Renting Shed homes

[DAn L.]

I've been building some tiny homes the size of a shed (using the footprint of a shed, so no permit), and so was wondering if I could rent these out to people, for rental income, and if so, what would be a fair price per month?  I can produce 10 at a time.  I've streamlined the process and taken everything out that is not absolutely necessary.  No bathroom (I guess they could use a camping or composting toilet) and no kitchen (can plug in a fridge or hot plate/microwave).  There is no plumbing.  Only electricity that plugs in with an extension cord on the side.  

My first units are on trailers.  After some thinking, I decided to go with a fixed foundation, like the above, because it can be assembled on site in about 3 hours, and you can't get a trailer into a lot of back yards.  

[DAn L.]

Answer to your first question- "yes" and look for my CL ads.  Answer to second question "my suggestion is to 'not ask, don't tell, just do."  You probably won't have any issues, anyway, for years.  Most of my clients have not had issues.  The first one I sold was to a Telsa employee in Sunnyvale.  His sister, a physics student I think, has been living in it for a couple years now.  No permits.  Neighbors haven't complained.  In fact, his neighbor wanted one for a bit (hasn't followed through).  

No permits are required if 120 sq ft (or less) for a 'temporary structure.'   Where things get interesting is when you want to live in it... so I suggest saying "look at my nice shed" and even getting a permit if you want one bigger, and just say "it's for making pottery, and I should have a toilet and shower in it so I don't bring mud into the house."  The city will likely say "yes" and now you have a permitted structure with facilities.  I designed mine to fit into the "no permit required category" but a lot of people are now buying much bigger, however soon I might not be selling them anymore, and just renting them, because that was my original goal, anyway.  

Where else can you essentially add an additional bedroom for so cheap?  Turn a 2 bedroom into a 3 bedroom?  It surprises me that so-called "real estate investors" haven't figured this out.  They so much fear "the man."  

I know exactly what are talking about regarding the recent 2016 law change allowing for "Accessory Dwelling Units."  It's actually a revision of a 30 year old law!   Honestly, in my opinion, this too is a waste of time, because it comes a little too late.  30 years ago, the law allowing for "granny flats" was first enacted, as a State law, over city code, but the city's all figured out ways to block it, like saying "you don't have enough parking."  Apparently this was the favorite tactic.  The State legislature knew about the problem of housing affordability 30 years ago, then revisited it, giving it more "power" 15 years later, and only recently enacted this new law that took away a city's right to say "sorry, you don't have enough parking spaces," and essentially block grandma from having her own tiny house to live out her years, while the kids live in the main house.   "No permit for you!" translates into "no affordable housing for a lot of people."  And here we are, needing millions of apartments yesterday, and most backyards being used for nothing. 

Were people still getting their "granny flats" (today "ADU's") built? Yes, by SUING THE CITY. People could get it done, but who wants to fart with suing their own city? That's scary to most people. Meanwhile, The Fair Housing Act, a federal law, essentially bypasses all of that garbage. You basically "just do it," and if it's "discovered" later (i.e. a nosy neighbor calls the or city finds out some other way), you just ask for "reasonable accommodation, in light of disability" and carry on. I'm more of a "better to ask for forgiveness than permission" kind of guy, so I'm of the opinion that it works better WITHOUT permits, WITHOUT asking for permission, and getting someone moved in as quickly as possible, BEFORE the nosy neighbor calls the city to "investigate" your goings-on in your back yard, because once moved in, to get the person out is an eviction or "ejection" process, and that's much harder than prevention. Code enforcement goes home at 5, like most bureaucrats. And they don't work on weekends. My sheds go up in a matter of hours.

Asking for reasonable accommodation with a simple 1 sentence mailed letter essentially turns the table on the city in the federal sense, where now instead of you proving to the city that what you are doing "follows the code" now the city must PROVE that THEY are being "reasonable" in handling your particular situation (in law they call this a "fact issue," and is particular to each case, as opposed to city code, that is "general in scope," and so "fact issues" must be decided by a jury) and that their permitting process is "reasonable" for you to work your way out of the situation  (for instance, the permit fees alone for building a house in places like the Bay Area can easily top $50k, and that's before turning a single shovel of dirt.  Who's grandma on social security has $50k lying around to pay for building and sewer permits, when you can put up a livable bedroom space, in the form of a shed, for less than $10k?

I'm not a lawyer (thank God), but what I suggest to people now is "just do it, and have your doctor's note ready, documenting your migraine disorder, anxiety disorder, or in one case, the existence of your child's autism/ADHD, who needs a special place to call his own, or a place for mom to do her work." This works on landlords, too, by the way, so good for you to be aware, in case you get one of these letters- it requires you to "have a conversation," to "be reasonable for the particular circumstances..." As in the aforementioned dog for the girl with cancer- let her have the damned dog, because it will cost you a lot more to fight than to "be reasonable," because you WILL lose, and the fight itself costly...do you have the Department of Justice fighting your case for free? I think not, and it won't be a cheap fight. And getting investigated by HUD is not fun, either.

  And it gets better- you don't have to DISCLOSE the type of disability, or give them a copy of the medical record- HIPAA rules!  It's a PRIVATE medical record, and "no, you do not get a copy....but I will flash it to you from 20 feet away so you know it exists."  Banks do this same thing all the time in court when a demand is made for a mortgage note- "show me the original note."  The bank's lawyer presents it to the judge, and plaintiff, and then it goes back in the lawyer's briefcase, because it's valuable.  

In a living person's case, medical records are private, and giving details about the color of your poop from your bowel disorder is really nobody's business but your own and that of your doctor (or in the case of mental health issues- your therapist- because a note from them counts, too! As long as they are licensed!). Study some of the pet cases, for "therapy animals," because they DO count. "Oh, that's silly," you'll say. Ok fine. Just keep doing what you're doing. You're right, but these new laws were enacted in California for this very reason, yet it is still not enough (if you want to learn more about them- check out Lilypad homes and ADU's, or the history of the new law, it's interesting back story...Get back to me when you come up with something better that actually does work, and doesn't cost $200k to just build a "tiny house, with permits." Who can afford that, these days? I grew up in the Bay Area, I know all about affordable housing issues. And yes, there are a bunch of my sheds all over the Bay.

But still, it was a lady in Petaluma, named Sonia (Talejin?), who knew about the FHA, and you can thank her and a few of her friends for paving the way on FHA for disabilities if you DO want to have a "tiny house" or "reasonable accommodation" in your backyard. It's now in the city building dept rules...if you ask, but don't expect them to advertise.  In Petaluma, for instance, she lives in a tiny house on wheels and pays, I think $500 a month rent to the homeowner AND she has a permit to "legally" live there, with the city's blessing.  She pays a $600 per year permit fee (a ripoff IMO), and had to pay about $10k out of pocket to run a "pump uphill" sewer line to the homeowner's main sewer line, and for an an electrician to put in a meter to her trailer, essentially.  It was a lot of out-of-pocket expense, IMO, just for a place to RENT....but this is stupid California.  In my opinion, and she considers my opinion "radical" (because I think it's almost pointless to work with bureaucrats sometimes), I think it's better to "just do it" and "see you in court...and oh, by the way, you won't be fighting me, you will be fighting....who is the US attorney general, at the moment?  Because, I'll be lodging a complaint against you with Housing and Urban Development for HOUSING DISCRIMINATION...So, can I please have your business card and badge number, Mr. Code Inspector?...I want to be sure your name is included in my complaint, and you may as well state the name of the person who called you, because it will come out in discovery...have a nice day."  Once that gets back to the office, the city attorney gets it, and the case quietly gets brushed under the rug.  That's what happened to a couple of people I've dealt with so far, who bought my sheds.  One of them got scared and moved, the other one is still there, now left along after "they got the reasonable accommodation memo."  I'm not going to say how many I've sold, but I'll say "a few."  I'm heading up to Portland to drop a double sized unit to a retiree.  Tiny homes are pretty big in Portland.  

The most sick example I came across was in Marin- no joke, and completely by chance I met a couple, who own a subway shop next to Costco.  In order to build a second living quarters for the husbands aging parents, they had to sign an agreement with the city's lawyer, that they would build the "apartment" as an "addition" to the house, such that once both parents died, the unit would NOT be rented to someone else, and the kitchen torn out, with the remaining space made part of the main house.  Isn't that sick?  Perfect example of Marin NIMBY, and exactly why the new law was needed.  But it is too late.  Housing affordability is simply out of control, where $100k per year is considered "poor."  The couple had finally received their building permits after a long-drawn-out battle with the city's building department.  6 months after meeting them, the 2016 law passed.  I would be curious to know what happened to them.  Most likely they did get their parent's cottage done, and it is attached to their house, but now once the parent's pass away, they CAN rent it as a separate unit, but instead of it being separate from the house, their home is now much like a duplex.  A duplex in Marin.  How funny.  Welcome to California.  

An ex-cop friend, who is also a contractor, said this "oh, they're too late, and you can't find a contractor to do small jobs like tiny houses, when you can make a lot more money building a real house or remodeling a kitchen or bathroom. The next law will actually PAY PEOPLE to build ADU's on their property, because we need more than a million of them built yesterday, and they can't get built fast enough."