Housing Affordability Through Small Homes, with Nichol Beckstrand, YardHomes Minnesota
- February 18th 2021
YardHomes Minnesota uses a prefabrication approach and an innovative financing model to create affordable housing.
YardHomes Minnesota is creating housing affordability by building and maintaining accessory dwelling units (ADUs).
“We are a startup that focuses on delivering ADUs in Minnesota as a method of housing,” Nichol Beckstrand explains. “ADUs are tiny houses designed to be permanent living spaces. The problem we set out to solve is housing affordability.”
Under its Y-HELP program, YardHomes installs an ADU on an existing residential property owned by a partner. YardHomes holds and manages the ADU for ten years, offering it as an affordable rental unit for low-income tenants. Each month, YardHomes typically shares a portion of the ADU rental income with the property owner. After 10-years, YardHomes transfers ownership in the ADU entirely to the partner.
The problem YardHomes Minnesota is solving:
Nichol grew up in a house where she could have fun and feel safe. As a parent, she created a space for her children. But, she soon realized that a safe, secure home is not an option for every family. “We are creating more affordable housing for the housing insecure. We create a community setting for them. This creates wealth for the families and nonprofits that participate as host locations for our ADUs.”
“I’ve understood the finance side of affordable housing all my life, but I needed to partner with someone. My business partner understands the building side and the cost factors that go into building a home. I also know that under my current model, the units’ affordability could change after ten years. So I knew I needed to partner with organizations and people who had a desire to keep the property in play for affordable housing after the ownership transfers. I spent a fair amount of time understanding how ADU’s work, how city policy can be helpful (and sometimes harmful) to adding density. I focused on also creating a community connection for the individuals that we are housing.”
Here’s how they solve it.
Yard Homes Minnesota is creating more living spaces quickly. This efficient building model meets housing and safety standards. With more homes in supply, this will eventually reduce the cost of housing. “We leverage our Y-HELP leasing program. YardHomesMN asks an intermediary between nonprofits or people with the land they would like to use for affordable housing. We own the ADU and maintain it. We lease the land where the ADU will be placed and rent the ADU’s to an individual on voucher programs. The program amortizes the lease over ten years, thereby transferring the ADU ownership to the nonprofit or individual landowner at the end of the ten years.”
Here’s how they’re funded.
“Thus far, we are self-funded. We recently established a Program Related Investment (PRI). Our lead donor is the Maggie Foundation, with a matching grant from The Bush Foundation. We will be using their funds as a down payment on a loan to leverage five times to create five times this amount of housing. For every $25,000, we can create one unit of housing with our lease program.”
Learn More About Nichol Beckstrand and YardHomesMN:
- YardHomes: https://www.yardhomesmn.com
- YardHomes on LinkedIn: https://www.linkedin.com/yardhomesmn/64755918
- YardHomes on Facebook: https://www.facebook.com/YardHomes-MN-103884421228762
- YardHomes on Instagram: https://www.instagram.com/yardhomesmn
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