4 ms·

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 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 7y ago
Who has time to manage a construction project? Just show me where to sign and send me my monthly checks.
- Empact 7y ago
  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 7y ago
    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 7y ago
      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
  - Balgair 7y ago
    I've personally built a few of these granny units in the East Bay over a few summers. It is very DIY-able, but it is faaaaar from simple to do yourself. If you go the contrator route, you had better know the crew personally as supervision is not turn-key. One example: The concrete pad. You must know the size of the pad. Then, you have to take soil mesurements for moisture and compaction. If you do not do this, your pad WILL crack as the center's moisture and it's volume changes relative to the soil outside the garder. This is especially a concern in South Bay clay and loam soils. There are many many Levitt-town style houses that are experiencing pad issues. These issues cause the building to shift. Doors will not close, gaps appear in walls, etc. This can happen within 5 years of the pour. Rebar must be tied off at each interesction, otherwise the pad will shift even more so. The garder on the pad must be 24 inches deep. Depending on the size of the building and the load on the pad (which is estimated beforehand) you have to tie the building into the garder with steel hooks (min 0.5' diameter, at least 12' into the pad) due to earthquakes. Concrete's drying period is dependant on a lot of factors, but weather is a big one. Before further construction occurs, the drying must be completed correctly. Actually getting the equipment, tools, and personel to the site is another headache too. Ok, got that very slimmed down list off the top of my head? Those are just some of the issues with the pad. Multiply that throughout the entire build and there are a lot of little problems to solve and they have very big effects in 5 years time. So, if you decide to trust your contractor, you had better really trust your contractor. These issues are not simple and there are a LOT of corners that can be skimped on without you knowing.
- kevinyun 7y ago
  Reminds me of this legendary comment: https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224 Although I appreciate some of the argumentative counterpoints, most of the time it's from people who underestimate how lazy human beings are, and that people are willing to pay for simple services
  - anonymous5133 7y ago
    Exactly. The biggest mistake people can make is to assume that just because you would do it a different way....that automatically means everyone else would do the same. Not the case. Obvious example is pretty much everything on amazon is marked up 25% compared to the next biggest competitor (gotta love the "free" prime shipping, right?) but people pay up because amazon will get you your stuff in 1-2 days while Ebay will take 5 days or longer. People will pay for convenience and they will pay a lot for it as well.
    - Cthulhu_ 7y ago
      Not only convenience but also an amount of trust - IIRC Amazon isn't difficult at all wrt returns, whereas with ebay - as far as I remember it - it's all up to the buyer / seller to handle it.
- quickthrower2 7y ago
  There are existing companies that will manage a construction project. Plus if you are doing this for the money you might want to shop around for a few quotes. Send me the cheque’s is fine and I understand (I’ve used Adsense before!) but this affects the house you live in and for most people their biggest asset. so a bit of forward thinking is wise here.
tbyehl 7y ago
Worse than that, the article states that you have to buy them out as part of a sale. My house has an ADU and came with paying tenants. Zillow thinks my place is worth about $30K more than the average on my street... but I also have a pool (couple others do) and am the only one with a legit 5th bedroom, so I'm thinking the market value of that ADU is roughly nothing.
- tbyehl 7y ago
  As another piece of anecdata, my previous home had a spacious and nicely finished detached garage in addition to a single-car attached. It values the same as other similarly sized homes in the subdivision without a detached garage. It definitely had value to me as a workshop/office/man-cave, but not-so-much the market at large.
  - davnicwil 7y ago
    Interesting. I sort of struggle to imagine anyone who wouldn't value an extra garage at anything - even if your need for it is just hypothetical or aspirational - or even just as cold storage space, which has not insignificant rental cost should you need it.
    - tbyehl 7y ago
      Well, I'm no expert, but for the vast majority of people a detached storage space probably isn't even on their shopping list. And for most who put some priority on storage space it will be fungible with an attached garage or full / partial basement, which are much more common. And it never comes down to these two homes are exactly equal but for the ADU. Logically, an ADU absolutely should be worth something but I don't see it reflected in my limited experience buying two properties with ADUs, one of them income-producing. Might be different for a rental ADU somewhere highly constrained on housing, but my rent-to-home-value ratio is comparable to what's being discussed here, too.
- nradov 7y ago
  Zillow estimates are not to be taken seriously in circumstances like that. The point would only be valid if the valuation came from a professional appraiser.

gxespino 7y ago

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

Empact 7y ago
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 7y ago
  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 7y ago
    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
- Balgair 7y ago
  I've personally built a few of these granny units in the East Bay over a few summers. It is very DIY-able, but it is faaaaar from simple to do yourself. If you go the contrator route, you had better know the crew personally as supervision is not turn-key. One example: The concrete pad. You must know the size of the pad. Then, you have to take soil mesurements for moisture and compaction. If you do not do this, your pad WILL crack as the center's moisture and it's volume changes relative to the soil outside the garder. This is especially a concern in South Bay clay and loam soils. There are many many Levitt-town style houses that are experiencing pad issues. These issues cause the building to shift. Doors will not close, gaps appear in walls, etc. This can happen within 5 years of the pour. Rebar must be tied off at each interesction, otherwise the pad will shift even more so. The garder on the pad must be 24 inches deep. Depending on the size of the building and the load on the pad (which is estimated beforehand) you have to tie the building into the garder with steel hooks (min 0.5' diameter, at least 12' into the pad) due to earthquakes. Concrete's drying period is dependant on a lot of factors, but weather is a big one. Before further construction occurs, the drying must be completed correctly. Actually getting the equipment, tools, and personel to the site is another headache too. Ok, got that very slimmed down list off the top of my head? Those are just some of the issues with the pad. Multiply that throughout the entire build and there are a lot of little problems to solve and they have very big effects in 5 years time. So, if you decide to trust your contractor, you had better really trust your contractor. These issues are not simple and there are a LOT of corners that can be skimped on without you knowing.
kevinyun 7y ago
Reminds me of this legendary comment: https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224 Although I appreciate some of the argumentative counterpoints, most of the time it's from people who underestimate how lazy human beings are, and that people are willing to pay for simple services
- anonymous5133 7y ago
  Exactly. The biggest mistake people can make is to assume that just because you would do it a different way....that automatically means everyone else would do the same. Not the case. Obvious example is pretty much everything on amazon is marked up 25% compared to the next biggest competitor (gotta love the "free" prime shipping, right?) but people pay up because amazon will get you your stuff in 1-2 days while Ebay will take 5 days or longer. People will pay for convenience and they will pay a lot for it as well.
  - Cthulhu_ 7y ago
    Not only convenience but also an amount of trust - IIRC Amazon isn't difficult at all wrt returns, whereas with ebay - as far as I remember it - it's all up to the buyer / seller to handle it.
quickthrower2 7y ago
There are existing companies that will manage a construction project. Plus if you are doing this for the money you might want to shop around for a few quotes. Send me the cheque’s is fine and I understand (I’ve used Adsense before!) but this affects the house you live in and for most people their biggest asset. so a bit of forward thinking is wise here.

tbyehl 7y ago

Worse than that, the article states that you have to buy them out as part of a sale. My house has an ADU and came with paying tenants. Zillow thinks my place is worth about $30K more than the average on my street... but I also have a pool (couple others do) and am the only one with a legit 5th bedroom, so I'm thinking the market value of that ADU is roughly nothing.

tbyehl 7y ago
As another piece of anecdata, my previous home had a spacious and nicely finished detached garage in addition to a single-car attached. It values the same as other similarly sized homes in the subdivision without a detached garage. It definitely had value to me as a workshop/office/man-cave, but not-so-much the market at large.
- davnicwil 7y ago
  Interesting. I sort of struggle to imagine anyone who wouldn't value an extra garage at anything - even if your need for it is just hypothetical or aspirational - or even just as cold storage space, which has not insignificant rental cost should you need it.
  - tbyehl 7y ago
    Well, I'm no expert, but for the vast majority of people a detached storage space probably isn't even on their shopping list. And for most who put some priority on storage space it will be fungible with an attached garage or full / partial basement, which are much more common. And it never comes down to these two homes are exactly equal but for the ADU. Logically, an ADU absolutely should be worth something but I don't see it reflected in my limited experience buying two properties with ADUs, one of them income-producing. Might be different for a rental ADU somewhere highly constrained on housing, but my rent-to-home-value ratio is comparable to what's being discussed here, too.
nradov 7y ago
Zillow estimates are not to be taken seriously in circumstances like that. The point would only be valid if the valuation came from a professional appraiser.