Backyard Office seeks to expand city housing 'without any dramatic' life changes, president says

Backyard Office President Quinn Walker joins Yahoo Finance Live to explain how his company works to create finished and detached home offices along with other home add-ons.

Video Transcript

DAVE BRIGGS: Return to office appears to have plateaued, with still around 30% of Americans still in some type of hybrid work arrangement. But even working from home has its drawbacks-- or, rather, endless distractions. To escape them, some are returning to an office that just happens to be in their backyard. Quinn Walker is the President of Backyard Office. He joins us now.

Quinn, good to see you. I want to hear about these offices. But first, take us back to the genesis of idea. And what was the problem you were trying to solve here?

QUINN WALKER: Yeah, well, it really comes from my brother. He was at home during the heat of the pandemic and he had a lot of work to get done. And the little ones are running around the house because they're out of daycare. And he's like, man, I bet a whole bunch of other people have this same issue. And he called me up and he said, hey, do you want to start a company with me called Backyard Office?

And I was like, sounds good to me. I was a web developer at the time. Threw up a website. And then sales just slowly started trickling in.

RACHELLE AKUFFO: So I love this. I'm a big fan of tiny homes, so this seems like a very natural evolution, especially with the pandemic. Talk about some of the features that you need, say, for the smallest sort of area needed to build one of these things versus, say, your most plush models.

QUINN WALKER: Yes. So we build as small as 80 square feet-- so 8 by 10. It fits a desk. It's a nice, secluded place to work. But a recent trend we've seen is people wanting to go bigger and bigger and use these things for Airbnbs. So we build all the way up to 1,100 square feet-- really, backyard living spaces where people can have their desk, they can have a full kitchen back there, really the whole executive setup.

DAVE BRIGGS: I want to return to just the office in and of itself. How much do they cost? What's the price range? And how do I build them? Do I have to be handy at all? Because most of us are like me and they are not.

QUINN WALKER: Yeah, so the costs range from around $35,000 to-- it can go as high as $150,000 just depending on how big you're going to go. Most of our units are under 200 square feet. Those units max out at around $45,000.

And what really sets us apart is you don't have to do anything. We don't manufacture these. We build everything on-site using residential construction techniques. And we will start to finish do everything-- connect the electrical, hook you up with HVAC so that day that we hand you the keys, there's nothing left for you to do except for get to work.

RACHELLE AKUFFO: So, Quinn, a couple of things-- I wanted to ask about any sort of planning permissions that you need for this sort of thing. And where do you see the business going from here? Now that you've started with the tiny offices and, as you were saying, getting bigger and bigger.

QUINN WALKER: Yeah. So as far-- there's a unique carve-out in the code in most municipalities, and it ranges from 120 to 200 square feet, where you don't need to go get full building permits, you just need the electrical permit. This allows us to start within a couple of days of you signing, and then have it completed in 4 to 6 weeks.

As far as what we've seen recently is, like I said, bigger and bigger units and people using these as backyard houses. So we're now launching our house line. We have our office line. We're going to go do houses and really help expand the amount of places people can live within cities without any dramatic changes to somebody's life. They still get to stay in the house they grew up in.

DAVE BRIGGS: My fear is the backyard office becomes the kids' cool clubhouse at some point. But that's for another day. How did sales spike during COVID and what are you seeing now that we're kind of past it and it's in the rearview mirror?

QUINN WALKER: Well, sales have not let up at all. And it has not been our limiting factor for some time. Right now, we're really limited by how many contractors we can get, and then also hiring superintendents who are qualified. We're based out of Austin, Texas, and construction is just going wild around here. So that labor supply is our greatest constraint.

RACHELLE AKUFFO: And I was going to ask, obviously, with the price of lumber, at one point, it was peaking. We're seeing that start to go down. What are some of the biggest input costs that go into making a backyard office?

QUINN WALKER: It's mostly labor. We definitely experienced some of that lumber prices raising. But that's a very small portion of the cost. When you're looking at the total cost of the building, our materials account for roughly 35% of the total cost.

The labor inflation has been the biggest driver of costs. We built our first unit-- we sold it for $12,500. Now, that probably wasn't priced accurately back then. But that same unit now is going to cost you $40,000.

DAVE BRIGGS: How far away have you sent these houses? And do you build them or do you have partnerships with contractors all over the country?

QUINN WALKER: So we act as a general contractor, but we manage the site. We don't outsource that, but we do hire specialty trades that work on homes, right? And that's part of our quality guarantees is this ain't going to be built like a house, not like a shed, or something that came out of a manufacturer that's limited by shipping weight or how to get it in the backyard. So that's how we're building these.

RACHELLE AKUFFO: And, Quinn, what's the most unique kind of customization that someone's asked for for one of these offices, since they're going to try and make this their home or, like, a really nice Airbnb to rent out?

QUINN WALKER: You know, I wish I had a picture that I would have sent you guys. We built one that was almost split in half wrapped around a tree. So being on-site, we're able to customize anything. And this is a really nice tree that the guy didn't want to lose and there really wasn't another space to build it. So we designed it to go around the tree and got a lot of likes on that one.

DAVE BRIGGS: Sure there's a lot of backyard gyms out there as well. Backyard Office President Quinn Walker, good stuff. Appreciate you coming on.