The standard method of starting such communities is to raise a lot of money or hire a developer and get mortgages.  Land is expensive, building an infrastructure for utilities and transportation is very expensive, and housing is extremely expensive. And that doesn’t include schools and other community buildings - what to speak of digging a large lake.  

Many groups don’t buy land until they raise substantial capital.  Some forming communities wait until they have $1 million in collective capital. Many communities require members to build their own homes, which sometimes excludes people who don’t have a good income or a lot of money. There are many people with talents and abilities who may not have a lot of money saved, and in fact they may be the type of people who want to be in a rural agrarian self-sufficient community and contribute a lot of time toward community development.

Such communities fall under the broad heading of Intentional Communities, and there are many types. All across the US there are hundreds, in various stages of planning and development. It can take years to start one, and some have less than a dozen members. The website for Fellowship for Intentional Community has many listed, yet few are practicing basic self-sufficiency by producing their own food. Under the broad heading of Intentional Communities are many types, such as Eco-Villages, religious communities, Co-Housing communities - even urban communities.

We’re not planning on living in mud huts without electricity, glass windows, and screens to keep the bugs out. Therefore we also need money to establish communities. The challenge is to include various types of people with different skills, all working for common purposes, including people who may not have so much money. 

A community should not automatically exclude someone who does not have sufficient funds to buy their own parcel of land.  There are many options even if someone does not have all the sufficient funds for a parcel, which will be covered in the next page, Alternative Financing.

The cost of the basic infrastructure should always be included in the land pricing. This includes clearing the land as needed, digging the lake, and fencing the perimeter. It particularly includes the cost of the extra land needed for the lake and for animal husbandry. This assumes that reasonably-priced raw land can be found. 

The land cost including infrastructure will usually be around 3-4 times the cost of the raw land. The cost per household is therefore estimated to be around $10,000, which includes their 1.5 acres for crops and the additional land for building a home in the village (see Community Layout page.) The cost of 1.5 acres per household is much less than this, but we must include the land required for the lake, for community buildings and parks, and for grazing. Land for villages, including the village land comprises only around 60% of the total land required.

Some communities may opt to require anyone who wants grazing land or land for profit farming to pay for it, whereas other communities may want to make those portions part of the community by allocating costs to everyone. The land for the lake and the community buildings must be allocated to everyone. We have a spreadsheet set up to estimate land and infrastructure costs with various different models. 

Different financing options and arrangements for both the land/infrastructure cost and the cost of housing are explored below and on the next two pages in the Financing section. 

Traditional Mortgages

Mortgages should never be used to buy the land. They should only be used for building homes, and only as much as is necessary.  We do not want anyone to lose their land due to default on a mortgage. All the land must be paid for free and clear when a community is started. It is also best not to use the land as collateral for any borrowing purposes. If the land is paid for there is considerable security, and housing construction can be started at any time thereafter, even if it takes someone time to raise funds to build a home.  

Mortgages mean working a job in the city to pay them off.  This means that the community development can be delayed for years. Even if we get private investors, they have to be paid back, with interest, so it’s no different.

Using traditional mortgages also excludes those who cannot get them. Each community must try to minimize the need for mortgages as well as minimize the amounts required. If someone can earn an excess $30,000 per year by working in the city, that might be worth the trouble and time, as land and home could possibly be fully paid for in around two years. One member of the household could commute to the city, and the other household members could help in developing the land, gardens, home, and so forth.

Three or more years to pay off a mortgage causes too great a delay in the community development.  We want to help communities become established as quickly as possible - at least to the point where there are many households established, as well as some gardening. Getting conventional mortgages delays this unless other arrangements are made, such as one person establishing the house and garden while another person is working in the city. 

Cost of Housing

Depending on other factors, a 2000 square foot house can cost upwards of $100,000 in some  rural areas.  Since we would like to see communities of at least 40-50 houses, on a community level that means a minimum of $5 million dollars for land and housing. The simplest solution is to find families with $100,000 of free cash, hire a developer who will use our plans, and once construction is done everyone moves in and starts growing organic produce and continue development from there.

Yet this is not a desirable model for many reasons.   

Most people do not have $100,000 cash.  Most residential communities are completely developed up front and everyone just picks their house and pays cash, or gets a mortgage. But not everyone can get a $100,000 mortgage, and even if they can, it takes many years to pay off, and everyone is completely bound up to the modern economic system.  

Housing in America is primarily based on how much money you have. Personal finances are primarily based on what existing society finds valuable. We are attempting to base participation on a completely different principle - willingness to work and live cooperatively in an agrarian society, regardless of personal financial condition. We want a society that is NOT based on how much money you have, or what existing modern society may think is valuable.

Expected Least Expensive Rural Housing Costs

Not even Habitat for Humanity builds without a mortgage to the homeowner. Their average cost is $60,000 per house, and they get some percentage of both labor and materials donated. Their houses are complete homes, usually wood frame as most houses are because they can be built quickly. In many other countries people try to build their homes of more durable materials, usually earth, brick or stone.

We intend to use a combination of other methods to further reduce material costs, such as purchasing in bulk, approaching companies for contributions of materials, getting government grants and possibly getting donations.

We estimate the amount of money required for materials only for a 2000 square foot, single story home is around $40,000. (This is not including less conventional very inexpensive styles such as Superadobe.) Obviously many people do not need a house nearly that large. This includes the possibility of getting quantity discounts, potentially mixing our own materials such as concrete, and certainly doing the construction of walls ourselves (see the page on Shelter) and so forth. It includes basic trim work on the interior such as kitchen cabinetry, doors, windows, and standard fixtures. It also includes standard wood-frame roofing, but asphalt or composite shingles would not be used in favor of materials more suitable for rainwater harvesting. 

Alternative Housing

We should always consider building less expensive types of housing.  Some examples are Superadobe or the use of shipping containers, but such construction will not be suitable for everyone and does not work well for keeping utilities low. Our choice of construction types are described on the page on Shelter.

There are some complications with earthen homes and conventional mortgages.  Financing non-traditional homes can be extremely difficult as the mortgage industry does not like unconventional housing (nor the insurance industry.) Practically everyone who builds these types of houses do not get mortgages; they save the necessary money before they start building, and often bootstrap it - building as they get the funds.

The homes within each village must have the same architectural style, but different villages can have different styles. Therefore one village might have $100,000 homes and the next one might have $50,000 homes. But this may still create potential splits between “rich” and “poor” neighborhoods, which is undesirable. Therefore the community as a whole must decide on all building parameters, with some flexibility to allow for variety. 

There may be people who have $100,000 cash that still want to build a $25,000 house and keep $75,000 - so this will not always be a problem. Regardless of variety of construction types, communities should not allow the building of homes over 2000 square feet or with multiple stories, so this also keeps the cost down and helps to prevent such divisions within communities. (See the page Necessities - Essential Needs: Shelter for more information.)

Cooperative Advantages

There are some financial advantages to a cooperative structure.

It will be easier for the cooperative to obtain mortgages on unconventional houses because other assets can be used as collateral if necessary. If the houses are owned by a cooperative then the cooperative can take out a mortgage using equity in other homes and in turn finance the construction of another one.

If the householder defaults on the mortgage to the cooperative the bank does not get the house because the cooperative will continue to make the mortgage payments and find someone else to take up residence and make the payments to the cooperative.

Persons within a community who have excess funds can loan them to the cooperative for a particular individual rather than directly to that individual if they so desire, with a much better guarantee of re-payment.

Such members with excess funds have the option to not require immediate payments and thus allow the person building the home to become established first. This means that taking such a mortgage internally from within the community (through the cooperative) does not delay progress toward the goals of the community.

The advantages of a cooperative in conjunction with general community cooperation make many other options possible.  All of these benefits to using a cooperative model can also be used with a private ownership model by structuring things properly. The key is cooperation and agreement.

So let's look at examples of cooperation that can be beneficial regardless of the community's legal structure. 

Next - (Financing) Alternative Financing