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A new trend among residential real estate investors is tiny home investing. Like any new investment opportunity, you should do as much research as possible before considering it a viable option for your portfolio.
First, we’ll define what a tiny home investment is. Next, we’ll go over the merits of investing in tiny homes. Finally, we’ll go over how you can invest in a tiny house.
This post covers:
- What is a tiny home?
- What is tiny home investing?
- Is it a good idea to invest in tiny houses?
- How to invest in a tiny house
What is a tiny home?
As the name implies, a tiny home is a house that is typically one story and around 230 square feet. However, a tiny home could be as large as 600 square feet. Bathrooms are not always included, and they fit between 1 and 3 people. Many tiny homes are a part of tiny home communities, which we will later explore in this post.
What is tiny home investing?
Tiny home investing involves purchasing or developing a tiny home that you will then rent out. Tiny homes are most commonly rented through Airbnb and similar platforms for short-term rentals.
Is there a market for tiny homes?
There most certainly is a market for tiny homes. The tiny house market is expected to experience continuous growth.
Can you make money on tiny homes?
As with any rental property, it is possible to make good money on tiny homes. However, this all depends on how you manage your finances. If you have a good mortgage on the property and have conducted all of the proper predictive analytics, you may be able to make a profit.
How much is it to invest in a tiny house?
Tiny houses range between $30,000 and $60,000 to purchase. This is pretty cheap compared to the average single-family home price in the US, which is $430,000. This low cost makes them appealing to first-time investors.
Are tiny home communities profitable?
Tiny home communities can be profitable. These communities consist of multiple tiny houses side by side in a certain space.
In theory, all an investor has to do is purchase land and develop as many tiny houses as local zoning laws will allow. But when it comes to making a profit, investors need to make sure the cost of their development doesn’t surpass the eventual return on their investment.
Learn how to invest in multifamily real estate:
Is it a good idea to invest in tiny houses?
It may be a good idea to invest in tiny homes depending on the location, cost, and your ability to efficiently manage the investment. If you intend to start tiny house investing, make sure you put in the same amount of research into tiny house market trends as you would any other property type.
Here are some potential benefits of tiny home investing:
- Tiny homes can be registered as mobile homes or even RVs (despite their lack of wheels).
- Tiny houses cost less than most real estate investments.
- Utility costs are cheaper.
- Tiny home stocks are expected to keep growing.
- If you’ve financed your tiny home property, you stand a chance at receiving a high return on investment (ROI) because of their cheap prices.
- Tiny houses often feature environmentally friendly materials and appeal to renters who are interested in sustainability.
- Maintenance is cheaper because tiny homes are small.
- Property taxes are cheaper.
- Tiny house Airbnb investments make them easier to rent out.
- When selling a tiny home, a tiny house’s value is typically easy to appraise because of its small stature.
How to invest in a tiny house
As we’ve previously touched upon, there are multiple options for tiny house investing.
You can either buy land and develop a tiny house or tiny house community to rent out OR develop/renovate and sell tiny houses.
Either way, our tips for making the most out of your investment are to:
1. Hire the right tiny house builders
What’s neat about tiny homes is that they can be built just about anywhere in the country and shipped to your location. However, we recommend trying to find tiny home builders who are familiar with the specific laws and regulations for the county in which you wish to develop.
States with friendly tiny home development laws include:
- California
- Georgia
- North Carolina
- Texas
- Kansas
- Florida
- Oregon
Tiny home builders worth looking into are:
- Rocky Mountain Tiny Houses. They offer fully customizable tiny houses that come with wheels for easy transportation and relocation.
- Tumbleweed Tiny House Company. This company allows you to develop and customize your tiny home online, giving you complete control over how the property will look. As an added bonus, all of their homes are considered environmentally friendly.
- New Frontier Tiny Homes. These are considered high-end, luxury tiny homes that run between $120,000 and $200,000. However, the price may be worth it for the high-quality building materials and amenities, such as a full-sized bathroom.
2. Pick an attractive location
The age-old real estate wisdom of “location is key” has never been more applicable when it comes to tiny home investing. If you are doing short-term rentals with your tiny home, then the general location should have something desirable nearby.
Desirable locations can include:
- Business districts
- Schools/colleges
- Beaches
- Parks
- Local tourist destinations
3. Consider developing in a mobile home
Mobile home parks and trailer parks are often the best place to start out developing tiny houses. Because the grounds are already properly zoned and equipped with amenities for small homes, you can easily buy plots of land and replace trailers with tiny houses. Tiny homes are often more modern, sustainable, and attractive than trailer homes.
Depending on your available funds, you can even redevelop a pre-existing mobile home park into a tiny home investment community.
Takeaways
- Tiny home investing involves purchasing, selling, renting out, and developing tiny houses.
- The benefits of tiny home investments include low costs, easy maintenance, and the possibility for a high ROI.
- Tips for tiny home investing include hiring the right builders, picking the right location, and considering development within a mobile home.
