Does a co-op sound like a good plan for me?

[curtis73]

Long story short...

Wife and I are looking to buy a large shop/warehouse in which we can section off about 2000 ft for living space and the rest will be my dream shop.

Depending on the size/location of the space, we can do the actual purchase ourselves, but then the building materials for the living space would be unfunded.

Thought about getting a business loan and actually funding this with a repair/hotrod shop, but that requires actual effort

So then I thought renting out time in one of the bays to fellow DIYers and hotrodders. But, for the sake of pooling resources and talents, should I make it a full, legal co-op? Sound like a good idea? How does one make a co-op?

[Moppie]

A Co-op here is a bunch of horny hippies sharing a life style block to grow veges and live in peace and harmony with each others wifes.


Must have a very different meaning in the US.............?

[curtis73]

Well, it could mean that... but no.

Here its basically a lighter form of a business in which the members reap more direct benefits. For instance, if you wanted to produce biodiesel for sale, you could form your own energy company, submit your biodiesel for ASTM testing, and a few billion dollars later you would have an oil company. Or, you could set up a co-op and sell product to its members. Co-ops usually have a legal requirement - either money or labor, but its very loosely regulated.

Its basically a good idea if you have a small-ish community of like-minded folks who don't have the means to produce a product themselves, or its legally prohibited for individuals. There is a co-op here in Austin that makes their own Vodka. Distilling for sale by an individual is not legal, and starting a Vodka corporation is cost prohibitive, so they set up a co-op.

Most university book stores are co-ops. Its a student or university operation which is funded in part by your tuition. Instead of setting up a commercial book store and letting the big profits go away, the co-op combines the buying power of all the students and the benefits stay with the school.

But I like the idea of the whole sharing wives thing. I'll make it a bylaw of my co-op

[MagicRat]

I did almost exactly as you describe back in the 1990's.

The key issues here are you maintaining control over this project vs. your need for money. If you are buying and owning the building or the space, do not do a co-op, because your co-op members will have an interest and some voting authority over key issues relating to your building, like finances, maintenance etc.

Co-ops are owned by everyone - which means they are owned by no one. Sometimes, people do not operate with the common good of the community at heart. Organizational politics comes into play, people argue, disputes create ill will etc.

Imho, if you are going to own the building and/or the space, you want to generate income from the space, to help pay the bills, but you must keep full control over the space you own. So, rent work space and storage space to people. Have them sign a contract with clear rules and regulations for space use, conduct etc.

I did this with my commercial building. and it worked well. I personally knew everyone involved, so the atmosphere was very communal. We shared tools, facilities, expertise etc. A lot got done and we had a great time. But ultimately, I was in control because I had assumed the risk for the operation. Mitigating that risk meant I had to have final say in core issues. But everyone understood that so it was fine.

Looking back, my only problems originated with one self-centered renter who, because he was a "friend", thought he didn't have to pay his share of the rent on time, and left his work area a mess. So, you would have to include rules about this kind of stuff.

Another thought..... zoning. Your unit must be zoned for the type of work you want to do. Around here, retail zoning (M-1) will not cover auto mechanics shops. But M-2 (medium industrial) and M-3 (heavy industrial) do allow for auto mechanics shops, but do not allow for residential living.

Therefore, if your jurisdiction has anything similar, you many not be able to live in your shop.

If you TRULY wanted a co-op, simply set up a privately-held corporation and issue shares with voting privileges, and have the corporation buy the building. Anyone who wanted in would have to buy shares and assume all the responsibility and authority that comes with it. But doing that may preclude your actually living in the place, because you would not have full control over what the other corporation owners want or expect.