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."
Startups take a lot of risks, its in their nature, so bankruptcy is always a possibility. Maybe you have the best intentions, but you're not a big bank yet, and even those have gone bankrupt.
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
