Came across an article on a recent housing startup that is trying to make rentals more affordable. See link below: https://www.pdxmonthly.com/news-and-city-life/202…
There are a few data points in the article to get a quick sense of the math, but wanted to get your thoughts on the following:
- Im assuming personal homeowners may/ may not like having a moving house in their backyard, but investment properties (but-to-let owners) wouldn't mind. Do you guys think this is scalable at a pretty fast pace? (they currently have 5 units, and expect to get to 900)
- 1/3rd production cost of an actual building unit, do you think opex would be the same as a SFR?
- Insurance costs: Is this a house or an RV? Also assuming no RE taxes and it would depreciate in value?
- What sort of exit cap would you use for this model (assuming 500-900 units in Oregon for simplicity)?
Any additional thoughts?
There is no exit cap. This is an operating co/ mgmt co. Basically the equivalent of buying a trailer park with a short term land lease rather than fee simple land ownership and deciding it is a good idea to own all of the homes rather than lease pads.
This is an oddly convoluted way to achieve a desirable goal.
A much better strategy would be to lobby cities to change zoning laws to allow for accessory dwellings in in-town single family neighborhoods. That way, homeowners can build accessory dwellings and rent them out to lower income families, making some money on the side and also helping to solve the housing crisis. It is wild here in the south how many houses with huge yards are within walking distance, or a short drive, from central business nodes. That's terrible land use.
That way, you can do this all yourself without some startup doofus paying you to park a trailer in your backyard.
BuT hE WeNt To HaRvArD
Okay but good luck getting that approved in Cali/Portland. Also better for who? Single family home owners? The city? This guy?
I think the brilliance here is that he got around the city rules. Long-term strategy should be to change the codes so then he can scale faster. But having a proof of concept will go a long way.
Lots of places have modified their zoning to allow for ADUs, this guy is just taking on the management and capital burden for SFH owners.
I believe they've already begun working on streamlining ADU permitting in CA. We've had more and more mom-and-pop type investors reaching out asking for financing for ADU Construction
https://www.hcd.ca.gov/policy-research/AccessoryDwellingUnits.shtml
While it is better than nothing, I don't know that it will have that big of an effect.. Most people who can afford a SFR in CA are either well off and don't need/want to share their 1/2 acre lot with another family, or are running a slim budget as is and won't want to take out another $150-300k to build an ADU. I'm sure it'll continue but I don't believe it's the single solution to CA's housing affordability issue
I'm surprised there's demand from homeowners to do this for only $250 / month.
Also surprised renters are paying $1,000 / month for 250 square feet. That's the same price / SF as a one bedroom in a nice part of a Tier 2 city. Why pay such a high price per square foot to have so little space forego basic amenities like a toilet that flushes?
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