Cover Photo Credit: Timbercrafttinyhomes.com
Investors looking to enter the real estate market without spending an exorbitant sum and wanting to become part of a sector that portends a great upside should consider the tiny house market.
“It’s an exploding market primarily because two groups—seniors and millennials—are madly in love with these types of properties. Seniors or boomers are downsizing, and millennials are buying their first homes,” says Mike Cathell, a real estate investor and flipper who works for Home Hunters USA, based in Ft. Myers, Fla. And both groups like the idea that smaller means fewer funds are spent on expenses and less time on maintenance, he says.
Exactly how tiny is tiny? Officially, a tiny house is defined as 500 square feet or smaller, sometimes as tiny as 125 square feet. Some slightly larger homes of 650 to 750 square feet also are considered by some to be part of the niche, even if not technically so.
Other reasons that tiny homes boast growing appeal is that they are considered a permanent home because they are sturdy—and more so than a mobile home. Yet, with wheels in most cases, they can be attached to a car or truck and travel around just as a recreational vehicle (RV) does.
One major downside is that because of their size, tiny homes can’t be placed on just any residential lot. Many communities object to the small size and require that they be parked where RVs are permitted. As a result, another trend is occurring. Tiny-home communities are sprouting nationwide. These, too, represent a good investment, says Cathell.
Unfortunately, numbers are hard to peg since some houses are converted from sheds on a property or built from kits, so they fall under the radar, says Greg Johnson, connected with the Small House Society, which offers resources for potential owners and investors. However, Johnson estimates that there may be several thousand tiny homes nationwide and more than 100 communities and even some houses without wheels.
Here’s how an inexperienced tiny-houses investor can learn more:
Buy a house, a community or both
If you simply want to buy a home or several, there are about 100 builders across the country, who construct the houses in factories or on their own. Another option is that you can invest in one of the kits and do the work yourself or hire someone. Because these are not deemed traditional homes, there are no mortgages yet available to finance them. You would need to finance with a car or RV or equivalent loan.
When it comes to the materials and styles, they vary just as widely as more permanent dwellings do. Usually, they are built with a wood or steel frame and in styles, from traditional to modern. The key is to decide how big you want it to be, how well insulated, heated, and cooled, and what interior materials and amenities you favor. Most contain traditional kitchen appliances, though some of those are on the smaller side. All the houses seem to have an open floor plan to avoid wasting square footage on walls and halls, and many place a sleeping area up in a loft.
Dan Louche, who started his Tiny Home Builders company after he built a small home for his mother, now operates a company outside Atlanta in Cumming, Ga., which offers several models. They can be purchased as finished homes or as kits, and the prices run a big range. Finished homes, from about 12 feet by 8 feet cost $20,000, with those bigger at 32 feet by 8 feet run $75,000. A DIY kit that is 24 feet by 8 feet costs $22,000, versus that same size finished one is $48,000. His company also sells trailers from $3,000 to $5,000. The prime demographic is the same as for most companies—“before and after kids,” he says, with the majority for those who don’t yet have kids. The good news is that the options are more stylish, and more houses have stairs rather than ladders.
Now, if the idea of owning part or all an entire community is appealing, investors should first know whether a municipality permits this kind of development. Many tiny-house communities have added landscaping, barbecues and playgrounds. Dan Dobrowolski, who founded Escape Homes five years ago to offer tiny portable homes, opened Canoe Bay Escape Village in Chetek, Wis., this year with five houses. More will be constructed, and they are designed to appeal to vacationers renting or buying them and home owners. Little River Escape in Cloudland, Ga., is another example of a tiny-house community with tiny homes nestled in a wooded private gated setting. Developer Ed Watters purchased 50 acres in 2015 and already has 13 tiny homes on the site with zoning permitting a maximum of two per acre. Residents can lease or purchase their lot and build the style of the home they desire within limits since Watters reviews all plans, says salesperson Sylvia Brophy. Those most interested so far are twentysomethings who like the idea of being able to limit their responsibilities of maintenance and the number of furnishings and possessions, she says.
Because of the industry growth, there are other resources now to tap online and in print. Louche writes a blog about tiny homes, has written a book, Tiny House, Design & Construction Guide, and conducts two-day workshops six times a year that teach building techniques, electrical and plumbing work, framing, and using tools. His website, tinyhousebuilders.com, has a map that indicates where communities are located.
A magazine, Custom Home, which offers a list of companies involved in the industry, also sells finished homes and plans. And periodically there are tiny home festivals with lectures and tiny-home displays around the country as interest continues to pick up. St. Petersburg, Fla., is interested in developing a community and a festival will be taking place there April 7-8, 2018. Organized for the first time, 25 tiny home vendors will showcase homes on wheels. Other vendors, including builders, will describe how to construct homes without wheels, and speakers will explain how to transition from a larger traditional home to a tiny one. More information is available online at www.tinyhomest.pete.com or by calling 727-637-5586.
EDITOR’S NOTE: In order to further satiate your interest in tiny homes, check out this example home (Credit for both of the following photos: Timbercrafttinyhomes.com):
The home is built by Timbercraft, based in Guntersville, Ala. and started in 2014. The average size of their homes is 8 feet by 40 feet and the cost is between $90,000 and $100,000. As noted above these homes are usually atop wheels.
Nationwide Tiny House Shows: