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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

#71

Post by simonebrunozzi »

sburl wrote: post #65
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…

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…

Hey, good to meet you here on HN!

I wish you all the best in your new business. I would be happy to see you succeed.

On the loan part, have you considered offering the ADU as an investment opportunity for private parties? E.g. someone has 100k in cash, can't afford a home, but can invest in the ADU being built by someone else. No loans = less cost, less friction.

Also, the ADU appreciates the value of the home, sure. I think you should find a way to size this appreciation for the home owner (it will be a lot in most cases); it will never be an exact number, but you can do an appraisal for 300-400$ for a few homes, and use the diff to show other clients that it makes a lot of sense to invest in it.

In fact, building an ADU is almost always a great investment. You give up on backyard space, in exchange for rentable real estate. Hard to beat.

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

#72

Post by bbakerma »

staunch wrote: post #13

It seems like the biggest innovation here would be bringing down the price of building a standalone studio apartment. These units probably cost cost $120k+ to build/install? It would be neat if there was a (high quality) $50k kit homeowners could buy and assemble themselves, almost like IKEA furniture.

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

These kit homes definitely exist -- the big problem is that the site work is often 50%+ of the actual costs of installing the unit. We definitely intend on bringing down site costs as we make our units lower impact on the property on which we build.

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

#73

Post by smt88 »

kspacewalk wrote: post #44
smt88 wrote: post #33

The price (50% plus an ownership stake in a structure on my property ) seems absolutely insane. Does the ownership stake mean that I can't stop leasing the studio if I want to? I think most people who really want to do this will work with a local contractor instead.

You can stop leasing whenever you want to, buy the company that spent a five digit sum of money on that thing in your backyard will want to get then money back first, which is unsurprising.

That doesn't surprise me, but the way a bank would do it is this: 1) loan you the capital to build the structure, 2) create a payment schedule, 3) try to collect on that payment if you miss it.

You could then declare bankruptcy if necessary, which means you'd keep the structure and have some sort of way out from under the debt.

If Rent the Backyard has an ownership stake in the structure, it sounds like they could continue leasing the unit even after you declared bankruptcy.

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

#74

Post by sburl »

simonebrunozzi wrote: post #71
sburl wrote: post #65

Earlier quoted context omitted.

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…

Hey, good to meet you here on HN! I wish you all the best in your new business. I would be happy to see you succeed. On the loan part, have you considered offering the ADU as an investment opportunity for private parties? E.g. someone has 100k in cash, can't afford a home, but can invest in the ADU being built by someone else. No loans = less cost, less friction. Also, the ADU appreciates the value of the home, sure.…

Thank you for the kind words :)

We're interested in platforms like Fundrise but really focused on the initial sales process and proving this model with 10 units. The hope is this will make it easier to go to real estate investment platforms and other sites like it.

We have a lot of good info on appreciation in the emails we send to people who are interested in learning more about the product. As we've gone through the launch process, I think this is the thing we've fumbled most. We've been focused on the initial value prop, but the long tail is really valuable too. As we build the website and other public-facing content out, this will be something we prioritize.

We're really thankful for the Hacker News community pushing us hard on this and other points, and bearing with us as we focus on getting the messaging right :)

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

#75

Post by JMTQp8lwXL »

sjg007 wrote: post #57
JMTQp8lwXL wrote: post #17

I don't have a backyard, and nobody I know in my area that also makes six figures+ a year has one, either. This trend has been documented [0]. Granted, my cohort is all earlier in our careers. But with years of saving, much of it prioritized in 401k's, IRAs, and HSAs, I don't have enough left for a down payment on a single family residence. [0]: https://www.washingtonpost.com/business/2019/02/21/are-you-c...

I mean.. move and work from home? Or sacrifice some of the retirement savings to get a down payment? Or wait for the market to crash?

When the upper incomes begin to see affordability issues, you have an unhealthy market. I like life with minimal use of a car. Urban areas areas are far friendlier to a car-free lifestyle. Also, homes in the surrounding suburbs aren't that much cheaper to meaningfully change the numbers. Another 5 years of savings should do it. So, 10 years to come up with just a 20% down payment. I'd rather not compromise my future by foregoing retirement contributions.

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

#76

Post by sburl »

Hi everyone, my name is Spencer and I’m one of the co-founders of Rent the Backyard.

Rent the Backyard was founded to help homeowners who want to earn extra income from their underused backyards but don’t want to spend a ton of time or money to make it happen. Rent the Backyard provides a turnkey solution — we handle all the logistics of putting a studio apartment in your backyard — helping you earn $10-$20k per year in rental income with as little loss of privacy for you as possible.

We’re focused on the Bay Area (particularly San Jose) to start. California has passed a lot of laws in recent years that make these “accessory dwelling units” or ADU easier to build because they believe these units can help play a role in solving the affordable housing crisis. 4,300 ADU were built last year in California and we’re hoping to help more homeowners access this new type of housing without needing to borrow money and become a part-time construction manager.

We’re building this business not only to help homeowners make more money from their underutilized space but also to help communities increase their supply of housing. We want to be sensitive to the communities we serve and as we build, we’re committed to listening to stakeholders and exceeding California’s requirements when it’s the right thing to do.

Excited to answer your questions here and by email: hi@rentthebackyard.com !

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

#77

Post by ygjb »

offsign wrote: post #43
m463 wrote: post #23

Earlier quoted context omitted.

I think of the long-term solar contracts that make it hard to sell a house.

this. anything that restricts or impedes what you can do with a home is a liability, not an asset. Up in SF, even partially tenant-occupied homes typically sell for a sizable discount. (also doubt that ~10k/year is going to make waves in the target market -- Bay Area homeowners with a back yard big enough to make this viable.)

It could be very meaningful to older retired or semi-retired folks who have fully paid for their home and are looking for additional income but don't want to sell their house and leave their neighborhood. AirBnB used folks in that situation here in Vancouver to great effect when pushing for support for short term rentals in the local market.

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

#78

Post by l4yao »

bbakerma wrote: post #70
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…

Sorry, I'm unclear what this means. Will the bank be taking over the relationship in place of Rent the Backyard? Will they buy the stake in return for 50% of rental income?

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

#79

Post by AnimalMuppet »

sburl wrote: post #60
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?

Hi there - my name is Spencer and I'm one of the co-founders of Rent the Backyard. You're totally right about possible zoning restrictions in most places. The climate in California has really changed in the last two years to allow what the state calls "accessory dwelling units" or ADU ( https://www.sfchronicle.com/bayarea/article/Are-accessory-dw... ). These laws cover everything from parking, to setbacks, to privacy…

Well, I think that the issue will be whether the dog works for the tenant.

Hypothetical situation: I don't have a dog. I build one of these. A tenant signs a lease. Then I get a dog. But the tenant is terrified of dogs. But they've signed a lease, and (because nobody thought it would be an issue) there's nothing in the lease about whether the owner can have a dog. Now the tenant is really stuck - essentially they are at the owner's mercy.

I don't know if your standard agreement covers this situation, but if not, it's something to think about...

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

#80

Post by closeparen »

blunte wrote: post #29

People who can afford their home will not like watching their property values and quality of life decline because a neighbor “rented” its back yard. Taking the Uber approach - ignoring laws - won’t work here, so this business is entirely at the mercy of permit laws. I find it astounding that some ideas get prominent backing. Furthermore, home owners will discover that having people travel alongside their homes to rea…

Accessory Dwelling Units are nothing new: https://www.planning.org/knowledgebase/accessorydwellings/
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