Tiny House Investments

Making money with a Tiny House

There is an endless list of ways to make money in real estate. But, there are only a few ideas on how to make them with a low-risk, up-front investment. A tiny home can be a very affordable option to making money every month, without a heavy mortgage or big financial risk. How we do this is by building a tiny home at a lower than market value cost, then rent it out! I will go into further detail how this IS being done by me, and other investors. 

Tiny House Cash flow

Cash flow is always important in the rental business. If you don’t have cash coming in every month, then your rental has little or no value. In order to have the maximum amount of cash flow, your tiny home must be desirable, in a decent location with rental demand, and affordable. 

Making your tiny home a desirable rental 

I do this by making the house pleasant to look at, smart floor plan and with as much usable space as possible. First, I use neutral colors on the exterior. I don’t do the crazy colors or architecture, but keep it simple and clean. Next I build with double lofts, so there is room for additional storage, or room for a slumber party if needed. This allows the renter to see that they have more space up top than they really need, especially if they are occupying it by themselves. Instead of a drywall interior finish, I install shiplap siding with a simple white semi-gloss paint. This gives a very bright finish without going overboard on costs. With LED lighting throughout, the entire home looks illuminated, even at night. I then install a real wood ceiling and accents in almost every space. This provides contrast, but still maintains a clean and high-end feeling that looks really classy but rugged at the same time. I use appliances that are pleasant to look at and avoid boring at all costs. Even if I have to special order a certain refrigerator from Home Depot that takes 4-6 weeks to arrive, it is worth the wait. The small details and finishes make the home appealing to look at and will enable a higher monthly rent than a “drywall box”.  

The right location for your tiny home rental

This is a major factor if you will get top rental rate, or even keep it rented at all. You will need to do your homework on what the supply vs demand is in your area. If there are a ton of rental units on Zillow, then you may have a hard time occupying your tiny home at a good rate. The mobile home park, or community that you place your home in, must be appealing for those that are ok living in a smaller space. This usually is more likely to happen when the market is not saturated with rentals. Do plenty of homework and look at rental rates before you invest in a tiny home rental. I have found out that in some markets, even with a handful of rentals available, a tiny house will rent out for a premium if the area is good, and the home is really pleasant to look at. For RV parks or mobile home communities, often the age of the surrounding homes or RV’s will determine what potential rentability your tiny home has. Find a clean area, with amenities if possible, and you can have a golden opportunity for solid tiny home rental income. 

Tiny home rental case study

  • Cost to build tiny house $37,000
  • Monthly utility cost $100
  • Maintenance/repairs $50
  • Monthly rental income $900
  • Annual net profit $9000
  • Full ROI in appx 4.1 years

This case study uses a real scenario with a home placed on the landlords property. Thus there is minimal monthly expense, with no lot rent or fee’s. 

Lets compare the ROI return in 4.1 years to other investments. 

Pro’s of a Tiny Home Rental

No mortgage, no loan, no property taxes, minimal repairs, fast ROI, still able to sell for a good amount after 4 years, 

Pro’s of a Duplex

Estimated with a down payment of $40,000.

Increase of value over 4 years, potential rental income longer than a tiny house

As you can see, if you are in real estate for the increase of value, the Duplex will perform better. But, this assumes that you are buying low, and selling high. In a down market, even Duplex’s will decrease and you can lose on your investment. However, a tiny home is less maintenance, lower risk, fast ROI, and steady cash flow machine as they attract higher-end tenants.

Profit breakdown

  •  Build cost $37000
  •  Rental income at 4 years. $37000.
  • Total income at 8+ years $78,000. 
  •  Total income at 10 years with increases $100,000
  • 10 year return of 270%
Ive invested in apartments, multi-housing, mobile homes, single family homes, large custom homes, vacant land…you name it. But investing in tiny homes is pretty low risk with a high return as a rental unit. If you have space at your home or property, I recommend you do a little number crunching to see how you can profit from a few tiny home investments. Who knows. maybe a small tiny home community is in your investment future!