Investing in Kindling
To buy the house we raised a large amount of money, a lot of it coming from loans from individuals, which are paid back at the end of an agreed period (with interest on the original amount). This is called ‘loanstock’. There are many more advantages to the community when using loanstock rather than a mortgage from a bank. We are now looking to refinance a short term loan we took to secure the house last year.
With a direct loan from an individual we can agree an amount, payback time and rate of interest that suits both parties. Currently we are looking for loans of a minimum of £5000, for a minimum of 5 years (10, 15 or 20 years would be better). For example, if we agreed an interest rate of 3%, (we offer 0-3% interest) this would be lower than a mortgage for us, but higher than a savings account for the saver, a win-win situation because we have removed (or reduced) the role of the middle-man (the bank). Another advantage of investing money within your community means benefits beyond a return of interest. By avoiding investing at the bank, less money will be going into industries which cause us grief.
In addition to the benefits to your community, investing in a housing coop makes good financial sense. You have the option of getting a higher return than you would from the bank, it’s fixed so you know exactly how much you will receive and when, and it’s safe.
The safety of the investment stems from the fact that there is a dire need for affordable housing, especially in Oxford. At another Oxford housing coop – Dragonfly – there is always a waiting list of people wanting to move in. This means that we know there will not be empty rooms for long, even though we factor the possibility into our accounts. The rents will start at around 80% of the market rate but will not increase significantly as the market rate does, meaning that as time goes on the house has a lot of leeway in raising rents if necessary. In the unlikely event that the coop disbands, the house can be sold and creditors repaid.
How much do we need?
We need to find £12,500 investment. Our rental income is based on £477 a month inc. council tax. We’d love to make this more affordable, but we have to ensure we can pay back our investors.
Download our investor pack
If you have any questions you would like to ask please contact us at info[at]kindlingcoop.org. If you would like to pledge a loan please fill in the form below and send it back to us: