Tiny homes are sweeping through the nation as more people looking for affordable housing are beginning to fancy the idea of living in a tiny home, especially one that is customized to their taste. Plus, the popular reality TV show “Tiny House Nation” brings amazing insights that are making a lot of people consider downsizing their living space.
For people who are yet to buy a house and don’t want to opt for a traditional 2,000-square foot home, the idea of owning a tiny home will appeal greatly to them.
Whether you love the simplicity they offer or you’re looking to save money or interested in living an alternative lifestyle, rest assured that owning a tiny house will help you meet your goals.
In today’s post, we will cover everything you need to know about tiny houses including their financial considerations and the current trends in the tiny homes real estate industry.
Buying a new tiny home
The cost of any tiny home depends greatly on its size, its finishing, basic amenities as well as other considerations like whether you’ll build it yourself, contact a company to have one built, or opt for one that is pre-owned. Whatever the case is, keep in mind that owning a tiny home could cost you anywhere from a few thousand dollars in down payment to more than $70,000.
If you decide you want to hire an experienced tiny house builder to handle your tiny house building project, you’ll not be disappointed to give Tumbleweed Tiny House a try. Founded in 1999 by Jay Shafer, this company offers four brilliant tiny house models you’ll love right from the get-go.
They have the Elm model, the Farallon, the Cypress, and the Roanoke, so depending on what you’re looking for, they should be able to bring your tiny home dreams into reality.
As per size, most of their models range between 164 and 225 square feet. And just like many tiny houses, Tumbleweed Tiny House designs its models to fit on trailer beds so they can function like RVs.
It’s important to know that each of their tiny house models comes with unique sizes and floor plans. And their pricing varies too. The 164 square foot Cypress model should cost you around $69,000 while the 174 square foot Roanoke model costs approximately $57,000.
Of course, these are estimates, so feel free to reach out to other tiny home builders to see what they are offering. Who knows, you may just end up with a better deal.
Building it yourself vs buying pre-owned
If you’re looking to drastically reduce your upfront cost, then you should consider buying a tiny house plan and get your hands dirty. But before you take on this project, you should be pretty confident about your building skills. Also, you must be ready to put in hundreds of hours of spare time to ensure the work gets done.
If building a tiny house is something you’re willing to take on, then a good place to start is to get a tiny house building plan, which should cost you about $759. And to make sure you don’t miss out on anything, you can opt for a how-to DVD that may cost you an additional $60.
Besides requiring a lot of time and dedication, the biggest cost of putting together a DIY tiny home is the cost of materials and tools. According to expert builders, you can spend anywhere from $8,000 to $10,000 to build a tiny home yourself using recycled materials.
You can also opt for the Amish Barn Raiser model from Tumbleweed, where the company builds the structure, while you go ahead to finish it at an additional cost. Going for this option will cost you between $13,000 to $16,000.
If you’ve thought about everything so far and you think you aren’t ready to get your hands dirty, you can simply opt for a pre-owned tiny home. This is especially great for people that are low on budget and not ready to dig deep into their savings.
For amazing deals on pre-owned tiny homes, a good place to start is TinyHouseListings.com. With hundreds of listings available on their website, you could end up with a decent tiny home for as low as $20,000.
Finding land for your tiny home
Building a tiny home is just one part of the puzzle. The other part of the puzzle is finding a decent land to park your home on.
Other concerns include how much land space you’ll need, where the land is located, the laws guiding renting, and whether you want to buy or rent the land.
Also, keep in mind that most cities have zoning laws that will make purchasing land to fit such a tiny home pretty challenging. To this end, you may be looking at renting land and not owning one.
If you’re interested in learning a thing or two about local regulations guiding tiny homes, you’ll not be disappointed to visit the American Tiny House Association website for more insights.
For tiny homeowners who have trailer-style tiny homes and live in communities where local laws allow people to park their trailers on their property, you’ll be able to rent land from traditional homeowners for a couple of hundred dollars per month.
But before you get excited, keep in mind that communities where local laws allow people to park trailers on their property also have laws in place that prevent people from inhibiting trailers as a primary residence. As such, you want to make sure you have a general idea about local laws before parking your tiny home.
If you have an active lifestyle and like to travel now and then, then you’ll be able to park your tiny home at various campsites. However, endeavor not to stay longer than the maximum days allowed.
For tiny homeowners hell-bent on finding land for their tiny home, they can opt for a mobile home park or trailer park. That said, the height and restrictions that come with this option usually make people shun the idea.
Overall, if you already have land that allows you to legally park your tiny home, then you’ll end up paying nothing to fit your tiny home.
Financing a Tiny House
Even though tiny houses are a lot cheaper than traditional 2000-square foot homes, getting a mortgage to buy a tiny home is almost impossible. To this end, you have to opt for a travel trailer loan or a recreational vehicle loan, which you can get from a credit union.
And before you even qualify for this loan, the tiny house has to either be classified as a travel trailer or an RV.
If this is a direction you want to tow, you can reach out to companies like Rock Solid Funding who are in the business of helping people find these types of loans. If you’re lucky enough to get any of these loans, you’ll be looking at terms between one to 15 years. And as per interest rates, the number is between 5.99% and 18.95%
On the flip side, if getting a recreational vehicle loan doesn’t work for you, you can try taking a personal loan. The only problem with personal loans is that the interest rate is way higher than what you’ll get with a mortgage. Thankfully, if the tiny home you’re interested in isn’t all that expensive, you may be lucky enough to charge it to one or more credit cards. That too comes with an exorbitant interest rate.
The good thing is since you’re not taking out a mortgage, you won’t have to worry about the mortgage-interest tax deduction.
If you already have a traditional 2000-square foot home and will continue to live in one, you can take out a line of credit or home equity loan to finance your tiny home projects. That said, going through this route will mean that the interest rate will now be tax-deductible.
Again, you’ll be putting down your traditional home as collateral. This means your primary home could be foreclosed if you are unable to meet up with payment.
Also, financing a tiny home isn’t as easy as you imagined. For people with bad credit, it is almost impossible and that’s because you’ll need good credit if you’re looking to finance a tiny house. By good credit we mean you have to have a credit score of at least 700. And this is for unsecured loans. For an OK credit, you’ll need a credit score of at least 640 and this is only going to get you a secured loan.
At the end of the day, the better your credit score, the greater your chances of getting your loans approved. Plus, a good credit score will get you a lower interest rate.
On the other hand, if getting a loan isn’t something you’re ready to do to finance your tiny home dream, you can save up to buy. Yes, this may take you some time, but it gives you peace of mind.
Real estate opportunities in the tiny home niche
As the tiny home movement continues to sweep through the country, it has opened up real estate opportunities for people looking for alternative sources of generating income for themselves.
While tiny houses have allowed tiny homeowners to rent lands instead of purchasing a property, landowners have been able to benefit from the trend too as they are able to rent out small sections of their property to tiny homeowners.
Another option to make some money from this growing affordable real estate trend is to construct tiny houses and put them up for rent or sale. Unlike traditional housing, the time required to construct a tiny home is pretty short.
Pro tips for tiny home investment
Before you jump on the tiny home movement sweeping through the country, we advise you to do your due diligence. And by this, we mean taking extra measures to ensure your tiny home meets the set residential codes. That said, here are a few more extra tips you should always have at the back of your mind.
Parking: While you can park your tiny home on residential lots, most city laws require you to park your tiny house on an acre of land. And to be on the safer side, instead of using the phrase “tiny home” it’s best if you ask the city if you can park your trailer, RV, or mobile home on the property.
To avoid any unnecessary confusion, we suggest you register your tiny house as a park model.
Offer personal loans: If you have a lot of cash sitting fallow in your bank account, you can set up investment opportunities by offering loans to people who are looking to finance a tiny home. Plus, you can take advantage of the cash flow banking aspect under a whole life insurance policy to provide loans to tiny home buyers or builders. Taking this route comes with many benefits including increased interest rates, which you stand to benefit from.
Frequently asked questions: Learn more about tiny home real estate
What states in the US allow tiny homes?
At the moment, not all states in the US allow tiny homes, so before you decide if this is something you want, please do your research to ensure you’re complying with city laws. For now, states like California, Texas, North Carolina, Oregon, and Colorado allow tiny homes.
How much do tiny homes cost?
While tiny homes aren’t as expensive as traditional homes, they could cost between $30,000 to $70,000. The cool thing about these types of houses is that you can choose how many frills you’d like to be included along with other customization.
Why are tiny houses illegal?
Though tiny houses are becoming increasingly popular, these brilliant homes are not yet legal in several US states and that’s primarily because tiny homes don’t meet their building codes.
To this end, if a state doesn’t recognize tiny homes as part of its building codes, having one could be illegal.
There are so many benefits that come with tiny homeownership. For starters, tiny homes have the potential to save you a lot of money. More so, it allows you to enjoy simple living, privacy, freedom, and environmental stewardship. Plus, it doesn’t cost as much as you’ll need to get a traditional home, which is perfect if you’re looking for affordable housing.