Free laneway homes? Vancouver entrepreneur's offer comes with a catch
Published Monday, June 18, 2018 6:54PM PDT
Last Updated Monday, June 18, 2018 7:11PM PDT
If you're a Vancouver homeowner with a little land and a lot of patience, Duane Laird has an idea you might want to hear.
The entrepreneur is offering to build free laneway houses in people's backyards – as long as they let him retain control of the property for 12 years.
"It's a crazy idea, but I think I can make it work," he told CTV News Monday. "If I can get someone's backyard for 12 years, I can profitably build a laneway house, rent it out for 12 years, and then give it back to the person that owns the property."
Laird said he got the idea from his experience in commercial real estate.
"If you're building a car dealership, you don't buy the land, you lease the land," he said.
He estimates it would cost him between $100,000 and $125,000 and about four months to build each 500-square-foot home using modular, prefabricated components.
"The land cost is always the biggest part of this kind of thing, so if the land comes for free, there's lots of modular places that can sell me something for around that price," he said.
He plans to rent out each laneway home for $1,200 to $1,500 a month. At that price, Laird expects there to be no shortage of demand.
"I think it would fit within the market," he said. "I think that there's going to be a lot of interest from people that are working in Vancouver that want to be able to do things."
Once 12 years have passed, Laird said the homeowners would take ownership of the laneway home at no extra charge.
If they want to take control of the property before then, they would also have the option of buying him out for the cost of the build without any inflation, he said.
"We're not looking to gain market value," he said.
He's also focused on creating relationships with any prospective clients. Laird said the homeowner would have some say in the design of the small home. Those details and all other terms would be laid out in a contract "to protect both sides," he said.
But Vancouver realtor Aaron Jasper recommends that any property owner sit down with a lawyer and look at that contract very closely before signing.
"I don't blame the guy for coming up with an innovative idea, but I, to be honest, am a bit wary of this," he said.
Laneway homes tend to raise the value of a property because they create room to house intergenerational families or can be rented out as an extra source of income.
According to Jasper, a laneway house can mean as much as a $500,000 difference between two otherwise similar properties.
But the realtor said Laird's offer is unlikely to make financial sense for most homeowners.
Given Metro Vancouver's housing boom over the last decade, those who already own their homes would have accumulated so much equity that they could afford to build the laneway home themselves and reap the benefits immediately, he said.
On the other hand, those who are just getting into the market and need the extra income to pay their mortgage couldn't afford to wait 12 years before that money starts coming in.
"There's a lot of questions that would need to be ironed out before I would recommend any client or neighbour to sign on the dotted line," Jasper said. "Why would you have other people living in your home, or property line, sharing your backyard, your garage, all that stuff if you're not getting any of the benefit out of it?"
Laird, however, said several investors and potential clients have already expressed interest in the project.
"I've had a couple of calls already this morning," he told CTV.
Laird he can't get a bank loan for the builds, but can front enough money for three laneway houses. He'll be relying on investors for any additional projects.
His offer is not the first of its kind in the city.
In a very similar project that started back in 2016, entrepreneur Stephen Do was asking local homers to lease him part of their backyards so he could build and rent out a $100,000, 500-square-foot laneway house.
At the time, he told CTV News he intended to rent the spaces to low-income families and that the property owners would get anywhere from $200 to $500 a month in extra income. They could also buy the structure outright.
There are already laneway properties for rent across the cities. Most cost between $1,500 and $2,500 per month.
The City of Vancouver conducted a survey on laneway homes earlier this year. Based on the findings, staff put together a report that suggests simplifying the rules and regulations around building them. Councillors will vote on those recommendations on Tuesday.
With files from CTV Vancouver's Allison Hurst