Bay Area start-up Rent the Backyard is making new room in dense cities by collaborating with homeowners who've got a little extra acreage. The company will install a prefab studio apartment on unused land behind your home, handle all the permitting required to do so, find a worthy tenant to rent the unit, and pay you 50% of the profits for providing the space—all for zero up-front costs.
They’re partnering with companies like NODE, who make sustainable, carbon-neutral homes that can be installed in just a few days. Utilities will hook up to the property's principal dwelling, and they'll be metered and reimbursed. Participants can expect to add roughly $10k to their annual income (dependent on the going rate for a studio apartment in your city), and cities will get new affordable housing in previously unused space.
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In 2016, California loosened housing laws surrounding accessory dwellings units—ADUs, or granny flats—to face its growing affordable housing crisis. The opened flood gates led to a surge in permit applications—Los Angeles saw a roughly 2000% increase from 2015–2017, and San Jose is tracking to add 100,000 affordable housing units by 2022. Although retrofitting units like garages or basements into rentals was suddenly easier, building brand new ones still faces daunting red tape.
In the Bay Area, Rent the Backyard cofounder Spencer Burleigh watched homeowners shy away from building when faced with permitting problems. "Right now, to build an accessory dwelling unit is a huge process," he says. "You have to talk with the city and deal with the permits. And even if you can find a great builder that is able to do a lot of those steps for you, you’re still fronting a whole lot of money."
The turnkey deal has one caveat: if you were to sell your home, you'd be responsible for paying the remaining equity of the 30-year agreement. Conversely, after 30 years you'd own the ADU outright (unless you paid the remaining equity out of pocket before then).
Rent the Backyard is set to install its first dwellings in the next few weeks. If you own a home, have a 30' x 30' chunk of land to spare, and have dreamt of adding an ADU, this might be your ticket. And yes, you can choose your own tenant, if you'd like. Learn more (and find out what you could make) at Rent the Backyard's website.