Investing in real estate requires constant vigilance. If you’ve done your homework, you’ve probably heard of the tiny house trend. Most people refer to it as the “Tiny House Movement,” and it is based on the idea that people should be able to afford their homes. The tiny house movement has evolved from a fun side hobby to a serious endeavor. Investors are debating whether or not to join the tiny house revolution.
You may wonder, “Should I buy a smaller house?” Is it wise to invest in a tiny house? Yes, many people believe the answers to both questions are yes.
Investing in a tiny house can be a smart way to make money in real estate. To help you get started, I’ve outlined four reasons to consider investing in these types of properties in this blog post. But first, let’s go over some important facts about tiny houses.
WHAT IS THE AVERAGE SIZE OF A TINY HOUSE?
According to The Tiny Life, a typical US tiny house is 100 to 400 square feet. For comparison, a typical American home is 2,600 square feet. These properties come in all shapes and sizes. Its owners can move it from place to place by connecting it to trailers. Others, on the other hand, are permanent foundations.
Furthermore, some tiny houses are self-built, while others are built by professionals. A shed or storage container can also be used as a home. To create the illusion of space, tiny homes often have open floor plans, large windows, high ceilings, double-duty furniture, and micro-appliances. So, while they vary in size, shape, and style, they all make life easier in a smaller, more efficient space.
WHAT CAUSED THE TINY HOUSE MOVEMENT TO TAKE OFF?
Think about it: when and where did the tiny house movement begin, and why is it so popular now? Some may think this is a new housing trend, but tiny homes have a long history. According to studies, compact homes became popular in the 1980s and grew in popularity in the late 1990s. Then came the housing crisis of 2009, which fueled interest in downsizing and living in smaller homes (including tiny houses).
Aside from that, housing costs around 37% of the average American’s budget, with many people spending much more. As a result, finding cheap homes for sale is more difficult. Mortgage rates are rising in most parts of the country, which explains why homeownership is declining while rental rates are rising. All of this data suggests that housing is unaffordable for most Americans, forcing them to rent or downsize. As a result, investing in tiny homes may be profitable.
HOW TO MAKE MONEY INVESTING IN TINY HOUSES
So, how can a real estate investor benefit from a little house purchase? In the small house market, there are a variety of ways to make money. You may consider investing in tiny homes in four distinct ways.
Consider Becoming A Landlord
The simplest way to profit from a tiny house investment is to rent it out. Purchase a small house and turn it into a rental property to earn monthly rental income. This can be profitable, depending on the location of the rental property. Invest in a high-demand area for this type of property. You’ll be able to find a tenant and set a fair rent. Here is a list of the best cities to invest in tiny homes.
Before renting tiny houses, keep in mind that they are not for everyone. Small houses aren’t designed to accommodate a couple or a family with children. Based on size and appliances, you must be realistic about the type of tenant that will suit your investment property. The last thing you need is an empty rental that isn’t bringing in any money after you rent it to someone.
Consider VRBO Or Airbnb
Most real estate investors will find that renting it out as a vacation rental is a better option. Many modern tourists (especially millennials) prefer non-traditional accommodations to hotel rooms. Along with RVs, lodges, and yurts, tiny houses are a popular choice for them due to their uniqueness. Investing in real estate and making extra money with Airbnb can be done with tiny vacation homes.
Do your homework and understand what’s required in your area before diving in. There are strict laws and regulations governing what types of real estate can be rented on services like Airbnb. Furthermore, the number of short-term guest days per year may be limited. Regulations like this affect how much money you can make from Airbnb. Make sure you do your homework before you invest in a tiny house..
Buy and Sell Renovations
For house flippers, the tiny house craze has opened up new investment prospects. Many people are establishing a house flipping business since flipping real estate has become a popular approach for making money in real estate. Housing availability, on the other hand, is dwindling, which can be both good and bad for flippers. This means that while flipped houses sell faster, finding them is more difficult. As a result, house flippers must be more creative in their search for investment homes. As a result, a large number of them have turned to flipping little dwellings.
Tiny house flipping can be done in two ways. The first method involves a real estate investor purchasing a tiny house, renovating it, and then selling it for a profit. Because of the desire for tiny houses, you’ll not only be able to take on smaller square-foot projects and have reduced costs, but you’ll also have a pool of possible home purchasers. As a result, while flipping little residences, your risk is reduced than when converting a larger residential property. The other option is to purchase a mobile home park and convert the units to tiny homes. This will boost the park’s worth and attraction, allowing you to sell it at a high profit margin. This is an interesting financial option that you should look into..
Consider Renting Out Land
Finally, instead of buying or owning tiny homes, you can buy or own land. You have the money but not the time to renovate or rent a home. Buying land and renting it to tiny home owners is a simple way to make quick money. Many small house owners (especially those on wheels) rent their land. It’s a great investment opportunity to subdivide your land and rent it out to many tiny homes!
BENEFITS OF PURCHASING A TINY HOUSE AS AN INVESTMENT
Knowing how to profit from the tiny house trend in real estate investing leads to asking why tiny houses are such a good investment. An investor’s benefits of investing in tiny homes for sale Investing in these properties has four advantages:
Affordability
Tiny houses are naturally more economical due to their size. How much does a small house cost? According to The Tiny Life, a tiny house costs between $10,000 and $40,000. Location, upgrades, rooms, size, water access, and yard all affect tiny house pricing. Due to the low cost, first-time investors who cannot afford a traditional investment property may be able to buy a small house instead.
If you don’t want to buy one, you can build your own tiny home for rent for a low cost. In the US, the average cost of building a 200-square-foot home is $25,000-$35,000. The average cost of building a new home is $292,000. Taxes, utilities, and maintenance are all cheaper in smaller investment homes.
They’re Easier To Take Care Of
Tiny homes are also easier to manage on your own as a real estate investor. Smaller areas require less energy to maintain, clean, renovate, and move. You won’t have to pay extra for major repairs like roof replacement or pool repair. You can also save a lot of money on utilities such as electricity and heating by living in a tiny house. If you invest in small houses for rent and have a renter occupying the property, you can choose your level of involvement to generate passive rental income..
They Are Appealing To Both Renters And Buyers
The internet is full of accounts from people who are and have lived in tiny homes for years. The tiny house movement is spreading across the country. Simply put, people are choosing to downsize and live with fewer possessions. Small houses are less expensive to rent than a single-family home or condominium.
Tiny houses appeal to buyers of all ages, from baby boomers to millennials, because they offer many unique features at a low cost. Many people are following tiny house owners who post about their comfortable lifestyles on social media. This shows that whether you buy tiny houses for rent or flip and sell, investing in these properties will make you money..
Increased Units Improve Return On Investment
Another reason to invest in tiny homes is the combination of the above benefits. Their affordability, ease of use, and high demand make them ideal for building a profitable investment portfolio. In other words, you can buy a lot of tiny houses and make a lot of money quickly. Tiny homes can outperform traditional residential investment properties.
You might buy a ten-unit multifamily property and wait several years before buying another. If you buy a tiny house and flip it within a few months, you can double your money! You could even buy a bunch of cheap tiny houses for sale and rent them out to make money! Many years down the road, you’ll have more investment properties than if you’d invested in multifamily housing.
Summary: What Is A Tiny House And Is It A Good Investment?
Investing in real estate requires constant vigilance. If you’ve done your homework, you’ve probably heard of the tiny house trend. Most people refer to it as the “Tiny House Movement,” and it is based on the idea that people should be able to afford their homes. The tiny house movement has evolved from a fun side hobby to a serious endeavor. Investors are debating whether or not to join the tiny house revolution.
If you have any questions about what are tiny houses and are they a good investment? contact me today.