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

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

haha was looking for that. My first thought on reading the headline was London. Shed renting is actually a thing there. Next though...SF

But yeah - I totally think this has legs. I live in a smaller more modest space than I could afford. Works for me.

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 rent out your "apartment" / unit in your backyard. Or you can use it for your own purposes.

I would guess it's a fairly good investment, with returns of money invested in the 6-8 year range, at least in the current economic climate of the Bay area.

The "loan" part is tricky: any financial institution would want to put a "lien" on the property (essentially, you can't change ownership or sell the property until you remove the lien, which means until you have repaid the loan).

If you do this with "Rent the Backyard", or by yourself, it means your house can't be sold until you pay the loan.

It also means that potentially not all homeowners will be able to obtain a loan from a financial institution.

I examined this business model in depth in the past (while founder at fabrica.city), and decided it was not interesting. But I hope these guys prove me wrong and succeed.

Zoning is very expensive and with lots of requirements (affordable housing) that has slowed increases in supply, further pressuring prices up.

One loophole is the ADU loophole. Basically, no rich town wanted to allow smaller or cheaper housing (existing owners want to preserve things as is) despite tons of lipservice.

State came in and now you can in many cases create an additional dwelling unit (not too big, one floor etc) in your property EVEN if each additional dwelling unit is supposed to have 6,000 square fee of lot size (R-1 zoning).

6,000 square feet is crazy expensive in SF. See here: ($2M for 3K square feet of just land) https://sf.curbed.com/2019/3/25/18280993/empty-lot-glen-park...

Be interesting to see how these folks do.