Living Unlimited intends to identify suitable properties, organizing “pioneer” groups of founding families for each property, arrange planning and zoning approval (if necessary) and spearhead financing of each property.
The number of pioneer families required for each property will depend on the number of bedrooms (adjusted to reserve bedrooms for what we are calling companion roommates, depending on the level of independence of the special needs residents). We expect pioneer families to commit for one-half of the available bedrooms, in the expectation that we can fill the remaining bedrooms (and arrange house companions) before each property is ready.
Each property would be owned by a Limited Liability Company (LLC) with two groups of members:
1.Managing Member: Living Unlimited will be the Managing Member of each LLC with responsibility to identify, secure, finance, tenent and manage the associated property, prepare financial reports to Members and tax returns, and to arrange caregiving support for special needs residents. It will own 15% of each property for this service, but as a non-profit corporation, it will take none of the tax benefits of ownership. It will have control over the LLC Board of Directors.
2. Limited Members. Parents or special purpose trustees of special needs residents will be Limited Members of the LLC. Limited Members will enjoy all the tax benefits of owning the property (such as expenses, depreciation, interest on loans, etc.) which will pass through the LLC to their benefit. Limited Members will have non-controlling voting seats on the LLC Board of Directors, but no individual voting rights. Limited Members will have the right to sell their membership under certain conditions (allowing the selling Limited Member and/or Living Unlimited sufficient time to replace their child with a suitable new resident. Eventually, Limited Members may be able to swap their membership in one LLC for membership in another property-owning LLC, if there is a more suitable property that LU is offering and seeking to fill. Also, LU may eventually be in a position to simply buy out Limited Members, based on the value of the membership – but to be the lesser of original investment or appraised value of the limited member’s membership share. This structure will protect the families’ investments; however, this should be seen as a fair and flexible way to house our children and not construed as a traditional real estate investment.
Each LLC will be governed by Articles of Incorporation and bylaws, to be agreed by all members but consistent with this document. Each will have a Board of Directors the chairman and majority of seats of which will be officers of Living Unlimited. Limited Members will have voting seats as well. Rights to sell memberships, election of board members, meetings and other details will be detailed in the bylaws.
Each LLC will have an Advisory Committee consisting of parents (or special needs trustees) of the residents, with oversight responsibility and the power to make non-binding recommendations to the Managing Member on how the property and the services are run.
We intend to move forward on a property, once we have a core group of pioneer families, roughly one-half of the total occupancy of a property. In such case, pioneer families may have to have larger down payments at the start, with new members’ investments being used to repay the pioneer families over-subscription amounts, so that by the time a property is occupied, each family will have invested no more than their fair share of the total.
We are estimating that each child’s bedroom would cost between $200k to $250k (for single occupancy), and are hoping to find commercial bank financing (which may require guarantees from the pioneer families). Naturally, living expenses will depend on the needs and requirements of each tenant. Financing details have not yet been negotiated, but if an 80% loan at 4% can be negotiated, each family would need $40k – $50k as their share of the down payment, and be prepared for a monthly payment of less than $800 or $1000.
In the future, we may also target bedrooms for children from families without financial means. If so, this would imply that each other member might be asked to pay a bit more to share the costs of the poor. Thus, for example, a 10 bedroom property might reserve two or three rooms for house-parents (depending on the independence of the special needs residents) plus another room for a child without means. Our goal is to find a solution for all parents and children.
First, however, we need to form core groups of families interested in one property or another.