Would you pay 20% more up front for an SB9 eligible lot if you're guaranteed 20% overall profit from living in the residence for 3 years while doing a lot split and sale of the second property?
99% of homeowners could not actually do what you need to do for this densification - the planning, paperwork, and execution to get everything done is very difficult. 20% of net profit in exchange is pretty good actually. You’d need some truly crazy levels (several million+) of pure gain before it would make sense to try it yourself IMO.
I’ve done a decent amount of permitted work and far smaller projects can easily burn a year of nights and weekends.
People sometimes need cash in the bank.
Sometimes theoretical is fine.
And since it takes awhile for a buyer to turn the theoretical value into cash (and risk, and work), the theoretical value is also going to be lower than you might think.
They could do a reverse mortgage, but a lot of people are adverse to those for their own reasons.
Once the market has a consensus.on what the change is, sure; it's fairly speculative what it will be, though; it's not like homes are a fixed price per housing unit and, because who can afford to live nearby also affects value in a positive feedback way (because people pay a premium to not live near poorer people), the relation is not simple or easily predictable.
The riskiest part is extending credit (imho) to marginal borrowers (low to middle class), but the value of the land is proven, so the rest is logistics.
The investment risk would presumably be mostly if the owner moves and the subdivision becomes inegligible. Or of course if they aren’t as good at building as they think and can’t clear 20%, or housing market tanks…
There are tons of places offering this service, they just dont post on HN.
I take it by this you're specifically targeting individuals who can't qualify for a HELOC or other (very common) methods of accessing home equity?
I assume you have data to suggest that "most people" with SB-9 eligible lots are incapable of opening a heloc?
If your goal is to pay for college or buy a boat, HELOCs can be great.
This is super appealing to me because its a path I hadn't considered to becoming debt free with your primary residence, which is a large goal for many people, including myself.
A scaled denser version of the house linked in your post doesn't seem like particularly appealing scenario for individuals, in the long run.
OTOH, I can see the appeal from a pure capitalist perspective. You guys won't be the only ones seeking to take advantage of the new rules, it's not personal and I can't fault you for it.
Most of the homeowners who wanted ADUs were lower income & couldn't find financing (likely not HN community). These are multigenerational households where the children live in the house their parents bought with them and their kids. They work two jobs—their yard is rarely used—no one stopped to mourn it.
They wanted to make money to help lighten the economic burden of living where they grew up, and maybe not work the night shift, or have to provide their own childcare while working full time.
I imagine a large subset of HN and the tech community will not want to lose their yards-and its a free world, we aren't going to take them away!
Most of our team is signed up for our buy product. If you think people you know would be interested, send them our way!
I grew up in a real estate family and while I don't think we personally engage in nasty behavior, I'm all too familiar with the games and schemes people play to get ahead. The large sums of money frequently attract unsavory and selfish actors. It makes for a rather ugly business sometimes, instead of being able to focus on the goal of helping people find a good living situation.
Wish you all the best, we're all stuck on this rock (and more frequently on HN, around the Bay Area) together, whether we care to think about it or not - we're all more connected than we may realize.
true to the name of your startup. consider collective homesteads. high density housing is definitely a sustainable solution, but high density without also scaling infrastructure is a bad idea.
like everything, it is a numbers game. and the only numbers that make sense here is in $$$$ that makes sense for investors and the taxman.
not everyone can own homes. and its ok. building affordable rentable communities that are sustainable is also a laudable effort. and it definitely is a profit maker. first infrastructure, then housing. otherwise, its set up for failure.
and the state of california has a really bad record when it comes to how counties are run. their mismanagement over decades have made the state highly taxed and yet unaffordable to most of the population.
This is a very natural way for cities to develop. So natural, in fact, that it's how every city in the country did develop before planners made that development pattern illegal via zoning. SB 9 isn't some kind of radical new way of doing things; it's a partial unwinding of rules that prevented the kinds of development that occurs when the market is allowed to meet the demands of buyers and sellers.
At some point in Providence's history they changed the rules here, too. My building is "non-conforming." It'd be illegal to build a two-family home on this lot today. Further, my building has a generous side lot, which was at some point combined with my own lot into one, leaving a conspicuous gap between my house and its neighbor. I would love to sell this land to a developer and would welcome an SB-9-style law in Rhode Island.