When I first saw HGTV’s show about Tiny Houses, I was intrigued. I could not figure out what tiny homes were used for, and who would buy them. Of course, with the name “house”, we can assume they are only used to live in. But, that is only one of the uses of a mini house.
Tiny House are used for a variety of purposes, such as… summer cabin, residential homes, home offices, casitas, visitors quarters are more.
Let me expand by using a real life case study. About two weeks ago I met with a lady that wanted to make a major change in her lifestyle. She lives in a 1600 ft.² home with three bedrooms and two baths.Two of the bedrooms were cluttered with things that she doesn’t have a need for. Her kids have grown up and she has recently realized that it is just too much space for her. She currently has a lot of credit card debt and high utility bills, especially in the summer. She wants to simply life and reduce her overhead. The area that she lives in has had a consistent increase in home values of the past few years, and fortunately she is in a good situation with over $150,000 in her homes equity. I proposed to her about the possibility of buying a tiny or small home, and placing it on a piece of property.I explained that she could pay cash for both, and significantly simplify her life with low overhead. With no mortgage and reducing her utility bills by over 50%. she immediately became interested and excited about the possibility. She is now cleaning her home and preparing to place it on the real estate market.
Tiny homes for business
Here is another scenario that describes a completely different use of a tiny home. The ultimate Home Office. The amount of people working from home has never been higher, and the need for a private office increases each year. A custom tiny home, or a tiny home on wheels can be an ideal solution. It can be connected to the main houses utilities, but yet offer the same luxuries of a home. A small home for an office may not need a kitchen, but certainly can offer a small meeting area, room for a desk and office storage, in addition to a full bathroom. In comparison to building on a casita or add-on to your home, it may be much more cost-effective by building a small tiny home, or purchasing a home on wheels. Even using the shell of a storage shed with the appeal of a tiny home can save you a bundle over adding on to your house.
Tiny home as a cabin
For those that have built or purchased a summer homework cabin, know that they can be very expensive. Spending $150+ a square foot just the construction of a cabin is very common. The cost of building a cabin is unfortunately the biggest deal breaker for most people. It’s hard to justify spending $200,000, $300,000 or even $500,000 on a home that will not be used as much as desired. This is the reason why tiny homes are now being used as summer homes more than ever. In fact, in many states, there are new tiny home cabin subdivisions popping up making it very affordable to have a summer home for less than $100,000. Some even offer the benefits of an HOA with activities and other amenities to make it more appealing.
Tiny houses as a real estate value stimulant
If you own land and are needing to increase its value, or put it to good use, you may want to consider placing a tiny home on your property. Sometimes land ownership is not all that exciting, especially if you own property that is not exactly in a high demand area. Land values can be stagnant for years with little or no positive change in value, making it very hard to sell. However, by simply adding or building a tiny home on your property can significantly add to the value and demand. Even if it is a simple casita style tiny home, built from the platform of a shed, or something that is appealing as a low maintenance home can be attractive to buyers.
Tiny home for cash flow
This is perhaps my favorite use for building a tiny house. If you are familiar with AirBnb, you will have noticed there are some properties that are in really high demand. But, they are all unique. Some are treehouses, some are casitas in an amazing area, some are an old school bus converted into a motorhome, and some are just tents on a wooden platform. But, some are just small houses or rooms in high demand areas, with really cheap rent. The idea of building very simple and basic tiny houses as rentals is pure genius. There are people that have built a tiny house and connected it to their own homes utilities, and rented it out frequently and profiting $500-$1500 per month. If you have a property that has nearby attractions such as an amusement park, national park, hiking trails, concerts, popular forests, ski resorts…etc, then you may be able to make good money with a tiny house, listed on AirBnb. I encourage you to do a little homework and asses the demand of AirBnb rentals in your area. Here is a simple scenario that is based on a real rental…
Small, 200 square foot casita tiny home with a full bath room, mini refrigerator and countertop electric burner. It has a queen bed, a dresser and nicely decorated. This tiny house rents for almost $90 a rented out more than 15 days per month. Total cash flow is $1350 per month, minus 15% for AirBnb fee’s, and net profit is about $1140 per month. Yes, the owner puts all new bedding prior to each renter, and cleans the tiny home, but that is a lot of profit for a very small amount of work.
The sky is the limit in regards to how a tiny house could be used. Even as a tiny house is not for you, it might be a great investment and an opportunity to add cash flow each month. Look outside of the box and find a creative way to make money with a tiny home!