Entrepreneur fights rising rent by thinking inside the box

If you rent your home, you probably already know this: Rents are up.

Zillow.com reports that renters shelled out $441 billion last year, up an average of nearly 5 percent from 2013.

San Francisco was hit the hardest. Rents there rose 13.5 percent.

That's a big jump, but as CBS News' David Begnaud learned, one Bay Area entrepreneur has a small solution.

In six months, Luke Iseman envisions his property looking like, "much less like a junkyard and much more like a verdant, garden-filled, tiny-house community."

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Luke Iseman's Boxouse estate CBS News

If this is a community, Iseman is the leader - a 31-year-old entrepreneur and graduate of the Wharton School of Business on a mission to change the way we live.

"I think we have an obligation to do interesting stuff that we can argue is changing the world and to be public about it," he said.

His concept is called "Boxouse." The idea: to convert used shipping containers into tiny houses.

It was born out pure disgust because Iseman felt the rent was outrageous. He was living in San Francisco with his girlfriend, paying $3,500 a month for a two-bedroom apartment. That was a year ago.

Today, the average price of a two-bedroom has jumped to $4,600, that's $1,100 more than New York City, making San Francisco the most expensive place to rent an apartment in the nation. So Iseman left and headed for Oakland.

"Everybody agrees housing is broken," Iseman said. "Everybody wants to live in awesome cities like Oakland. We need to come up with something else, and I'm happy to be one of the many failures along the way to figuring that out."

He and five friends each put up $30,000 for a down payment on their property.

It has a warehouse intended for a commercial kitchen and two bathrooms, plus 14 parking spaces.

Each space has just enough room for a Boxouse.

The rent here: $600 a month.

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Luke Iseman's Boxouse CBS News

"You can think of it as a really expensive parking space or a really cheap opportunity to invent your ideal house," Iseman said.

Sean Kolk bought in to the idea. He's rented a space, purchased a shipping container and is creating his own version of the American dream.

"I don't want a house and a picket fence and a dog and two-and-a-half kids or whatever it is. I want the freedom to build things that I want to build," he said.

The first Boxouse was built after Iseman bought a shipping container from the Port of Oakland for $2,300.

He made $10,000 in upgrades and converted the 192 square foot container into a Boxouse, complete with a rooftop solar panel.

We wondered, where's the restroom? Turns out, it's outside the box. According to Iseman, it's a "large capacity, well-aerated compost bin that you can pee into the side of."

His other option: a bucket.

But before you pity him, he wants you to know that living large in a tiny space isn't about sacrifice, but rather prioritizing what he really wants.

We got a pretty minimalist kitchen, my one pan that I use all the time, cast iron," he said, "chest freezer that ... I've converted into a refrigerator, bed/standing desk during the day, dog area, clothes, working shower, hot and cold."

His shower head is a garden hose nozzle.

"It's totally absurd, but you know this is really in a lot of ways a license for us to experiment," he said.

Iseman has been flooded with email inquiries since launching a website two months ago, soliciting input and selling Boxouses.

As his business grows, the city of Oakland has some compliance questions.

"We are not against the idea; it's just very new," said Rachel Flynn, the director of planning and building. "And assuming all our building codes can be met, we say have at it."

When it comes to the city and its codes, Iseman said he's operating on this philosophy: He'd rather beg for forgiveness than ask permission.

"I should not have to read 10,000 pages of code before I'm able to do something more interesting than living in an apartment, and I'm not going to do it," he said. "This is radically affordable and looks weird to everybody but pretty damn fun so far."