
Rent the Backyard (YC S19) wants to build a studio apartment in your yard - meanie
https://techcrunch.com/2019/07/18/rent-the-backyard/
======
quickthrower2
I don't like the idea of taking a free and simple house, which you can sell,
and myring it in a contract with another company (no less a startup!) so that
when I want to sell, I need to explain the agreement I have with this other
party to annex the land. I reckon it would devalue the house.

I think people would be better off borrowing the money and building their own.
Where I live (not in US) you might spend say $100k or more building one of
these, but without necessarily adding capital value to your house, so you'd
break even on your first $100k of rent, after tax. So even building your own
may not make sense. The many reason for building on is as a 'granny annex' or
a place for your parents to live so you can help them out. Or a place for your
kids to live when they move out.

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

~~~
Empact
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 supervision will do, which can be
manageable even with full-time employment. You may have better ways of
spending your time, but let's not use that as a basis for overly-narrowing our
own concerns and capabilities.

~~~
quickthrower2
Why do you have to supervise the work of the trades but not this startup? Why
are they more trustworthy? If they are ... then you can probably get someone
else who is trustworthy to do the job for straight money rather than owning
part of your house.

If this startup did what they did but just arranged finance as a broker and
acted as a letting agent I think it’d be a better deal. The issue I have is
the splitting ownership and income. I don’t think that’s in anyone’s interest.

~~~
Empact
In one case you’re hiring the work yourself, in the other case you’re bringing
on a partner who is sharing in the rewards. In the latter case the incentives
are better aligned.

“Not to oversee workmen is to leave them your purse open.” — Poor Richard’s
Almanac

------
ozten
Seattle has an innovative project called the Block project which puts a tiny
home into a volunteer's back yard.

Candidates are homeless individuals who have been working with social workers
for at least 6 months and are a good fit with the "landlord" which is the
homeowner of the hosting site.

The Individual pays minimal rent to cover utilities (hopefully subsidized via
the government and facilitated by social workers). The lease is for 5 years
with the goal of helping the individual get back on their feet to a
traditional housing situation. The project is from the Facing Homelessness
organization. They have placed 4 or 5 individuals at this point.

[1] [http://the-block-project.org/home](http://the-block-project.org/home)

[2]
[https://www.facinghomelessness.org/index.html](https://www.facinghomelessness.org/index.html)

~~~
ianai
What does the homeowner get out of it?

~~~
sfshaw
A human being doesn't have to live on the street.

------
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 !

~~~
martin-adams
I'm from the UK so probably have limited understanding of the US housing
regulations. But after reading your FAQ, I was left with the following
questions. While I don't need to know the answers, they give an insight in to
what went through my mind.

1\. What happens if there are no tenants?

2\. What laws/insurance/responsibility is now applicable as being the
landlord?

3\. How do you calculate the price of the house in a sale?

4\. What happens if I go bankrupt?

5\. What if I have a mortgage on my current property?

6\. Who is technically the landlord, me or Rent the Backyard?

7\. What about electricity, plumbing and sewage?

8\. What about breakages to the property and general maintenance and upkeep?

9\. Are they furnished or not, and if so, who furnishes it?

10\. What are your fees to pay for the service and bills to make the
difference between earnings and cost to the tennant?

------
Mizza
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?

~~~
m463
I think of the long-term solar contracts that make it hard to sell a house.

~~~
offsign
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.)

~~~
ygjb
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.

~~~
sburl
A lot of people we've talked to have been in this exact situation. Older folks
who have lived in their home for a long time and watched the cost of living
rise while remaining on a fixed income from something like Social Security.
Our hope with Rent the Backyard is to help people like this remain in their
homes and have a higher quality of life.

------
blunte
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 reach the rented studios will be unpleasant and unsafe.

Will the tenant be allowed to come and go at any hour? Will the home owner
know that the person creeping alongside their bedroom window at night is the
tenant rather than a burglar?

Will the tenant be allowed to park in the homeowner’s driveway, or will they
line the front curbs of the house with their car and any visitors’ cars?

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

We're very much focused not taking the Uber approach. We're working within the
context of a set of laws California has passed over the last several years
that establish and regulate what the state calls "accessory dwelling units"
aka ADU. We're initially focused on building in cities like San Jose that have
factored the sustainable and conscious development of ADU into their thoughts
on how to combat the housing crisis they face.

4300 ADU were permitted and built last year in California with hundreds of
these units being built in the Bay Area
([https://www.sfchronicle.com/bayarea/article/Are-accessory-
dw...](https://www.sfchronicle.com/bayarea/article/Are-accessory-dwelling-
units-an-answer-to-Bay-13776416.php)).

We're really conscious of the impact we'll have on the neighborhoods we
operate in and are committed to working with everyone involved to make the
process of installation and ongoing housing have a minimal impact. Our studio
apartments are almost completely built when they arrive in your backyard and
require very minimal (a few weeks if not days) to bolt together and be ready
to go. We're excited to see California have strong laws to protect neighbor's
privacy and rights as well and will go beyond what is required by those laws
when it's the right thing to do.

~~~
blunte
Hi Spencer. I applaud you for trying to formalize and refine that ADU process
(for the goal of helping people find affordable housing).

The California market might be suitable for this, but that market is unique in
many ways. I wonder how this can scale beyond CA (perhaps that market is big
enough...).

Given the alternatives to unaffordable housing, I see the appeal. But as other
commenters have noted, this need exists because of a very warped localized
economic situation. The real problem may not be solved, but eventually there
will be some shake out (such as vast numbers of people deciding it's not worth
living there) that will help to normalize things. When that day comes, your
business model will be less relevant.

Cheers and good luck.

------
Havoc
>In places like the Bay Area

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.

~~~
walshemj
yes for slum landlords which is all very well until you get busted by the
authorities.

~~~
sjg007
I think England is notorious for slum lords and that tenants have very little
legal protections.

~~~
C1sc0cat
London is notorious for this packing 3 or 4 guys into a ramshackle unsanitary
garden shed.

------
DoreenMichele
I approve this startup.

This is in line with the idea of Missing Middle housing. We used to have more
rooms for rent, SROs, small houses etc. Then we largely zoned and regulated
them out of existence. The ones we still have are often very old and
grandfathered in.

We desperately need to solve the housing supply problem. Government not only
can't solve it, it really shouldn't try. It should be looking to deregulate
some and get out of the way.

I've studied this problem space for a lot of years. Government interference is
part of the problem.

I don't want a nanny state that tries to provide for all your needs. I would
like to see single payer healthcare, but for the housing sector, I would like
to see government work on being less controlling and less interfering and let
the private sector have maneuvering room to handle this.

I wish this company all the best and much success.

------
smt88
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.

~~~
kspacewalk
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.

~~~
smt88
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.

~~~
sburl
People definitely use traditional home equity loans to build ADUs but this can
be quite risky. There are more full-stack providers (like one of our building
partners [https://node.eco/](https://node.eco/) who's headquartered in
Washington State) which make the process a bit less nerve-wracking, but it's
still a lot of time, effort, and risk.

------
JMTQp8lwXL
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...](https://www.washingtonpost.com/business/2019/02/21/are-you-city-
with-growing-number-high-income-home-
renters/?noredirect=on&utm_term=.52d9b83f72bb)

~~~
iancmceachern
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 fitting word I think.

~~~
nradov
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.

~~~
JMTQp8lwXL
Fortunately, most of the property cost when you purchase in California is for
the land, not the structure that sits on it.

------
barli
What prevents a homeowner to go directly to:
[https://node.eco/](https://node.eco/) or
[https://livemodal.com/](https://livemodal.com/) and do it themselves?

~~~
bbakerma
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.

------
madiathomas
This can be a huge success in South Africa. Backrooms are very popular in big
townships and provide residence to more than half of townships' population.
The good thing is that the laws already allow such kind of dwellings and you
won't have to deal with NIMBYs. Best of luck.

------
staunch
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.

~~~
stcredzero
_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:
[https://www.shelterkit.com/gallery.html](https://www.shelterkit.com/gallery.html)

~~~
staunch
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?

~~~
stcredzero
What if an Amazon company started putting together such kits? Perhaps there
would be a way this could be done for small margins, sort of as a no-loss-
leader to generate more Amazon customers?

------
AnimalMuppet
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?

~~~
sburl
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...](https://www.sfchronicle.com/bayarea/article/Are-accessory-dwelling-
units-an-answer-to-Bay-13776416.php)). These laws cover everything from
parking, to setbacks, to privacy requirements. We'll go beyond what is
required by those laws when it's the right thing to do.

These new laws have led to an explosion of building. 4300 of these units were
permitted in California last year with 187 in the City of San Jose -- our main
focus to start.

We love dogs too but this is definitely an issue. Ultimately, this is a
product you'll have to decide works or doesn't work for you :)

~~~
AnimalMuppet
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...

~~~
emerongi
In my country (not US) it is by law allowed for either side of the lease to
terminate it under extraordinary circumstances.

This situation would certainly fall under that. Obviously, if the other party
objects to the termination, you'd need to get some sort of medical
verification for your condition.

------
dpflan
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.

~~~
simonebrunozzi
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 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.

~~~
stcredzero
_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?

~~~
sburl
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)

------
crimsonalucard
In the bay, rent is so high this makes no sense. Why would I give away 50% of
rent for something that can pay off my investment in one to two years? Even
with the headaches 50% is not worth it. 20% maybe.

~~~
sburl
Unfortunately, a fully-featured unit is really expensive. For a unit like the
ones we build (full bathroom with shower, kitchenette, on a full foundation)
you'd be hard-pressed to build a unit for less than $100k. This number assumes
you're spending a whole lot of your time working on the project. People are
building these units and we're excited to see the stock of housing rise in the
Bay Area but most people won't make the jump to borrow the money on a home
equity line of credit and become a part-time construction manager.

~~~
jaclaz
Ok.

Can we have a (minimal as you want) financial plan?

I mean, let's say that the building (by a professional contractor, with
architect/engineers/whomever professional assistance, with all permits, etc.,
i.e. "turnkey") is going to cost to a "normal" person US$ 120,000 (or if you
prefer 20% more than your $100K (which sounds to me appropriate, probably
something in the 50-60 sqm or 500-600 sqm net surface).

Example of such an ADU:

[https://crossconstruction.com/wp-
content/uploads/2019/03/Des...](https://crossconstruction.com/wp-
content/uploads/2019/03/Design-Path_1bd-1ba.pdf)

How much is the expected income (rent - taxes) per year? US$ 20,000 per year
or 1,600 US$/month?

How much is the rate of the mortgage if you "simply" borrow the money from a
bank? (let's say a minimal down payment of 10,000 and thus a loan of 110,000)

It should be (roughly) anything between 500 and 600 US$/month for a 30 years
mortgage (fixed rate), let's make it 7,000 US$/year.

Besides the downpaynent of 10,000, at fixed prices (which is likely NOT the
trend for rents in an area where people resorts to living in ADU's) you get
1,600 US$/month, spending 600, i.e. a net of 1,000 per month, so first year
you get nothing (to compensate the down payment) and for the remaining 29
years it makes US$ 377,000 (29x(20,000-7,000).

With your formula, it is 30x10,000=300,000.

But - IF the rents ar going to increase in these 30 years - the difference
will soon become _huge_.

------
daenz
If there is demand for this, more power to them. However, I feel existential
dread considering that demand for this exists (and is potentially growing).

------
whileyoureup
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.

------
mirimir
It's a cool idea, for sure. Both for creating affordable housing, and for
increasing the affordability of existing housing.

But as others note, there could be major complications at sale. Especially if
the apartment doesn't increase the market value enough to cover the buy-out
cost.

Wouldn't it be more straightforward to just build pads and hookups for
trailers? Or even for RVs? That'd be much easier to untangle at sale. And it'd
probably cost less.

Perhaps the startup could convert shipping containers to apartments. I've read
about German ~gypsies that do that.

------
anonymous5133
This has been happening lately in my area of Orange County, CA. There is an
investor here who has been buying up single family residences with large
backyards and then the investor puts these "granny flats" in the backyard to
rent them out. The average buyer will simply see the property as a 3bed/2bath
with a large backyard for 500k while an investor will see it as 3bed/2bath
with a large backyard with opportunity for expansion....well worth more than
500k listed market value.

------
dangerboysteve
A couple of things to consider for the homeowner, increases in property taxes
and insurance but also the taxable revenue from the rental and its impact on
personal taxes you will have to pay. And then there is resale value for a
property that is locked into multi year agreement.

~~~
opportune
>increases in property taxes

Not an issue in the bay area

>the taxable revenue from the rental and its impact on personal taxes

Progressive income taxation should make this moot. Also many expenses are
likely tax-deductible. Combined with FHA terms, mortgage interest deduction,
etc. and this is actually rather tax-advantaged over regular rentals

~~~
refurb
_Not an issue in the bay area_

Why not?

Prop 13 protects the homeowners from higher taxes if the property appreciates,
but as far as I know that doesn’t cover renovations.

Otherwise you could buy a beat up $1M, year it down and still pay the same
taxes.

~~~
sburl
The way this works with ADUs is a blended approach. The existing home's tax
status is protected by Prop 13 and the ADU as a structure is appraised. While
adding an ADU adds considerable resale value to a home, tax assessors don't
typically value them that highly. It's also worth noting the ADU also becomes
protected under Prop 13 after the initial assessment
([https://maxablespace.com/granny-flat-tax-
implications/](https://maxablespace.com/granny-flat-tax-implications/))

------
davidw
Yes in my back yard!

~~~
sburl
We thought about calling the company this :)

------
jspash
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.

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

~~~
sburl
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...](https://www.curbed.com/2017/6/21/15839730/shipping-container-
house-for-sale-buy))

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](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.

------
Uptrenda
Do it, and innovate real estate investing too. Fix those crappy contracts and
low liquidity markets. Make it easier to move capital into these markets.
These units could solve so many problems

------
dtornabene
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

~~~
sburl
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.

~~~
dtornabene
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.

------
notindexed
© Clarus the dogcow

------
supernova87a
If this isn't reflective of an abject failure of local/state government and
public policy to plan and manage the needs of housing and population growth, I
don't know what is.

Tech companies now employ people, feed people, transport people, educate
people, and now they house people. Pretty soon we'll be voting for which tech
company governs our society.

All the while gutless local city council members afraid of losing their jobs
cower before homeowners, the landed gentry, the rudderless symbolic issues of
anti-gentrification and anti-neighborhood change, at the expense of everyone
who had the bad luck of being born later and not having gotten theirs yet.

~~~
stcredzero
_If this isn 't reflective of an abject failure of local/state government and
public policy to plan and manage the needs of housing and population growth, I
don't know what is._

It's not a failure of local/state government. It's an encompassing failure of
society at large. We keep passing NIMBY laws. Society becomes ossified.
There's no longer anywhere for the next generation to settle down.

 _Tech companies now feed people, transport people, educate people, house
people. Pretty soon we 'll be voting for which tech company governs our
society._

Aren't we already voting with our dollars? In a way, it's like our society is
becoming the one described in _Snow Crash,_ just with Silicon Valley
aesthetics, as opposed to the cyberpunk take on 1990's strip malls. The US
government is losing credibility. Everything is privatized and up for sale or
lease. Want a better jail cell? Offer the jail franchise your credit card for
an upgrade!

 _" What's it gonna be, the Hoosegow or The Clink?" the first MetaCop says.
From the way he is talking, he must be talking to the other MetaCop._

 _" The Hoosegow, please," Y.T. says._

...

 _The Hoosegow looks like a nice new one. Y.T. has seen hotels that were worse
places to sleep. Its logo sign, a saguaro cactus with a black cowboy hat
resting on top of it at a jaunty angle, is brand-new and clean._

    
    
                       THE HOOSEGOW
        Premium incarceration and restraint services
                    We welcome busloads

------
astrodust
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?

~~~
bbakerma
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."

~~~
l4yao
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?

~~~
sburl
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.

~~~
chuppi
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

------
YeGoblynQueenne
So this is Uber but for backyards?

Any moment now someone is going to come up with Uber, but for toilets. I can
see it: it'll be called something like Petey Potty, the app will let you
connect with Potty Providers and you'll get to use their toilet for a fee. The
company will have an ostensible plan of making money by taking a cut off the
Potty User fee, and charging a standard fee to Potty Providers. It will be
wildly popular in dense urban areas and business districts where it's hard to
find a public toilet and around kebab places and it will be hailed as a
lifesaver for individuals with Krohn's disease who need to be able to access a
toilet with very little warning. There will be an article in Wired and an
outraged article in The Guardian (there will be outrage, no questions). The
company will lose money for the first ten years of its existence, then it will
be sold to Uber, probably, or possibly Yelp.

Oh and- there will be a review system on the app. With five little smiling
turds rather than stars.

~~~
ZhuanXia
This is the comment you want to make on a board dedicated to startups?

If a startup can gain power and then lobby to change zoning laws, even if they
do it in a self serving manner that locks out competition, it would be such a
vast improvement it is hard to calculate.

The deadweight loss of zoning is huge.

This is a far more ambitious idea than Uber. I imagine it will fail as the
majority of voters own and they vote to immiserate others so their property
values remain inflated.

Your comment is gross. The sentiments within it are nothing but regressive,
mocking sneers.

------
Causality1
>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.

~~~
bbakerma
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.

~~~
Causality1
Oh I don't mean to say it doesn't make sense, both in terms of personal
finance and with regards to the housing market. Then again, so does letting
people sell their own kidneys and livers for transplant.

>Rent the Backyard will give the homeowner an increasing share of equity in
the apartment, until they own it completely after 30 years

What's the life expectancy of these backyard studio apartments? Somewhere
around, oh, thirty years?

>Homeowners also can buy out the startup’s equity and take full ownership at
any time (which they’ll need to do if they sell their home and move out).

I'm assuming there's some legal way to transfer the entire contract to another
person, so you could sell your house and property along with your stake in the
a-yard-ment and the new owner takes over where you left off. Having a renter
will lessen the likelihood of having to sell for financial reasons but a good
chunk of home sales are prompted by owner becoming unable to keep up the house
or live alone in general, due to age or illness.

How's the agreement work with other stuff like use of the yard itself and
other stuff that might be concerning like loud music, changes to the fencing
setup, planting of flowers the renter is allergic to, etc? Not just for the
homeowner, but for the renter. I can imagine many of the owners, having had to
put very little work into this, really not giving a crap about their renter or
her/his needs.

>What we are doing here is finding a synergy

C'mon man. Your picture doesn't feature nearly enough 80s power tie for you to
talk like that.

~~~
sburl
We build units that are just as nice as your existing home. With proper
upkeep, they'll last just as long too.

This was something the article didn't quite get right. You're able to pass
this agreement on to a next of kin or new buyer. We'll even lower the priority
of our lien to allow a mortgage to be issued.

You're right that one of our hopes is to enable people to stay in their homes
amidst the rising cost of living. The income from this unit can be used to
hire a caretaker or even enable the homeowner to downsize in place -- moving
into the ADU and renting out the main home. In this scenario, the homeowner
would just need to pay us half the market rent.

Finding a balance between renter and homeowner is a big concern of ours. The
scale of the difficulty depends a lot of times on how much space there is on
the lot. Most of the time we'll build as far from the main home as possible to
help preserve privacy and independence but there's still a balance to find. We
have an expectation for homeowners and renters alike to be reasonable and we
don't want to need to enforce that with a contract but setting clear
expectations and methods of recourse are important.

I don't think I've ever seen Brian wear a tie ;)

