Owning a home is simply a part of the “American Dream.” But when the average American home costs $329,000 (not counting taxes and utilities) and you’re riddled with credit card debt and student loans, you have a problem. Do you continue to rent an apartment and miss out on the chance to build equity?
Or do you find a different alternative?
Thanks to shows like Tiny House Nation, more Americans than ever are opting for barebones housing through tiny houses. Tiny houses are affordable—averaging $46,300 in 2018—and can cut costs on things like utility bills and property taxes. There are no extra bells and whistles, they’re more environmentally-friendly, and they’re every minimalist’s dream.
So is a tiny house a good investment for your family and the life you lead together?
Let’s review everything you need to know about buying a tiny home. You might just find that a 1,500-square foot home is out of your budget, and more than your family needs!
What is a Tiny House?
Tiny houses are small homes, typically built atop a trailer, ranging from 100-400 square feet. These tiny living quarters became popular in the nationwide desire to downsize during the financial collapse of 2008. Tiny homes boast many features of a traditional home, but at a smaller scale—such as a functioning bathroom, electricity, plumbing and sitting areas.
Reasons to Buy a Tiny House
Buying a tiny house is popular, given its growing presence on television channels like HGTV, but the allure of having unique housing wears off after a few months in such tight quarters.
Before you join the tiny house movement, consider why this type of housing is a great idea:
- Some tiny homes can be built on a trailer, so you can bring your tiny house with you on a road trip or pick up and move when you purchase a new plot of land.
- Choosing sustainable energy (like solar panels) or hooking your tiny house into an existing grid are likely, meaning you could cut your utility costs to $20 a month.
- You’ll cut costs at every step along the way, such as purchasing a small plot of land, designing and building the structure, and powering a tiny home.
- The limited space is excellent if you don’t have many physical possessions or worry about a cluttered home.
- You can build or bring your tiny house off the grid, ideal if you enjoy your personal space of straying from the suburbs or city.
Keep in mind that a tiny house isn’t an ideal form of housing for all people. You may not want to build a tiny house if you have a large family (3+ people), enjoy the luxury of running water and a comprehensive HVAC system, like being nearby retail stores, or have a lot of items.
Sizes, Features, & Amenities
If you’re building a tiny home from scratch, you have free rein to choose how large you want your new home. You’ll often find tiny houses boasting up to 400 square feet of floor space within, though it’s not uncommon to approach a 600 square foot interior limit.
Considering the average rental apartment in America comes in at 882 square feet, transitioning to tiny house living is undoubtedly an adjustment. With less than half the space of a typical apartment, you’ll have to downsize, prioritize a minimalist lifestyle and tolerate claustrophobia.
Tiny houses are tiny, but they have quite a few unique amenities and features wowing the masses as the years pass. Let’s review a few of those right now.
To save floor space for the necessities (like couches or cabinets), tiny houses often boast a lofted sleeping area with a kitchen or living room below. You can install narrow stairs with interior storage in each step or even a rock climbing wall to get up to your bedroom. Since many tiny houses are no higher than 13.5” tall, you likely won’t be able to stand upright in the bed area.
Tiny houses might be minimalistic in the world of interior space, but your options for exterior space are often limitless. You can install an outdoor ladder or staircase to the roof and hold parties on your rooftop deck or use your front yard space for outdoor seating and a bonfire. A tiny house built upon a foundation is the perfect location for an outdoor garden or hot tub.
A tiny home placed on a foundation is your best bet for modern features like running water and electricity. You may be able to install a water and gas hookup on your property, or you may choose to use solar panels or a gas-powered generator to power an RV-style tiny house.
Regardless of whether you’re using filtered rainwater or not, consider your modern needs.
Interior walls and doors would only take away from the minimal amount of living space you already have in a tiny house. Many tiny homes are reminiscent of a studio apartment.
Aside from the lofted or hideaway bed, tiny houses are often one long room with a sitting area that turns into a kitchen area and, possibly, a small bathroom area with a mini tub and toilet.
Trailers vs. Foundations
Like a typical American home, tiny houses give you a choice between a home on wheels (trailer) or a home on the ground (foundation). Both tiny house set-ups have their pros and cons, and, if you’re building from the ground up, you’ll want to make the right choice.
Take a look at the difference between the two right now and consider which one fits your lifestyle and needs best.
Mobile tiny homes are similar to RVs (recreational vehicles), meaning you’ll have to abide by local ordinances to get them on the road for travel or relocation. Size-wise, you’re limited to 13.5 x 8.5 x 40 in many places in America for travel by road. For a single person or a first-time homebuyer, a trailer-hitched tiny house is more than enough.
Here are things to consider:
- Limited size (no more than 340 square feet, often)
- Ease of relocation (spend the night in the desert and then by the beach the next)
- Lack of foundation can be dangerous (heavy winds or rain can make it sway)
- Limitations for parking (RVs aren’t allowed to park everywhere)
- Extra costs (RV and home insurance, extra permits and a truck to tow)
Foundation tiny houses are essentially very small homes, installed directly atop a concrete slab, and likely hooked up to electric and plumbing on land plots. The size of your tiny house will depend on how much land you have, and you may have the opportunity to add a second floor or additional amenities due to the permanency of a foundation.
Here are things to consider:
- Resale is more straightforward (people are more likely to buy a home than a trailer)
- Protection from the weather (slab prevents flooding, wind damage and more)
- Easier to get financing or a mortgage (it’s just a small house)
- Need to purchase land (in some states, an acre of land may exceed $50,000)
- A yard of your own (add a deck, plant a garden, install a pool and make it your own)
The Cost of Buying a Tiny House
There’s no single flat-rate for a tiny house, as you’ll have to factor in a few price points. You need to consider the cost of land for a foundation-based tiny house, how large a home you intend to build, and whether you want a gas and water hookup.
On the low-end, buying a tiny house might cost you as little as $10,000. This price range is often paired with a DIY build kit, so you’ll have all of the materials delivered, and it’ll be your job to put the pieces together following the instructions or blueprint. A budget option makes permanent housing a reality, but you might also be risking a functional bathroom or high-quality materials.
On the upper-end, a tiny house may be as much as $150,000.
This price range reflects a luxurious tiny house, typically boasting high-end materials, unique features (like windows in place of walls), fancy appliances and granite countertops. The luxury features can make tight living quarters more bearable, though you could buy a larger house in this range instead.
How Long Tiny Houses Take to Build
How long it takes to build your new tiny house will depend on what types of handyman skills you possess and how much free time you have. If you leave the job to professional builders, plumbers, electricians and a construction crew, you could have your tiny home built in 120 hours or less (15 days of full-time work).
But if you’re looking to pour some elbow grease into your new abode, you’re looking at closer to 500 hours (60+ days of full-time DIY construction).
The Best Places to Build
So you’ve decided the tiny house lifestyle is for you, but now you’re wondering where to begin the build or where you might go to buy a tiny house of your own. You’ll have to consider local ordinances, zoning laws and what’s available to you to decide. Consider the following.
Whether it’s your own plot of land or you’re renting a portion of land from a loved one, this is the most logical option. Residential-zoned land typically has water, electric and gas hookups, meaning the modern luxuries are all there. But you might not be able to park an RV on the land.
Tiny House Communities
Like mobile homes, there are also a few tiny house co-ops scattered across the nation. Rather than flat-out buying a plot of land, you can spend up to $500 a month in “rent” or an HOA. This is an excellent option if you want to be around fellow tiny homeowners in a community.
If you have a tiny house on a trailer (on wheels), you can’t simply park your tiny home on a land plot and call it home. You may have to jump through additional hoops, such as setting up shop at a legitimate RV site or having your land zoned for recreational vehicles.
Other Things to Consider
Some states are a little picky regarding where you can build tiny homes. So you might also have to consider the following when building:
- The interior square footage (some states have a minimum and a maximum)
- Classification (some states require tiny houses to be called “accessory dwelling units”)
- Width, height and length limitations (specifically for tiny houses on wheels)
- Zoning (ADU, residential, RV, will vary by state)
Your best bet is to give your local zoning board a call to ask about your local area’s specifications. Regardless, you will need permits for nearly every build project, such as electric, plumbing and construction.
Tiny House Loan & Financing Options
Financing your tiny house will depend on a few things, such as where you plan to live in your home permanently and whether your tiny home is on wheels. Your options include:
- Pay outright (a cheap $10,000 DIY build kit may be in your budget)
- Manufacturer financing (some tiny home builders will offer to finance with interest)
- RV loans (if your tiny home is on wheels, though this type of loan is uncommon)
- Bank loans (construction loans or a typical 30-year mortgage)
- Personal loans (usually come with an abnormally high-interest rate)
In addition to the materials’ cost to build, you’ll also have to factor in real estate costs, hiring builders and contractors, and interest on your loan.
Whether you’re a first-time homeowner, looking to downsize and cut costs or are caught between the choice of renting or buying, one thing’s for sure: Buying or building a tiny home might be the perfect way to make homeownership a reality.
Not only can you build your own custom home for a fraction of the cost, but you also can build your home on wheels if you don’t like to stick around in one place for too long. Consider a tiny home if you like minimalism, have a small family (or just you), and appreciate being off the grid and away from the bustling city streets.
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