t a big push from the private sector either (Australia’s program to encourage private investment in disability housing has potential upside… but someone is going to need to assemble a political coalition to make it happen).
The bottom line is that a lot of disabled adults are living with their parents… and there doesn’t seem to be a plan for what to do once those parents die.
Owned Housing and Disability Benefits
Eligibility for Supplementary Security Income (SSI) and Medicaid is based on having very, very few assets and very little income. The notable exception to this is for housing.
If a disabled person or their (first or third party) special needs trust owns the house that they live in, that house doesn’t count against the disabled person’s assets. This is gives a disabled person (and their families and allies) an opportunity to address one of their biggest costs and support needs… so they can maybe worry about other things!
State Programs, Rent, or Own
Given this, the housing options range from using state housing programs (such as Group Homes if available), renting (from parents, a private group home, or a private adult disabled development or assisted living facitily), or owning (an individual home or the options discussed in Disability House Hacking.
Cooperative Disablity Housing – Putting the “D” in Team
Multi-family real estate investors don’t talk in terms of properties or buildings, they talk in terms of “Doors”… how many tenants that they can have leases with. And, in general, the larger the property, the lower the cost per “Door” (apartment/unit… whatever).
But, there are limits to how many “Doors” any individual can buy, so real estate investors move from individual purchases to setting up syndicates – a pool of investors who can buy a larger property than any of the individuals could on thier own.
It is a proven model.. and disabled individuals (and/or their families or allies) can do the same thing to buy housing together – for less money or more amenities or both.
Another option that my wife and I have been talking about is creating a combined senior/disabled adult community. While I understand that some disabled adults want to live away from their families (I certainly did), there are potential advantages to a multi-generational community both in terms of cost, but also mutual support (while we are still years from our son’s adulthood, we do worry about him living independently and being able to trust that community will adequately and responsibly support him in the long term – much less avoid the too common incidents of abuse and fraud).
There is no magic answer that is right for everyone… here are some options (if you find other options, let me know).
- Small Family Group – 2 or more families or individuals that work together to buy a property to live in together.
- Multiple Family Cooperative – a number of families or individuals investing together as a more formal cooperative project, either structured as a cooperative of some sort or as an investment syndicate.
- Development Project – a large group, likely led by a developer or project manager to build or buy a large facility. Assisted living facilities and new communities are typically structured this way. Participation can be as a renter or as an owner of a unit (likely structured as either a condominium or coop).
Arguments and Exits
Conceptually, this is all slick, but there are always problems. Once you have more than one individual or family (and even within a family), there are potential disputes – disagreements over anything and everything can undermine a project. Buy-Sell agreements, valuation models, liquidity windows, right-of-first-refusal and other structures should be built in to a project from Day Zero so that if (or when) things go wrong, the project can be unwound or restructured without collapse.
Larger projects are likely to be structured more as pure investment transactions and thus have clearer built-in mechanisms to handle the exit of individual participants. This is not necessarily better than a small group which may benefit from smaller size, tailored structure to individual needs, flexibility, and lower overhead.
Building Disability Housing Capacity
The open question is how to build more Disability Housing capacity. Individual multi-“Door” projects and multi-family cooperatives can add immediate capacity for more disabilty housing. Can disabled people work together to ensure this expanded capacity extends past the initial beneficiaries?
How do we ensure quality for disability housing regardless of how it is provided?
What public and private tools do we need … and how are we going to get them in place?
No Magic Bullet
There is a huge shortfall in housing for disabled adults. In the US, at least, there seems to be no major public initiative to address this shortfall. While there is some disabiltiy housing being created, the gap between what is being discussed and what is needed is massive. The “default” disability housing option seems to be staying with family members for as long as possible – with no exit strategy or real plan after parents or siblings die or are no longer available.
Cooperative disability housing options add yet another choice that can provide housing not just for select individuals, but can scale towards providing more housing for more disabled people cost-effectively without waiting for unreliable public or philanthropic funding.
