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Rent the Backyard (YC S19) wants to build a studio apartment in your yard

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Re: Rent the Backyard (YC S19) wants to build a studio apartment in your yard

#61

Post by sjg007 »

staunch wrote: post #36
stcredzero wrote: post #34

Earlier quoted context omitted.

It would be neat if there was a (high quality) $50k kit homeowners could buy and assemble themselves, almost like IKEA furniture. There was a New England company that sold complete kits for small houses with pier and beam foundations, designed to be constructed by two fit adults, including the fasteners! I think they went out of business in the 2000's. EDIT: I just found another company doing almost the same thing: h…

All the companies doing this seem to be small/unsuccessful/brand new. Maybe there's some fundamental problem with the business or maybe no one has nailed it yet?

Hard to sell and get a mortgage on a homeowner built house. It’s doable with licensed subcontractors in some places. It would take a lot of political lobbying to get something like that approved and standardized.

Re: Rent the Backyard (YC S19) wants to build a studio apartment in your yard

#62

Post by bbakerma »

barli wrote: post #26

What prevents a homeowner to go directly to: https://node.eco/ or https://livemodal.com/ and do it themselves?

Absolutely nothing. There are two things that we provide that going directly to a builder can't get you: 1) No upfront costs. We pay for the entire unit without asking our homeowners to put any money down. 2) Turnkey solution. We do all of the building and rental management for the homeowner, allowing them to sit back and see rental income coming in.

Re: Rent the Backyard (YC S19) wants to build a studio apartment in your yard

#63

Post by yonran »

AnimalMuppet wrote: post #46

I see a few issues. First, the local zoning commission may not allow such units. Second, my dog uses the backyard on my dog's schedule, not the renter's. And the renter may dislike walking through a minefield to come and go. Third, where's the renter going to park?

The article mentions recent state laws that overrode city prohibitions on multiple units: SB 1069 (2016) required cities to approve ADUs in backyards of all single-family houses and inside houses, and AB 494/SB 229 (2017) reduced parking requirements to 1 parking spot per ADU and made them more financially feasible (by limiting utility fees and allowing ADU rental). These are a big deal, especially on suburban 5,000+ sq. ft. lots where there is enough space for egress and parking.

As for your dog, no homeowner is required to construct an ADU, so an owner who wants to keep a big yard is allowed to do so. Other homeowners can make a different decision depending on their situation.

SB 1069: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

AB 494: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

SB 229: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

Re: Rent the Backyard (YC S19) wants to build a studio apartment in your yard

#64

Post by bbakerma »

Mizza wrote: post #18

I love anything that creates more housing in the bay, but these are 30-year contracts! I can't even imagine getting into a 30 year contract with a company that might not exist in 30 months. What happens when the start-up goes under, or gets acquired, etc? Is the loan made directly to a third party bank?

Hi there! You can always choose to buy us out of the contract whenever you want -- we just ask for people to pay for the equity they have yet to earn in the unit. We will need to eventually give custodial ownership to a larger entity (think big bank) in the medium term to mitigate the risk of our company going under for the homeowner, such that, if the worst-case scenario happened to our company, the homeowner continues to make rental income as usual.

Re: Rent the Backyard (YC S19) wants to build a studio apartment in your yard

#65

Post by sburl »

simonebrunozzi wrote: post #7
dpflan wrote: post #4

Can someone more familiar with the Bay Area housing issues and this company’s approach to increasing housing explain or analyze this for a non-Bay Area audience? I ask because this currently is Bay Area only.

I will try. In the US, there is the concept of Accessory Dwelling Unit - essentially, you can build a small shed in your backyard with a much simpler process, including the paperwork, permit, etc. If you are a homeowner, you can do that yourself - it means taking care of the permits, finding a construction company, etc, and putting money down, probably in the ballpark of 100-150k to do a good job. After this, you can…

Hi there - my name is Spencer and I'm one of the co-founders of Rent the Backyard.

@simonebrunozzi -- great summation of the ADU climate in the US. In California, the government has become even more receptive to ADU in the last few years (https://www.sfchronicle.com/bayarea/article/Are-accessory-dw...)

Our financial model is different than a loan. We use the split from the profits of the unit to make back our money and secure that with a lien on the home. The great thing here is that this lien decreases each year over 30 years until it goes away and you own 100% of the unit and its proceeds.

The great thing about an ADU is that it appreciates the value of your home. We're focused on building long term partnerships with homeowners but if you decide to move before the lien decreases to 0 you can pass the contract to the next homeowner who can continue it to completion. Or you have the flexibility to buy out the contract. When this happens, the increase in value the ADU brings your home can often cancel out or make you money compared to if you didn't have the ADU.

You are right about the potential limits on taking further debt on a home with our agreement and that's a value call each customer will need to make: earn rental income from working with Rent the Backyard, or maximize the access I have to my home's equity.

Re: Rent the Backyard (YC S19) wants to build a studio apartment in your yard

#66

Post by sburl »

stcredzero wrote: post #32
simonebrunozzi wrote: post #7

Earlier quoted context omitted.

I will try. In the US, there is the concept of Accessory Dwelling Unit - essentially, you can build a small shed in your backyard with a much simpler process, including the paperwork, permit, etc. If you are a homeowner, you can do that yourself - it means taking care of the permits, finding a construction company, etc, and putting money down, probably in the ballpark of 100-150k to do a good job. After this, you can…

If you do this with "Rent the Backyard", or by yourself, it means your house can't be sold until you pay the loan. You probably thought of this already, but I have to ask: What if "Rent the Backyard" is the lender? Couldn't they have a provision in the loan contract allowing the homeowner to move out? What if Rent the Backyard forms an entity with the homeowner, and sells the lot to the entity?

Hi there - my name is Spencer and I'm one of the co-founders of Rent the Backyard.

It's tricky (years and $$$) to become a mortgage lender but we have flexibility in our agreement for a homeowner to pass the agreement to a new owner (we'll even move our lien back to the second position so the new homeowner can get a mortgage)

Re: Rent the Backyard (YC S19) wants to build a studio apartment in your yard

#67

Post by bbakerma »

Causality1 wrote: post #48

>builds studio apartments in homeowners’ backyards, which are then rented out That might be one of the most dystopian things I've ever seen on HN.

Hi there -- this is Brian from Rent the Backyard. What we are doing here is finding a synergy between homeowners and renters, allowing for people to profit off their unused backyards while increasing the housing stock. Airbnb started the trend of being able to monetize your home in the form of rental income and we see ourselves as an extension of that phenomenon. In our case, homeowners give up zero privacy to make meaningful extra income. We help existing homeowners stay in their homes amidst rising costs in the Bay Area.

Re: Rent the Backyard (YC S19) wants to build a studio apartment in your yard

#68

Post by simonebrunozzi »

stcredzero wrote: post #32
simonebrunozzi wrote: post #7

Earlier quoted context omitted.

I will try. In the US, there is the concept of Accessory Dwelling Unit - essentially, you can build a small shed in your backyard with a much simpler process, including the paperwork, permit, etc. If you are a homeowner, you can do that yourself - it means taking care of the permits, finding a construction company, etc, and putting money down, probably in the ballpark of 100-150k to do a good job. After this, you can…

If you do this with "Rent the Backyard", or by yourself, it means your house can't be sold until you pay the loan. You probably thought of this already, but I have to ask: What if "Rent the Backyard" is the lender? Couldn't they have a provision in the loan contract allowing the homeowner to move out? What if Rent the Backyard forms an entity with the homeowner, and sells the lot to the entity?

Being a proper lender requires a lot of paperwork, compliance, and investments. I doubt they will do it from the start. Perhaps if they become wildly successful.

Re: Rent the Backyard (YC S19) wants to build a studio apartment in your yard

#70

Post by bbakerma »

astrodust wrote: post #16

When they inevitably go bankrupt who ends up owning the unit? Will it be collateralized and sold off or revert to the original property owner?

Hi there -- this is Brian from Rent the Backyard.

We don't see bankruptcy as quite inevitable as you do :) In all seriousness, as written somewhere else on this thread:

"We will need to eventually give custodial ownership to a larger entity (think big bank) in the medium term to mitigate the risk of our company going under for the homeowner, such that, if the worst-case scenario happened to our company, the homeowner continues to make rental income as usual."

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