Asking partially because the Auckland community really needs to start a grouphouse and could do with advice, and also I expect the answers to be interesting for a bunch of other reasons:
Intuitively, one might expect a mostly longtermist community to be interested in buying, rather than renting, and if they did, that could end up being quite interesting in economic and social terms, different residents may end up owning potentially different-sized ‘shares’ of the property, selling them when they leave (to the house, or to the new resident?) and buying them when they join. All of these things would be somewhat socially challenging, full of lessons, and worth talking about. It might also provide motivation to work on a less ambitious form of my Propinquity Cities, which can pretty much be paraphrased as a matchmaking system/placement solver for grouphouses.
Alternately (and this is the impression I get), maybe everyone just rents. It would be the path of least resistance and you can make some arguments about the benefits of dynamism. In which case I’d want to start a discussion of whether that really makes sense, and whether it has made sense so far.
Alternately, maybe one person owns the house, and everyone else pays rent to them?
The majority rent (I’ve lived in a few, all of which, including the one I live in now, rented).
I believe the main reasons for this are:
People who live in rationalist group houses are disproportionately young and live in expensive areas, which makes it hard to buy a house,
There’s a lot of variability in how long people live in rationalist group houses, and
Figuring out the ownership structure is complicated.
The first point is fairly self-explanatory, but I’ll say a bit more about the other two.
There are several sorts of people who choose to live in a rationalist group house:
People who would rather live in a rationalist group house than live alone or just with a partner/family,
People who want to live in a rationalist group house until they find a partner and settle down,
People who thought they wanted to live in a rationalist group house but decided it wasn’t for them (often because they find out they’re more introverted than they realized or want more control over their living space than a group house offers),
People who can’t afford to live alone so they live in a group house, and given that they need to live with other people, they’d prefer rationalists, and
People who are moving to or explicitly temporarily living in a particular city (e.g. to study) who want their housing to come with a rationalist-type social circle,
Partners of rationalists who themselves aren’t rationalists, and
People in the rationalist community who can live in a rationalist house more cheaply or more conveniently than somewhere else (often but not always because a room is temporarily vacant).
Most of these kinds of people aren’t going to stick around very long. That’s fine; the temporary (a few months to a year) residents of the rationalist group houses I’ve lived in have generally been positive additions to the house, so I wouldn’t want to exclude them.
Because most of the people who might want to live in a rationalist house won’t be sticking around that long, it doesn’t make sense for everyone to own it. Which brings us to the question of some subset of the residents owning the house.
Last year, a friend and I looked into buying a house together to turn into a group house (where we would rent the rooms out to other residents). Things I learned from that process were (I expect this to vary a lot by geography, and I know very little about New Zealand’s housing market):
It can be hard to find something that matches multiple people’s constraints (in terms of price, location, size, features).
Co-owning a house with someone (other than a spouse) is legally complicated and requires a good contract and a competent lawyer. Especially if there’s also a mortgage involved.
Touring houses is a lot of work.
Most houses for sale have a lot wrong with them and the permitting process for transforming them to be the way you want is slow and unpredictable.
Figuring out whether there’d be sufficient interest in a rationalist group house in a particular location is hard.
There were a couple houses that we came close to want to make an offer on (though we still hadn’t figured out the legal issues around co-ownership). Then my friend accepted a job offer in another city, which ended that project.
None of this means you shouldn’t buy a house for this purpose under the right circumstances. I think those circumstances are:
Someone in the group has the ability to buy such a house.
Enough people are interested and have sufficiently legible requirements regarding price, location, size, and amenities.
The prospective buyer is ok with the house ending up not being a rationalist group house (and either living in themself not as a group house or turning it into a regular rental property).
I haven’t been directly involved in any group housing, but the ones I’ve visited or learned about are predominantly rented, with a few exceptions of “owned by one, rented to the others”. And I’ve heard of but not interacted with “corporation formed for ownership, with some residents fully bought-in, some renting without ownership (but still voting on many decisions), and with the provision for (but not actual existence of, that I know of) non-resident investors.
The single biggest piece of advice I have is “plan for exit before you start.” When someone decides they want to do something else, how do they take any equity they have without crippling the remaining folks?
Nice. I’d be really interested to hear from, or about, the corporations formed for ownership.
The obvious benefit is low-start-up capital—all you need is a security deposit (bond). And the dynamism you mentioned is also pretty relevant. I was going to say more, but on second thoughts, I’d just ask: why don’t you find those reasons alone compelling?
The thing is, owning a house is a financial commitment and a timesink. You have to manage all the repairs and such yourself. You have to keep paying the mortgage, and you can’t just end the lease. You have to sell the house, and that will typically cost you a low five-figure sum, depending on the location.
I know one property investor who got started by buying large houses, starting a group house at the house, and then repeating this process several times. Each group house had a fairly distinct vibe to it (none were rationalist themed). There was a lot of hassle in terms of getting involved in various personal disputes between residents but it worked out well for that investor in the long term.
I don’t super recommend this as a way to invest in property, unless you BOTH (a) want to start a group house AND (b) have a group of specific individual residents in mind, or at least a target market with plenty of people who’d want to join your house in your particular location. For a “rationalist” themed house, you’d probably want to get started once you have specific people interested in moving in, unless you’re in a large enough city that you can be confident of just finding rationalists when you advertise. If you want to try, but are open to relaxing your “rationalist” theme, it is probably a good long-term investment in most places.
AspiringRationalist already gave a very thorough answer that I endorse, so I’ll just add a couple additional thoughts.
The vast majority rent, but I know one group house who bought their home after roughly the same group of people had already lived together for several years. At the time the house was bought there was already one child in the house being co-parented by several housemates; they’ve since had another kid and are working on more. So that’s an atypical group house in that it both has very stable members and is more of an extended poly family than a group of friends. I’m not sure, but my guess is that people at that house mostly aren’t charged rent, which would be in keeping with the more family-like vibe.
Can’t think of any other examples of group houses that bought their home, N=~50, though I’m not confident that all of them rent(ed), I just have incomplete information. (Edit: In the comments Jeff mentions that he owns his house too — another group house with children. IME young childless people don’t see much value in owning over renting.)
I also want to say feel free to hit me up for more group house advice/thoughts. I think I know a lot about rationalist group houses in general and I’m always happy to talk to community organizers :)
I remember some stories about rationalist grouphouses that didn’t end well. This could be a selection bias—if everything works okay, it is kinda boring, no good story to tell. But unless someone makes a proper research, I am going to assume that, let’s say, 50% of rationalist grouphouses fall apart because of some kind of conflict.
This seems to me like a good argument in favor of renting—if the conflict happens and the project falls apart, it is easier for everyone to go their own way. If you bought the house together, now your situation is similar to a divorce, only with more people involved.
I would make an exception if you already live together for one year, and everyone seems to be okay with the situation and wishes to stay for another few years. Even then you should write a contract specifying what happens if two years later someone decides to leave. (Will they keep owning a part of the house they no longer live in? Will the remaining people now pay them rent? Or will the remaining people buy the fraction of the house back? What if the market prices have changed in the meanwhile?)
This seems much easier. You just need one person sufficiently rich to buy a house where dozen people will want to live.
Strongly disagree that 50% of rationalist group houses fall apart because of some kind of conflict, although I guess I’d probably want to operationalize ‘fall apart’ and ‘conflict’ better.
I can only think of one(?) public story about a group house that didn’t end well (Decision Tree, which was very much not a typical rationalist house)
I think a lot of houses chose to dissolve around the beginning of the pandemic, which was often due to disagreements about how to respond to the pandemic, but I wouldn’t necessarily characterize those disagreements as ‘conflict’
I know group houses where there has been some level of conflict but that often just results in one person moving out, rather than the house disbanding
I know of plenty of group houses that have been disbanded amicably, because young single people in the Bay live ever-changing lives
I don’t disagree that it seems better to rent partly because of the possibility of conflict — lots of group houses have a rotating cast anyway, and that seems like a bitch to manage if everyone somehow went in on the house together. But I disagree with the characterization of rationalist houses as incredibly unstable and conflict-prone.
What were the covid disagreements about? If it was just about differences in personal preferences and risk tolerances, fair enough, situations changed, someone had to move, but if it was about inability to reconcile or reach a satisfying compromise on the epistemics… I’d be disappointed.
I hope you are right.
My limited experience is that most grouphouses, in general, fall apart due to conflict. Despite being pretty thoroughly embedded in the rationalist community, still hear about as many grouphouse stories from outside it.
I’d agree that renting probably makes it easier to dissolve after conflicts, I don’t know how much easier. In a partial ownership scheme, it’s just a matter of finding someone to buy you out, or if only one person is leaving at a time (and this applies to a renting situation as well), maybe there could be a scheme where the others are obligated to buy someone out (they then sell that share to whoever moves in next).
I guess in that case, the house should only be expected to be able to deal with one house-backed buyout at a time.
I can think of a number of ways this could be done:
There’s a minimum fraction of the share that each member must be prepared to buy. (What’s the enforcement mechanism?)
Or maybe we should be nice and exempt members who don’t manage any little liquid wealth from having to contribute.
But it’s permissible to let someone else buy your fraction, if they’re willing.
The house maintains a communal liquid investment to be drawn from when a buyout is necessary.
The house takes on a collective loan to pay for the buyout. Which is then usually paid back when a new member arrives. From what I’ve heard (sorry, can’t remember source) collective loans have extremely high payback rates because a communities are really good for accountability, so the interest rate could be potentially quite low. It might also be feasible to get CEA to facilitate these if finding sufficiently trusting lenders is an issue.