Wednesday, April 20, 2011

Do You Buy a Beer or Rent One?

When I first heard this joke (30 years ago?) I thought it was outrageously clever. While I'm able to contain my guffaws over it now, it's nonetheless a good lead in to the compelling topic of renting vis-a-vis owning in intentional community.

• • •
Recently I facilitated six hours of meetings for a group that was exploring the issue of how best to manage renting unsold units. With the national housing market stuck in the doldrums, there are a number of communities who are scratching their collective heads about what to do with empty units—in some cases, a substantial number of empty units. While the idea was to sell them like hotcakes, in reality they've been selling like cold cakes. Which is to say, poorly.

While these units were not built to be rentals, that looks pretty attractive relative to letting them stand idle and having the existing membership all take an extra helping of interest payments.

Rental issues break down into two categories: those that are generic to renting at all; and those that are peculiar to renting a much higher percentage of the community's housing than was ever intended.

Generic Questions About Renting
o Will renters undercut our community's cohesion; to what extent will it lead to revolving-door residency with lukewarm involvement? Can we expect renters to evince the same level of enthusiasm and responsibility for the care and feeding of the community that we ask from owners?

My anecdotal response (based on first-hand reports from dozens of communities) is that if a group does a decent job of making it clear to prospective renters what it means to live in community, then the renters are just as likely to be productive and engaged members of the community as owners.

o Will we screen prospective renters with the same diligence that we do prospective owners, or will it solely be at the discretion of the owner?

While there almost certainly needs to be a streamlined process for evaluating renters
(if a person wants to rent month-to-month, how can you justify a three-month courtship?), I think you'll be happier if you make the way you assess renters mirror the process used for owners as far as practicable.

o Will we extend membership rights to renters in the same way that we do buyers? If the rights of these two subgroups are not the same, in what ways will they be different?

I think the answer here should be yes (two classes of residents is a tough sell in a group committed to flat hierarchy and everyone having a say). In general, it works fine to extend to renters all the rights of membership, perhaps excluding only the right to block proposals involving long-term financial implications.

o In what ways will owners be responsible for backstopping the compliance of people who rent from them?

It tends to work well if the community is actively involved in the selection of renters, and expects the owner to be a "co-signer" on the membership agreement with the renter, such that the owner is expected to get involved in problem solving if there are issues with the renter as a member.

Additional Questions When Renting a High Percentage of Units
o At what point might the community be at risk of losing its core commitment if the dynamism of the owners is diluted in a seas of transients?

This is a nuance question and not easy to assess. The more cohesive the owners are, the more resilience you'll have regarding renters. Think pro-active.

o If the units are owned by the community, is the group better off self-managing the rentals, or hiring a management company?

Critical here is an assessment of whether the current membership has among it the skills, availability, and motivation to tackle this job—which will necessarily include jawboning with renters who start coloring outside the lines (falling behind in rent, skipping work assignments, getting too creative with how they "decorate" the wall, etc).

On the one hand, the community wants to screen propsectives for a good fit with the community, while a management company will be solely looking for warm bodies who can cough up rent payments. Further, the management company will almost certainly cost more dollars than what the community would compensate members to manage the rentals. There are essentially two reasons to select a management company: the skills set isn't present amongst available members, or no one with the skills has the time.

o How will you navigate the potentially tricky dynamic of simultaneously being peers (where all residents have an equal say on some issues, such as problems getting the common house cleaned or kids' scooters being left in the parking lot) and being landlord/tenant (where rights and responsibilities are paired, yet demonstrably unequal)? How can you be suitably firm with a renter who's behind in payments and then turn around and ask for their help in resolving tensions with a neighbor whose dog barks too much?

While tricky, this is not insurmountable. It requires clarity about how the relationship shifts as the circumstances change.

• • •
One of the most interesting aspects of cooperative problem solving is how to balance values that inadvertently are in tension on a given issue. Let me describe three pairs that come up in connection with the issue of renting.

Prudence Versus Trust
If the group is going to play an active role in screening prospective renters, how much information are you going to request about that person's background? On the one hand, you'd like to know if there are danger signs regarding a person' financial stability, health (both mental and physical), and perhaps their criminal record. On the other hand, you'd like to develop a trusting relationship and how might that intention be compromised by posing all these queries?

In essence, where is the middle ground around between not being naive and not being fear-based. This is not a trivial question.

Transparency Versus Discretion
One you start gathering information about a prospective member, to what extent should that information be shared with other members? How does your answer vary depending on what the information is? What's an invasion of privacy? What's appropriate information to pass along so that people can make an informed decision about risk? Do anyone promise you that community living was going to be straight forward?

Class Versus Diversity
Most groups have a core commitment to embracing diversity, but that doesn't mean without limits. If you allow renters that often translates into accepting people with less income or savings, and that often means people from a different socio-economic class. In turn, this often means people with a different upbringing and a different way of working with information and problem solving. Are you ready for that?

• • •
While I'm a big fan of renting, and I'm also a big fan of going down that road with your eyes open. While selecting renters is almost always more challenging than selecting what beer to drink, they'll both lead to a marked increase in pissing dynamics if you're not careful.

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