Startup's answer for high-priced Silicon Valley housing: Homes in backyards

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Make extra crash — right in your backyard?

That’s the proposal from new startup Rent the Backyard. The company is tackling rising home prices in the San Francisco-Bay Area by building backyard studio apartments, and splitting the rental profits with homeowners.

“This is a long-term partnership that we have with the homeowner,” Rent the Backyard Co-Founder Brain Bakerman told Yahoo Finance during a recent interview.

Homeowners can make $10,000 to $20,000 in additional income each year, according to the company.

“We try to make the process as fast as possible for the homeowner,” Bakerman said. He explained the entire operation — from filing permits to completing construction — takes about 4-5 months, at which point “a homeowner can start seeing rental income.”

So what’s the attraction for the person who actually owns the land?

“The homeowner can’t necessarily put up the $100,000 - $300,000 dollars [needed] to build one of these units [but] we can,” Bakerman said.

“It’s a great synergy...and then over the long-term we make our money back,” he added.

Startup builds apartments in homeowners' backyards to offset rising home prices (Courtesy: Plús Hús & Art Gray Photography)
Startup builds apartments in homeowners' backyards to offset rising home prices (Courtesy: Plús Hús & Art Gray Photography)

To qualify, homeowners need a backyard with at least 30x30 feet of space, to live in their home most of the year and to be located in the greater Bay Area.

“We’re starting in the Bay Area, but our plan is to expand to the rest of California shortly then to the West Coast and then nationwide,” Bakerman explained.

The company is currently working on its first batch of backyard units with the goal of permitting 10 apartments by the end of the summer.

“We’re definitely excited about the potential of the future,” he added.

‘Incredibly expensive’ housing crisis

San Francisco home prices have skyrocketed in recent years, largely thanks to an influx of Silicon Valley buyers that’s created a severe affordable housing crunch.

According to online real estate database Zillow, the median asking price for a San Francisco home is $1.295 million with a median home value of over $1.36 million.

And it’s not just home owners feeling the pinch.

The median rent for a one-bedroom, San Francisco apartment is now hitting record highs at $3,720 — beating out notoriously pricey New York City for the highest rent in the United States, according to apartment rental platform Zumper.

“The area is just getting incredibly expensive,” Bakerman said. “We’ve had people who want to do this to fund their child’s college [tuition], supplement retirement or simply just survive in a high rent environment.”


Alexandra Canal is a Producer at Yahoo Finance. Follow her on Twitter:
@alliecanal8193

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