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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

#141
post #76

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…

Hey, great idea guys! I've spent a few summers in the East Bay building these units for folks and know a fair bit about the process.

A few questions:

Are you pouring pads?

How are you tying into the sewer and electrical lines?

Parking issues?

Especailly with South Bay soil/clay, how are you addressing lift and shrink?

There has been a fair few house fires in SF proper in the last few years, many are related to rentals that are over capacity. I've actually lost friends due to these issues. Not fun. Obvi, I really like your idea as it'll help with over crowding. But there is the HUGE issue of fire safety. How are you addressing that?

HOAs?

Extra dirt?

Great idea guys! Hope it all works out for you.

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

#142
post #127

Earlier quoted context omitted.

Same here, and if I were able to afford a downpayment I would live in daily fear of an earthquake because I wouldn't be able to afford Earthquake insurance, and if I did I wouldn't have the 20% deductible in the bank. I'm convinced that most non-wealthy bay area homeowners are essentially betting their financial future on there being no earthquakes here until the house is greater than 50% paid off. Tenuous is a fitti…

California building codes have been pretty strong for many years. Only older residences are likely to suffer catastrophic structural damage when "The Big One" hits. Earthquake insurance is a terrible deal. Instead of paying insurance premiums, put the money toward earthquake safety retrofitting and saving an emergency fund. There will probably also be some state and federal disaster zone financial assistance.

Fortunately, most of the property cost when you purchase in California is for the land, not the structure that sits on it.

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

#143
post #131
post #115

Shipping container offices are all the rage these days. Have you considered using them? I mean, if they're ok to work out of - legally and safely - then why not live in one? It would certainly cut down on the construction costs.

Shipping container offices aren't popular at all. And they aren't suitable for housing either. There is no savings.

We did take a pretty deep look into shipping containers. There are a number of sites that will sell you a pretty fully featured container (https://www.curbed.com/2017/6/21/15839730/shipping-container...)

While many of them look pretty reasonable, longevity and sense of value are the main issues people have psychologically. Shipping containers often elicit worry about rust and decay which is not unreasonable by my understanding is that they have coatings and paint that can largely prevent this.

The bigger issue is the homeowner's sense of value. While any ADU should increase the value of the property it's on, a shipping container home may make the home a bit harder to sell.

Shipping container homes often come with a very technical installation. Since the entire unit is built, if access into the backyard is limited the unit needs to be lifted over the home (and all the power lines) by a massive and very expensive crane. An easier version of this installation by crane: https://www.youtube.com/watch?v=KDTLBbfKL3E

As we've thought about these problems, we've honed in on building beautiful largely prefabricated flat-packed units that are easy to get into the backyard and then bolt together kind of like Ikea furniture.

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

#144
post #101

Earlier quoted context omitted.

As another piece of anecdata, my previous home had a spacious and nicely finished detached garage in addition to a single-car attached. It values the same as other similarly sized homes in the subdivision without a detached garage. It definitely had value to me as a workshop/office/man-cave, but not-so-much the market at large.

Interesting. I sort of struggle to imagine anyone who wouldn't value an extra garage at anything - even if your need for it is just hypothetical or aspirational - or even just as cold storage space, which has not insignificant rental cost should you need it.

Well, I'm no expert, but for the vast majority of people a detached storage space probably isn't even on their shopping list. And for most who put some priority on storage space it will be fungible with an attached garage or full / partial basement, which are much more common. And it never comes down to these two homes are exactly equal but for the ADU.

Logically, an ADU absolutely should be worth something but I don't see it reflected in my limited experience buying two properties with ADUs, one of them income-producing. Might be different for a rental ADU somewhere highly constrained on housing, but my rent-to-home-value ratio is comparable to what's being discussed here, too.

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

#145
post #125
post #97

Earlier quoted context omitted.

Worse than that, the article states that you have to buy them out as part of a sale. My house has an ADU and came with paying tenants. Zillow thinks my place is worth about $30K more than the average on my street... but I also have a pool (couple others do) and am the only one with a legit 5th bedroom, so I'm thinking the market value of that ADU is roughly nothing.

Zillow estimates are not to be taken seriously in circumstances like that. The point would only be valid if the valuation came from a professional appraiser.

A single Zillow estimate is not worth much, but for making a relative comparison of 18 neighboring homes on the same street it's not unreasonable.

Clicking around the ones that have changed hands recently enough for Zillow to have the full MLS data and photos, it's pretty clear that the transactional price differences come from the typical areas (# bedrooms, square footage, updates).

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

#146
post #100

Earlier quoted context omitted.

Who has time to manage a construction project? Just show me where to sign and send me my monthly checks.

Definitely appreciate that many will benefit from farming it out, so I think this company substantially expands the addressable market, but in support of DIY (as someone who was raised in the house my father built), building your own such modest project is very achievable, particularly if you farm out electrical and plumbing concerns. With respect to managing contractors, my understanding is that roughly daily superv…

I've personally built a few of these granny units in the East Bay over a few summers. It is very DIY-able, but it is faaaaar from simple to do yourself. If you go the contrator route, you had better know the crew personally as supervision is not turn-key.

One example: The concrete pad.

You must know the size of the pad. Then, you have to take soil mesurements for moisture and compaction. If you do not do this, your pad WILL crack as the center's moisture and it's volume changes relative to the soil outside the garder. This is especially a concern in South Bay clay and loam soils. There are many many Levitt-town style houses that are experiencing pad issues. These issues cause the building to shift. Doors will not close, gaps appear in walls, etc. This can happen within 5 years of the pour. Rebar must be tied off at each interesction, otherwise the pad will shift even more so. The garder on the pad must be 24 inches deep. Depending on the size of the building and the load on the pad (which is estimated beforehand) you have to tie the building into the garder with steel hooks (min 0.5' diameter, at least 12' into the pad) due to earthquakes. Concrete's drying period is dependant on a lot of factors, but weather is a big one. Before further construction occurs, the drying must be completed correctly. Actually getting the equipment, tools, and personel to the site is another headache too.

Ok, got that very slimmed down list off the top of my head? Those are just some of the issues with the pad. Multiply that throughout the entire build and there are a lot of little problems to solve and they have very big effects in 5 years time.

So, if you decide to trust your contractor, you had better really trust your contractor. These issues are not simple and there are a LOT of corners that can be skimped on without you knowing.

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

#147
post #99
post #78

Earlier quoted context omitted.

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?

The idea is that there's a third party who formally holds the contract so there's minimal disruption for the homeowner if something happens to our company.

I think it is a great idea and I see a lot of potential. If any of you have tried any addition/remodeling in the bay area, you know the difficulties involved. It is hard to find reliable people at reasonable cost. This company is bringing scale advantage and that is the only way to make sense of any construction project in the bay area. A friend of mine checked with a few design-build firm for second floor addition. 400$ per square feet is the minimum price. Even to explore the project there is a huge cost upfront without any assurance of success. I think it is a great way for homeowners to get cashflow with minimal risk.

Question to the founder: Do you see profitability in building or rental or both?

It would be leaving money on the table for the home owner to continue on the contract for 30years. Initially with 0 equity, the owner gets 50% of rent. at year 20, with 50% equity, the owner gets 50% of rent and at year 25 with say 70% equity, the owner still gets 50% rent. From home owners point of view, it is better to buy out sooner rather than later. It is also not hard to get home equity loans. Thanks and all the best

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

#148
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…

Everyone is entitled to their opinion, but I must say it's very peculiar to me reading the reactions like this one. > 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. Why should neighbors get a say in your legal activities? >Furthermore, home owners will discover that having people travel alongside their homes to reach…

> Why should neighbors get a say in your legal activities?

This is one reason why there are different layers of rules on what a property owner can do - zoning laws, building codes, ordinances, community rules. Neighbors get a say because what you do on/with your property can significantly affect your neighbors. When one property owner does something that adversely affects a neighbor, that sometimes leads to conflicts which play out in courts or councils.

If you want examples of how neighbor disputes result in new rules, just do some searching for "neighbor dispute". You'll find some amusing, scary, and even baffling cases.

And with regards to living in close proximity to others, that is something that you know before you choose to live somewhere. It's not usually something that suddenly changes. You may have a quiet neighborhood with relative privacy. When your neighbor uses their back yard, it's perfectly reasonable. You know or quickly learn how many people live on each side of you, and you acclimate to the level of traffic/activity around you. And judging by your research and what you experienced during early viewings of the property, you decided whether you were comfortable with that level of activity. But now your neighbor(s) are adding ADUs, potentially doubling the number of people living around you (and correspondingly doubling the activity and traffic).

> I would certainly hope so, these are human beings not indentured servants

Do your neighbors normally walk between the houses to enter their own house via the back door? Probably not. Will the ADU renters be walking through their landlord's house to reach their ADU in the back? Probably not. And chances are, your house is fairly close to your neighbor's house.

Prior to the ADU situation, you probably didn't have much foot traffic, particularly late at night, alongside your house (between yours and your neighbor's houses. But now you have one or more people walking between the houses, by your bedroom window, as often and at whatever time as they want. You might have made a difference decision regarding buying your house if you had known this would be the case.

This is a bit similar to the hoopla when Waze first became popular. Occasionally a quiet neighborhood with small, low traffic roads would become a major thoroughfare because Waze routed people around large road traffic and through your neighborhood. Residents were quite disturbed.

Now think about property crime. It's very easy to steal or vandalize property, but it isn't a problem in many areas because the people living in those areas become familiar with their neighbors and people's patterns of behavior. And when someone notices something peculiar, they may contact a neighbor (or the police) to ensure that everything is ok.

Increase the population in the neighborhood (and especially add new traffic paths which specifically involve entering people's back yards), and you have greatly increased the difficulty of residents having a sense of what activity is normal and what is potentially criminal.

Yes you can return to the apartment or high occupancy argument, but areas of high occupancy have already adapted or built in behaviors to help prevent crime. Usually it involves more walls, less windows, more locks, more isolation. These aren't reasons why people typically buy a home with a yard.

I frankly don't care if people do this ADU thing or not. I'm just pointing out that it will be a change with significant impact that many people will not expect. This will change the character of neighborhoods from places where people settle and live to places landlords buy because of the rental opportunities. You'll have higher turnover of people in the neighborhood. It will essentially turn a traditional neighborhood into an apartment block with extra lawns. I promise you'll see groups with good financing buying up these homes to rent (and to rent the ADUs in the back) more than you'll see regular (non-landlord) people coming to enjoy the kind of life that apartments don't provide.

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

#149
Do NOT do this in SF! ANY building, including illegal in-law units and backyard buildings (ANYTHING occupied) is recognized by the city. A single-family home with any other unit is seen by the city as a multiple-unit building, and the backyard renter would have eviction protection. (In SF, “eviction protection” means leases never expire, only shift month to month). Do you want someone to move into a random shack in your yard and then have legal rights to remain there indefinitely?

This company is a nightmare waiting to happen.

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

#150
post #106

this should do wonders for the housing crisis, outstanding work guys. edited: its so fitting that on the front page right now there at least two other stories covering real estate and the housing crisis

Growing up on the East Coast, I was confused when I first visited the Valley and learned about how expensive housing is. People that don't work for big tech companies can't afford to live here anymore and even workers just starting out at Google are spending >30% of their income on housing. I'm afraid of what that means.

I was actually being sarcastic, I think this is a really bad idea. Sorry man, I see that you're one of the cofounders, I just don't believe this is will help the situation at all. Fwiw I lived for several months in SF, in the tenderloin, stacked in a room usually with at least four, sometimes five other people.
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