Author Topic: How to build a family compound for dummies?  (Read 23257 times)

KisKis

  • Stubble
  • **
  • Posts: 106
  • Age: 35
How to build a family compound for dummies?
« on: November 10, 2015, 02:45:21 PM »
So, we're not a family of dummies  ...well maybe.  Building a family compound has been a topic with DH, his siblings, and his parents for years and we are finally approaching the time when everyone is settled and financially in the position to be able to start some serious planning.  With the vast fountain of knowledge that is the internet, I haven't been able to really find any good material on compound planning.  I was wondering if anyone could point me in the right direction or if any of you mustachians have any personal insight. 

Brief overview:
- 4 families would be building 4 separate homes around a circular drive. 
- We would all go in on a land purchase of 10+ acres.
- In the middle of the circular drive, we would have a community property with a clubhouse, grilling area, and toolshed/pole barn.  Utilities will be paid through an escrow funded by monthly dues, like association fees.  Two signatures will be required to pay from the escrow fund, other than the regularly scheduled utility bills.  I am considering an LLC for the common area assets and funds.  It would be great if we could rent the property occasionally for weddings and then have a business write-off, but I don't know if any of us wants to fool with that yet.  This can happen much later down the road, since I don't think the community property will be developed until all of our houses are built and we have capital to spare again.
- Written agreement/contract regarding the occupancy and sale of houses, including in case of divorce.  I really don't think this will be an issue until our children's generation, but it will be good to have all the major "what ifs" covered.

We've also already discussed the possibility of squabbles and giving each other personal space, etc.  We see each other all the time anyways, and now that everyone has kids, it will make it so much easier for childcare, gardening, and lots of other good mustachian economies of scale.  I am just worried about all the actual logistics of buying land, running utilities if the property is undeveloped, the process of building four homes, etc.  Any guidance is welcome!   


Tester

  • Stubble
  • **
  • Posts: 218
Re: How to build a family compound for dummies?
« Reply #1 on: November 10, 2015, 02:53:36 PM »
I can't say from personal experience but I wouldn't be worried about the logistics, I would be worried about the human interactions.
Seeing each other all the time does not mean sharing property.
First be sure you all will get along with sharing property, then the logistics will be "easy".

What I know - a colleague from work bought land with another colleague to build a duplex.
They were seeing each other all the time, with the families.
Their wives had a common business.
At one point their wives did not get along anymore and they split their business.
I don't know if they finished their duplex.

BarkyardBQ

  • Pencil Stache
  • ****
  • Posts: 667
Re: How to build a family compound for dummies?
« Reply #2 on: November 10, 2015, 02:57:24 PM »
I have no details, but I was friends with someone in high school who did this with 4-5 families. I believe they all still live on the property.

Seemed to work just fine.

TrMama

  • Magnum Stache
  • ******
  • Posts: 3017
Re: How to build a family compound for dummies?
« Reply #3 on: November 10, 2015, 03:17:13 PM »
Sounds like you want to set up an HOA with a pre-selected group of owners?

What about buying 4 lots in a new development? You'd get to live close, but the 3rd party developer/builder would handle all the actual work. If one family wants out, they just sell and it doesn't affect anyone else.

Or, use a hybrid approach. Buy a piece of land and partner with a developer to set up the subdivision and HOA.

lthenderson

  • Handlebar Stache
  • *****
  • Posts: 1360
Re: How to build a family compound for dummies?
« Reply #4 on: November 10, 2015, 03:19:04 PM »
To me it seems like a disaster waiting to happen. What happens if one family members spends all their money and can't contribute to the fund anymore? What happens when family squabbles happen? What happens when the current generation dies off? I'm guessing a small piece of property with four houses all together will be kind of hard to unload onto the market.

If I was going to do something similar, it would be buying one parcel of land and subdividing it into four separately owned pieces all along a common road. There would be no community property or shared utilities. That way if the disaster eventually happens, one property can be sold and life can go on for the remaining three down the road.

Bob W

  • Magnum Stache
  • ******
  • Posts: 2947
  • Age: 60
  • Location: Missouri
  • Live on minimum wage, earn on maximum
Re: How to build a family compound for dummies?
« Reply #5 on: November 10, 2015, 03:25:01 PM »
Around here we don't call this type of thing a compound.  Isn't that word more or less reserved for certain varieties of these situations?  We have lots of multi generational families sharing farm land and large lots.   

One thing to remember is that nothing is forever or even for very long anymore.   There will be change quicker than you think.

That said,  I love the idea!     I would do it myself with my kids families.   

You might consider going bigger than 10 acres.   Something like 60 maybe.   Then you can sell off lots to other folks. 

Any builders in the family?     In my dream we build one house at a time with everyone pitching in on foundation work,  framing,  drywall,  electric plumbing etc.    1/2 the cost of the home is labor.

You should also consider a shared well situation and how to set that up and if your bank will finance with that agreement. 

Don't know what state you are in but around here if you design a house with both a black water and grey water systems you can get away with a much smaller and thus cheaper septic or lagoon situation.   

The "how to" is something to talk with your banker about.  Purchase of the land,  intent to purchase lots contracts,  building loans etc...  One would assume that everyone going through the same bank makes the most sense.   

You also have the sale of current homes situation and the timing of that all.   I don't think it is like one day we all live here and there and then on June 31 we all move.    I think it will be a matter of several months or more than a year from start till everyone is situated.
 

Now for the relationship side of things,  I would have lots of meetings up front and talk about what happens when things go wrong and worst case scenarios. 

Also consider this a time to do some really,  really,  really good planning regarding home plans and energy efficiency.     Building from scratch is way cool.   

I like the barn gazebo in the middle concept but not sure if that is a first or second stage plan.    I would consider that a must do for a group effort.  Be sure to include a play ground,  basket ball hoop etc in the central area. 

Don't forget dog rules --  will you allow barking dogs,   will dogs roam free,  will there be a leash law.   And who mows the commons,  and what about HOA rules?   Will Uncle Jim park his beat up truck in front of his house.  And road upkeep?  Who does that and pays for it?    Dusk to dawn lights?   Who pays or do you prefer darkness?   Gated or ungated?   I personally would love the gate concept.   You'll want the neighborhood nice so does everyone feel comfortable with tight HOA landscape rules?     Sub leasing?   Right to purchase first right of refusal?   Divorce?   Every group has one or more people with burrs up their butts ---- will that be o.k..   Will the common ground be group owned?   Who plows the drive?    Where do mail boxes go?   Minimum size and price restrictions?   What fire zone?  Will it be zone 10 with sky high rates.   Will you install a pond and pump for fire protection?    Yeah,  lots and lots of questions.   I can see why you want a template. 

Compound for Dummies --- great concept. 

GizmoTX

  • Handlebar Stache
  • *****
  • Posts: 1389
Re: How to build a family compound for dummies?
« Reply #6 on: November 10, 2015, 03:57:46 PM »
We are part of a hunting/fishing "ranch" with 9 other families. None of the families are related, but the founding families have been very good friends for decades. It is organized as a partnership, with very detailed bylaws. Each partner family gets 1 vote & there's a meeting & an expense payment due quarterly. Before we bought into it, we made sure that the exit strategy was clearly in the bylaws. Since then, one partner has died, so the other members opted to buy out the share rather than find someone else to sell it to. As for buildings, the property has a building that contains a very large community gathering space with commercial kitchen & laundry, plus 7 bedrooms with bath that look like a motel, 1 for each partner/family. When we joined with 2 others, an additional building with 3 motel style rooms was added for us. Each family paid for & did the inside finish out & furnishings, so there's a wide variety. We also have a barn & some sea containers for storage. Currently no one lives here full time or intends to--it's a vacation place. The partnership gets some income from allowing cattle to graze on the land & from some oil drilling options.

In the case of individual houses around a community facilities, you probably want to formally subdivide the land around each house so each can easily be sold or transferred. Have each house independently metered or self sufficient, & pay its own way. Put the community land & buildings into a partnership like a HOA & equally share those expenses. You'll have to define what to do if someone doesn't pay up or wants out.


Spiffsome

  • Stubble
  • **
  • Posts: 209
Re: How to build a family compound for dummies?
« Reply #7 on: November 11, 2015, 05:01:42 PM »
I think it could work, as long as everyone's expectations are crystal clear at the outset. Jim McKnight studied a lot of Australian communes and formulated McKnight's Law of Communes: The longevity of a communal village is directly proportional to the clarity of its written constitution.

In a family situation, it's especially tempting to assume everyone's on the same page and brush any uncomfortable differences under the carpet. Unfortunately, those come crawling back out again when you have to live together.

frugaldrummer

  • Pencil Stache
  • ****
  • Posts: 692
Re: How to build a family compound for dummies?
« Reply #8 on: November 11, 2015, 05:36:35 PM »
The biggest issue I see here is divorce.  What happens if one couple divorces?  Does the "non-blood-family" spouse get to keep the house if they're the custodial parent?  How would the house be valued for purposes of buying you out of the house equity if that happens?  I would worry that the spouses who aren't members of the family making the compound, would get the short stick in any divorce split.

I know none of us want to think about divorce, but you never can predict when it might hit your family.  I was sure my ex and I would last, but he had a midlife crisis and left after 26 years.

MrsPete

  • Magnum Stache
  • ******
  • Posts: 3519
Re: How to build a family compound for dummies?
« Reply #9 on: November 11, 2015, 06:46:58 PM »
Sounds like a great thing:  If everyone sticks with the program. I totally agree with the poster who says that hammering out all the details and making sure everyone agrees on the details is paramount.  Things I think you should discuss and agree upon:

- Divorce.  Yeah, it could happen.
- The family member dies, leaving spouse and children ... and the spouse remarries, bringing someone new into the  mix.
- Parents die -- what do you do with their house?
- Children grow up and want to build houses of their own in the compound.  Will you have space?
- Someone gets a job in a new area, needs to sell/rent house to afford to live elsewhere.
- Someone falls on hard times and can't afford the house any longer.
- Will any of the families involved need to borrow to build their houses?  Shared ownership can be an obstacle.
- Borrowing of tools, cars, other items -- don't forget small things that can become an annoyance; like, why do I always end up driving the kids to swim lessons AND giving them snacks? 
- Lawn care and maintenance for shared areas
- What if you disagree about projects; for example, one person wants to build a small shared picnic area, while someone else wants a larger club house and a pool -- how will you decide who gets his way? 
- How will you pay for shared projects?  If you have 3 kids and I only have 1 kid, you're getting more use from play equipment. 
- What if someone (or someone's kids) break or damage family property?  How will it be handled? 
- Parking? 
- Guests?
- Quiet after what time? 

Take a look at Ross Chapin's small houses (whether small houses actually interest you or not).  He has a vision of "shared community" that includes houses facing one another across a public green space ... in his houses public rooms face the green space, while bedrooms fall to the back of the house ... cars are parked behind houses.  I like his work. 



KisKis

  • Stubble
  • **
  • Posts: 106
  • Age: 35
Re: How to build a family compound for dummies?
« Reply #10 on: November 11, 2015, 06:48:11 PM »
Any builders in the family?     In my dream we build one house at a time with everyone pitching in on foundation work,  framing,  drywall,  electric plumbing etc.    1/2 the cost of the home is labor.

You should also consider a shared well situation and how to set that up and if your bank will finance with that agreement. 

Don't know what state you are in but around here if you design a house with both a black water and grey water systems you can get away with a much smaller and thus cheaper septic or lagoon situation.   

The "how to" is something to talk with your banker about.  Purchase of the land,  intent to purchase lots contracts,  building loans etc...  One would assume that everyone going through the same bank makes the most sense.   

You also have the sale of current homes situation and the timing of that all.   I don't think it is like one day we all live here and there and then on June 31 we all move.    I think it will be a matter of several months or more than a year from start till everyone is situated.

Now for the relationship side of things,  I would have lots of meetings up front and talk about what happens when things go wrong and worst case scenarios. 

Also consider this a time to do some really,  really,  really good planning regarding home plans and energy efficiency.     Building from scratch is way cool.   

I like the barn gazebo in the middle concept but not sure if that is a first or second stage plan.    I would consider that a must do for a group effort.  Be sure to include a play ground,  basket ball hoop etc in the central area. 

Don't forget dog rules --  will you allow barking dogs,   will dogs roam free,  will there be a leash law.   And who mows the commons,  and what about HOA rules?   Will Uncle Jim park his beat up truck in front of his house.  And road upkeep?  Who does that and pays for it?    Dusk to dawn lights?   Who pays or do you prefer darkness?   Gated or ungated?   I personally would love the gate concept.   You'll want the neighborhood nice so does everyone feel comfortable with tight HOA landscape rules?     Sub leasing?   Right to purchase first right of refusal?   Divorce?   Every group has one or more people with burrs up their butts ---- will that be o.k..   Will the common ground be group owned?   Who plows the drive?    Where do mail boxes go?   Minimum size and price restrictions?   What fire zone?  Will it be zone 10 with sky high rates.   Will you install a pond and pump for fire protection?    Yeah,  lots and lots of questions.   I can see why you want a template. 

Phew, lots of good things to think about in here.  Thanks.  We all currently own our own homes and there might be an opportunity for 10-40 acres of land, so hopefully no bank financing will be needed.  My in-laws have what is essentially a duplex, so we might even sell our house and move in with them so we have the capital to complete construction, and then they can move in with us while they build. The great thing about DH's family is that they are all very open with finances, personal topics, and everything else, so I really don't think we will develop any festering issues living as neighbors.  We have also already discussed pets, and some other of the mentioned topics.  We all appreciate bluntness and are not practitioners of passive aggression.  We have discussed common area maintenance, which would largely fall on the early retirees (DH and his dad).  Common area would also be a second phase development.  We might start out earlier with the high-return, low-investment items like the pole-barn and garden.  The club house with game room will come much later, if it even happens at all.  A well is a great idea, especially for the garden. 

I think it could work, as long as everyone's expectations are crystal clear at the outset. Jim McKnight studied a lot of Australian communes and formulated McKnight's Law of Communes: The longevity of a communal village is directly proportional to the clarity of its written constitution.

In a family situation, it's especially tempting to assume everyone's on the same page and brush any uncomfortable differences under the carpet. Unfortunately, those come crawling back out again when you have to live together.

I will have to read the Law of Communes.  Thanks for the reference.  We already spoke about how we need to have a clearly written agreement addressing many of the topics raised.  There have been some good suggestions that we hadn't previously thought of, so thanks for those.  I appreciate the group brainstorming.

The biggest issue I see here is divorce.  What happens if one couple divorces?  Does the "non-blood-family" spouse get to keep the house if they're the custodial parent?  How would the house be valued for purposes of buying you out of the house equity if that happens?  I would worry that the spouses who aren't members of the family making the compound, would get the short stick in any divorce split.

Yes, we talked about the possibility of divorce, and will definitely address it in the written agreement.  I am sure if it does actually happen, it will be messy regardless, but hopefully some foresight will make the mess manageable.  I haven't spoken with the third sibling in-law, but both I and DH's sister's husband agreed that the blood relatives should keep the houses.  I don't think either of us would want to live with our divorced in-laws, anyways.  We will need to dig a little deeper to address the house equity buyout issue, but I think we should be able to come up with something that everyone can agree on.  An appraisal would probably work in favor of the spouse being bought out, but I think some sort of 50% share of the principal investment plus interest might be more fair.

We are part of a hunting/fishing "ranch" with 9 other families. None of the families are related, but the founding families have been very good friends for decades. It is organized as a partnership, with very detailed bylaws. Each partner family gets 1 vote & there's a meeting & an expense payment due quarterly. Before we bought into it, we made sure that the exit strategy was clearly in the bylaws. Since then, one partner has died, so the other members opted to buy out the share rather than find someone else to sell it to.
...

In the case of individual houses around a community facilities, you probably want to formally subdivide the land around each house so each can easily be sold or transferred. Have each house independently metered or self sufficient, & pay its own way. Put the community land & buildings into a partnership like a HOA & equally share those expenses. You'll have to define what to do if someone doesn't pay up or wants out.

Thanks, I think it is clear that we will need a very clear and detailed written agreement.  We do intend to formally subdivide the land into parcels for the individual houses.  I also agree that putting the community land, buildings, and assets into an HOA/LLC is a good idea.  We will need to think more about the rules for any exit strategy.  Right now, we are telling each other to only participate if we are 100% committed, but I understand things change, so we do need to address potential issues in writing.

Thanks again everyone!!  Lots of good things to think about.  Feel free to keep throwing ideas around.  It's very helpful to have the extra brainpower. 

AgentCooper

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: How to build a family compound for dummies?
« Reply #11 on: November 12, 2015, 12:43:17 PM »
Love this compound idea!  Wondering:  why so many houses?  I'm a big fan of the idea that is prevalent in some other cultures, which is that multiple generations can and should live under one roof.  Before building a new-but-separate home for someone who is aging or elderly, I'd think about whether a room in someone else's home is what they really need.

One of my dreams has been to build a house that can hold 3 households under one roof.  I picture a big house shaped like a U, where everyone uses one gigantic kitchen, one huge living space, and the arms of the U are covered walkways which lead to several bedrooms on each side of the U.

Having several bedrooms would be great, as it would offer space to grown children, and empty bedrooms could become nurseries for when they have their own kids.  A multi-generational home built to last generations.  Shucking corn and shelling peas together in the evenings.

Bathrooms would be dorm-style, with several toilets and showers in each, and a long mirror with several sinks.

The bedroom doors would face inwards towards an outdoor courtyard in the middle, where there would be space for a flower garden or edibles garden, some benches, outdoor tables, BBQ grill, kids' play area, etc. 

Till today I had never thought about what would happen if somebody didn't get along with somebody.  My family isn't in to written agreements and HOA contracts.  But since it would be my place built on my dollar, their primary option would be to GTFO.  :-)

Alas, for me this is probably going to remain a dream only.  If I ever move I think it would be to a smaller house, and I don't think I would contemplate building a new home and getting another mortgage at my age, with FI targeted for 9 years from now.
« Last Edit: November 12, 2015, 12:46:17 PM by AgentCooper »

KisKis

  • Stubble
  • **
  • Posts: 106
  • Age: 35
Re: How to build a family compound for dummies?
« Reply #12 on: November 12, 2015, 03:01:15 PM »
Love this compound idea!  Wondering:  why so many houses?  I'm a big fan of the idea that is prevalent in some other cultures, which is that multiple generations can and should live under one roof.  Before building a new-but-separate home for someone who is aging or elderly, I'd think about whether a room in someone else's home is what they really need.

We are all young.  The three siblings all are married with young children.  My in-laws are in their low 50s, so there is no concern about aging or elderly care for about 30 more years.  While we all love each other, we definitely need our own space because we are spoiled Americans.  (I come from an immigrant background so I am familiar with multi-generational living and see how it can be beneficial for all.  I just still want to live with some private luxury but have the convenience of communal interaction when it is desired.)  There are a lot of people in this family who enjoy walking around in their underwear, and that would just be awkward in one multi-generational residence.  Sure, we could have multiple living spaces, but once you start making duplex/triplex/quadplex residences, you might as well build the separate houses so everyone can have what they want.  Also, DH and I are a lot stingier on utilities than the rest of the bunch.  I think it would become a sore spot if we had to split the bill to keep the AC on in the 70s when we are good with 82.  DH would also piss everyone else off if he had access to all their food because he is a black hole that consumes all.  With young kids in the mix and every couple enjoying different levels of cleanliness, separate living spaces are crucial.  We plan on having written rules and maintenance agreements for the common areas.

sisto

  • Pencil Stache
  • ****
  • Posts: 976
  • Age: 50
  • Location: Sacramento, CA
Re: How to build a family compound for dummies?
« Reply #13 on: November 12, 2015, 03:09:36 PM »
I absolutely LOVE this idea. I have a close groups of friends and we talk about this all the time, but have never really been ready to do it. My plan also includes a common property. I would build that first though so the family building their house first has a place to stay and then the next family etc. I hope this works out and I look forward to future updates.

AgentCooper

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: How to build a family compound for dummies?
« Reply #14 on: November 12, 2015, 03:20:16 PM »
KisKis, laughing heartily at your reply.  Very good points.  Hadn't contemplated the electric bill being impacted by a granny running her little electric heater in the middle of June, or someone who thinks the AC should ever be set below 75 in summer.  I lived in a similar, 6-person compound for several months once, and people just had to adapt, as far as any desire to amble about in their knickers.  In the end, you're all together and you end up getting used to seeing someone half-dressed on their way to or from the shower. 

For me, 50 is not too young to start thinking about what they will require when they are elderly.  I have a 65-year-old relative, and another who is 66, who are both getting to the stage where they would greatly benefit from having someone check in on them daily, or even someone else doing some of the housework.  It's nuts to be that age and to be maintaining a home big enough for an entire family, but to be alone, or just two people.  But you raised excellent points and I'll have to revisit my U-home dream and apply my more recently acquired MMM principles to the concept.

Taran Wanderer

  • Pencil Stache
  • ****
  • Posts: 562
Re: How to build a family compound for dummies?
« Reply #15 on: November 12, 2015, 09:54:06 PM »
We live next door to my in-laws.  FIL doesn't like to share anything (yard tools, etc.), and he also doesn't like to borrow, so kind of inefficient.  But they're great neighbors, lots of meals together, and great for the kids.  The nice grandma next door is actually their grandma!  We really appreciate the closeness, especially when we have travel a whole mile to my parents' house.

I second all the cautions above about getting things in writing, separate property, etc.  But as for living close to family?  Love it.

Kaplin261

  • Bristles
  • ***
  • Posts: 321
  • Age: 39
  • Location: Richmond Va
    • Michael Foutz
Re: How to build a family compound for dummies?
« Reply #16 on: November 13, 2015, 05:21:17 AM »
Think of this as an investment. It sounds like you lack expertise in land development and other skills to do something this large.

Find a Land Developer who develops small subdivisions.You and your friends would buy the land together, plan and design the subdivision. The subdivision should have 8 buildable lots with every other lot being one that will be used from your group. Build and develop your home's first this will add a lot of value to the 4 extra empty lots(people want to live in an established subdivision). The developer would get the 4 extra lots. Your sacrifice here is you will share the compound with 4 other families, however this should offset the extra costs of having a developer putting up his money and expertise to build your dream. Sharing your area with a limited number of strangers will also add the benefit of uniqueness and improve the chances of longevity of your dream.

Another option here is the 4 of you start a llc together and buy a 4 plex together. Each one of you get a specific unit to rent out or live in.

KisKis

  • Stubble
  • **
  • Posts: 106
  • Age: 35
Re: How to build a family compound for dummies?
« Reply #17 on: November 13, 2015, 06:32:52 AM »
Thanks, all, for the supportive responses.  It will probably be at least a year or two before anything actually happens, but I will update as it comes.  We are working on a land deal right now.

Think of this as an investment. It sounds like you lack expertise in land development and other skills to do something this large.

I agree.  I personally don't have any land development skills, but we do have people in DH's extended family locally that have built their own homes before.  One built his ranch entirely with his own two hands (with help from a couple friends for some heavy lifting).  We also have another relative who is a building inspector. I also have a couple architect friends, but they live in other states.  We will seek their input, but definitely plan on using a locally licensed architect/engineer for the actual designs, and we will be hiring a GC to manage the actual work.  DH and FIL are pretty handy and understand the basics to everything, so they will at least be able to keep an eye on the construction and realize if there are any problems developing.  My skills are mainly with planning and logistics.  We have done remodels before, so I am familiar with construction at least on a small scale.  I expect a lot of my time will be going towards materials research and price shopping.  I am trying to develop rough floor plans for at least my house and the common area, so we don't waste any time (and money) once we start meeting with the architect/engineer.  I realize that some of my proposals will need to be tweaked because there are probably considerations that I don't know how to factor for, like drainage and foundation optimization.  Anyways, that will be the fun part for me.

I don't know about going with a developer.  I might try approaching some of the more well-known subdivision developers, but I don't know if working on our small project would be worth their time, and I definitely don't want to pay a premium for a middleman.  I don't think any of us are interested in adding stranger neighbors to our project.  That would introduce a lot of uncontrolled variables in terms of personalities and financial capability.  Maybe once we are older and if the kids aren't interested in inheriting the houses, we can start selling off to strangers, but that needs to be discussed.  We don't need a developer to finance the project.  However, I might be able to develop a relationship with one of the local developers and see if they might be willing to take a glance and share any thoughts or insight, so that's a good thought as far as additional resources available.