Author Topic: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!  (Read 2159 times)

ComradeGrumbles

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Hey everyone,

TL:DR: I am financially stable at the moment and I am looking at an affordable tiny-ish house (950sqft or so) to further financial independence. I'm needing extra opinions.

Long Story (I'll try to detail, without giving all my numbers away. :P) I've been reading MMM and similar blogs for years. I am absolutely onboard and fully-committed to frugality. I often feel like I have this down-pat, but I really want some extra opinions for this particular decision, because it's the biggest financial decision I may have ever made. Also, the "bubble-ish" economy that we're seeing now makes me extra-wary. I'm graduated, steadily employed, and debt-free. Currently, I'm dumping my money on rent and am a little bummed about that, but I'm pushing to lower my overhead with every life change or relocation. I have a shockingly reliable 7 year old car that's paid-off (I know... NEW, wasteful!  :P. ) and plan to run it into the ground. 

I have been watching a rumored tiny-house community in Charlotte, NC for a few months, but never imagined that it would come to fruition. Low and behold, it's here and it is a real possibility.   (See home developer and info URL: https://www.keyoparkwest.com ). I've always loved the idea of a small and affordable home that could be paid off in a snap, pushing me closer to financial independence, but am a little freaked out about the idea now that it is moving from a dream to a reality.

I could get 800 - 950 sqft, new, somewhat-custom home in a good area, for $130,000, all-in.  After 20% down, the loan would *only* be $104k with 3.8% interest.  I am not one to take debt lightly, so even such a relatively small mortgage is still giving me the chills... I could put more down, but I want to maintain an adequate safety-net and won't sacrifice that.

Doing the math and splitting this mortgage with my significant other (considering her payments as her "Rent"), it would be paid off in 4 years flat. She and I have a really strong relationship, but I always do all the math and prepare for the worst. So, should the S.O. not work out, I can pay it off in 8 or 9 years, myself (possibly sooner, depending on how hard I hustle, in true MMM fashion). 

If/when the economy or job situation becomes uncertain, a 30-year fixed mortgage (as opposed to a 15-year) would leave my monthly mortgage under $600.  While I will never willingly let a mortgage string out for 30-years, the flexibility and low-minimum make me feel better, should the worst-case economic situation come about.

If you've made it this far, thank you. The real question is... What would you do? With the assumption that I am pushing towards financial independence, but also would love a brand-new, custom small house, is this reasonable? Is it safe?

Thanks again for your time and opinions. I'm looking forward to what everyone has to say!

totoro

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #1 on: August 13, 2017, 11:06:23 AM »
I don't understand your market well or how it affects your commute, but the homes look nice and 950 square feet is not too tiny for long-term living.  I'd personally go for the accessory building/MIL suite as well so you can have rental income later if you want to retire earlier.

englishteacheralex

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #2 on: August 13, 2017, 11:38:53 AM »
I don't know anything about your real estate market. Essentially the question you're asking is: is it a good idea to take out a $130k mortgage?

And the answer is: it depends. All the normal, boring things to consider apply: do you have an emergency fund? What percentage of your income does the mortgage represent? Sounds like you have those questions covered.

The specifics...those don't seem like "tiny houses". I'm married with two kids and we live in a condo that is 850 square feet. It's fine. I don't feel like I'm living in a tiny house. What I've heard about tiny houses is that they are just glorified trailers, and trailers are terrible investments. The houses on the website don't look like trailers. What I'm getting at is are these things going to appreciate over time or what? It just looks like a development with unconventional houses. So maybe they will appreciate. Hard to say without knowing the market. It would be a big question in my mind, if I were you.

It seems like you want a super cute brand new house and the low square footage relative to typical American houses is making the mortgage affordable. Doesn't seem like there's much wrong with that. But...it's kind of like buying a brand new Honda Fit, instead of a used Toyota Corolla. You could probably get a cheaper mortgage if you were willing to buy a less fancy but still small house built in the 70's in an older subdivision.

But maybe you couldn't. Again, I don't know your local real estate market. Might be worth talking to a good realtor.
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lbmustache

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #3 on: August 13, 2017, 04:37:41 PM »
Since when is nearly 1k sq ft "tiny" for two people... lol. I think that's a perfectly decent size, "tiny" would be 600 sq ft or less IMO.

A 20 year mortgage is actually the sweet spot between a 15 year and 30 year, if you're open to that. Without knowing your income details or anything else... I think $100k is fine to spend on a place given what you've told us.

frugaldrummer

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #4 on: August 13, 2017, 07:16:42 PM »
950 sq ft is a nice size IF the layout is good AND it's a climate with some outdoor living.

My Mom's last house was 1,025 sf, 2 bedrooms plus a den (same size as the second bedroom except no closet), 1 1/1  Ba. The layout was great (galley kitchen with opening to dining area and living room, giving a "great room" feel. Den was next to the living room, would have made a nice private bedroom, was used as tv room which kept living room more open. Could have made a great office too. Master and second bedroom were down hallway with bathroom off the hall. Mild climate and large sliders from living room leading out to patio and nice back yard made the house feel larger. This was a fifties house with a great floor plan. I lived there with her for a year after my divorce and there was plenty of room.


geekette

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #5 on: August 13, 2017, 10:30:35 PM »
Interesting project!  I went to the site, but I can't find pricing info (except for add ons).  One of the news sites said they start at around $90k, so I don't know how you could almost double the size for another $40k (when just adding 170sf is $23k). 

It does look like it's about 2 miles from the end of the airport runway, and that's a pretty busy airport, IIRC.

Linda_Norway

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #6 on: August 14, 2017, 04:08:06 AM »
Interesting project!  I went to the site, but I can't find pricing info (except for add ons).  One of the news sites said they start at around $90k, so I don't know how you could almost double the size for another $40k (when just adding 170sf is $23k). 

It does look like it's about 2 miles from the end of the airport runway, and that's a pretty busy airport, IIRC.

Is that the catch? Then I personally would not like to live there because of the noise and polluted air. House prices are often related to location.
Otherwise this tiny house might be nice. And this one isn't tiny. It's like having an apartment, but with the advantages of a villa.
Is it a warm climate? A freestanding house has a lot of outer walls. Check the insulation if that is relevant.

DarkandStormy

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #7 on: August 14, 2017, 08:56:47 AM »
Is your SO on board with that size house?  As others have said, that size should serve you well, but if you plan on having a couple little Mustaches down the line, you'd have to consider an additional bedroom potentially (depending on the current layout).  Of course, if you two have it paid off in 4 years, that's 100% equity you can put towards the next house if you wish.

I ask about the SO "being on board" because if she's not a MMM type, she might think you two need 1,500+ sq ft for yourselves.

Just things to think about.  I hated paying rent so this sounds like a great opportunity for you - I definitely understand it about getting nothing out of paying rent.  Get some equity built up!  I don't know at that size that it's a "tiny house" but definitely a bit more frugal than the 2,000+ sq ft starter homes many people buy with wasted space.  If it fits your needs and lifestyle, then go for it.  Like I said, consider your SO's opinion and if any little ones are planned for the future - size, school district, safety, accessibility to parks, etc.  Also consider location to work or any other areas you frequent.   If it meets everything else on your checklist I say go for it!  Sounds like a cool project.
« Last Edit: August 14, 2017, 01:09:19 PM by DarkandStormy »
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MrsPete

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #8 on: August 14, 2017, 12:27:09 PM »
I would not do it:  950 sf is a pretty reasonable amount of space for two people, but $130,000 seems outrageous for that amount of space.  I live in a decent, nicely-maintained 2400 sf house (also in mid-NC) that we're preparing to sell for an asking price of $140,000.  Yeah, 950 may be enough, but more for almost the same price would allow you space for hobbies, a small business, even a rent-paying roommate. 

I think you can do a whole lot better for $130,000

ComradeGrumbles

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #9 on: August 14, 2017, 07:12:07 PM »
Thank you to everyone and all of the opinions!  Even the one/s who disagree!

To answer the question that came up a few times, my SO is onboard with this idea. In fact, she often says we could get an even smaller place. I agree, although I think that the 750 to 1000 range is the sweet spot.  I've lived in apartments that span that entire range and have been satisfied with almost all of them. 

While the price is a bit high for the sq footage, I'm writing that off as paying for the "cool/hip factor."  Because it doesn't seem egregiously overpriced, I think it's worth it.  :P

Interesting project!  I went to the site, but I can't find pricing info (except for add ons).  One of the news sites said they start at around $90k, so I don't know how you could almost double the size for another $40k (when just adding 170sf is $23k). 

It does look like it's about 2 miles from the end of the airport runway, and that's a pretty busy airport, IIRC.

- Geekette, good catch.  I didn't realize it was so close to CLT.  I think I'll have to take an hour or two to sit by the model and listen to the sky.  It could very well be bad... but, I'm hoping that it won't be. We'll see! 


I would not do it:  950 sf is a pretty reasonable amount of space for two people, but $130,000 seems outrageous for that amount of space.  I live in a decent, nicely-maintained 2400 sf house (also in mid-NC) that we're preparing to sell for an asking price of $140,000.  Yeah, 950 may be enough, but more for almost the same price would allow you space for hobbies, a small business, even a rent-paying roommate. 

I think you can do a whole lot better for $130,000


- MrsPete, this is true. These houses certainly aren't the best value for the space. That fact is playing into my pro/con list for sure.  I'm keeping an eye on Zillow and other sites for similarly sized houses and am really considering the price differences that I see.  Thank you!


I'll report back after the tour that I"m going on this Saturday.  We'll see if it's worth the markup on the square footage! 

ComradeGrumbles

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #10 on: August 14, 2017, 07:16:00 PM »
Interesting project!  I went to the site, but I can't find pricing info (except for add ons).  One of the news sites said they start at around $90k, so I don't know how you could almost double the size for another $40k (when just adding 170sf is $23k). 

It does look like it's about 2 miles from the end of the airport runway, and that's a pretty busy airport, IIRC.


The additions that can be added to the base floorplan do seem to add a bit of value.  I haven't run a $/sqft calculation yet, but my gut tells me that the price per sqft goes down as more space is added.  Definitely something to consider, without going over budget of course. 

ComradeGrumbles

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #11 on: August 14, 2017, 07:20:29 PM »
I don't know anything about your real estate market. Essentially the question you're asking is: is it a good idea to take out a $130k mortgage?

And the answer is: it depends. All the normal, boring things to consider apply: do you have an emergency fund? What percentage of your income does the mortgage represent? Sounds like you have those questions covered.

The specifics...those don't seem like "tiny houses". I'm married with two kids and we live in a condo that is 850 square feet. It's fine. I don't feel like I'm living in a tiny house. What I've heard about tiny houses is that they are just glorified trailers, and trailers are terrible investments. The houses on the website don't look like trailers. What I'm getting at is are these things going to appreciate over time or what? It just looks like a development with unconventional houses. So maybe they will appreciate. Hard to say without knowing the market. It would be a big question in my mind, if I were you.

It seems like you want a super cute brand new house and the low square footage relative to typical American houses is making the mortgage affordable. Doesn't seem like there's much wrong with that. But...it's kind of like buying a brand new Honda Fit, instead of a used Toyota Corolla. You could probably get a cheaper mortgage if you were willing to buy a less fancy but still small house built in the 70's in an older subdivision.

But maybe you couldn't. Again, I don't know your local real estate market. Might be worth talking to a good realtor.


Thank you for the response.  Excellent points, especially the car analogy.  While I can certainly get the same for less in an older house, this modern styling has me hooked and would be (I assume) much more difficult to either find or modify an existing house to become.  In particular, the sloped roof and vertical siding gets me. 

And yes, these are quite a bit larger than tiny houses!  I totally agree.  The average american may view them as tiny though, ha!  Here's to reasonably sized houses.  There's nothing I want less than a mcmansion. 

GreenEggs

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #12 on: August 14, 2017, 07:52:29 PM »
I would not do it:  950 sf is a pretty reasonable amount of space for two people, but $130,000 seems outrageous for that amount of space.  I live in a decent, nicely-maintained 2400 sf house (also in mid-NC) that we're preparing to sell for an asking price of $140,000.  Yeah, 950 may be enough, but more for almost the same price would allow you space for hobbies, a small business, even a rent-paying roommate. 

I think you can do a whole lot better for $130,000


Ditto.  My thoughts too. 

I can't see it appreciating for a loooooong time.

englishteacheralex

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #13 on: August 14, 2017, 07:56:16 PM »
Yeah...so the houses are adorable, and it would probably be really fun to live in an adorable new house. Just depends on your priorities, because you're probably paying a premium to live in an adorable little brand new house.
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ixtap

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #14 on: August 14, 2017, 08:06:44 PM »
Getting a brand new house isn't much wiser than getting a brand new car. This tiny house community is an attempt to cash in on a trend.

And, as others have noted, it looks like you should be able to get a 2-3 bedroom house in the same area for that price.

calimom

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #15 on: August 14, 2017, 11:01:38 PM »
Very cute, depending on the location. The add-ons seem like they would tick up pretty fast, and the casual eye says the construction may not be the best. Whatever you decide to  do, good luck!

merlin7676

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #16 on: August 15, 2017, 07:54:40 AM »
I'm not sure at what square footage "regular" size becomes "tiny".  I will say my DH and I have a 2 bedroom, 1 and 1/2 bath that is 954sq ft and I don't consider it tiny. 
Our kitchen, living, and dining are all combined into one great room and I think it's plenty spacious. Our master bedroom is way bigger than we need even with the large queen sized bed we have in it and the other bedroom is mainly set up for guests (we frequently have friends visiting/staying over otherwise we'd probably turn it into a office/hobby room). 
I'd be more than happy to downsize and we do have plans to eventually build a home that the plans say is 860 sq ft so not much of a downsize. I could easily see us going down to 500-600 with no problem.

Like the other say $130K does seem like a lot but again it all depends on location. And ultimately it's really up to you. If you think it's worth it, then it's worth it to you.

Cwadda

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #17 on: August 15, 2017, 08:23:29 AM »
I live in a 950 sq. ft. apartment. It's way too much space for me, there was a whole bedroom sitting empty. I ended up getting a roommate.

Honestly, I could go smaller. My mom is a designer - she always designs for functionality. If the place is designed well, the right layout and furniture to a T, you need very little space. I would go smaller, but the layout of my apartment is weird. It's got 5 doors coming off the kitchen, including a bathroom. My apartment building was built in 1917 so things are a little wonky.

Sun Hat

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #18 on: August 15, 2017, 08:53:48 AM »
950 is not too small, if that is something that was a concern for you. Small houses are easy to heat, cool, and maintenance is reduced because there is physically less to do (for instance, I painted my house exterior over the course of a very lazy week, and tiled my wee kitchen in about 3 hours). Since there is less area, I can afford to do more of the "want to do" upgrades because they're each cheaper.

A new house has pluses and minuses.
Pluses:
It should come with a warranty to cover major structural issues for a decade or so, which is nice.
You'll be able to customize it to some degree, which I can only imagine is a nice feeling (though, if that's important to you, keep in mind that a Mustachian Badass can do renos on an existing house on a reasonable budget if you DIY some aspects)
Some people like being on the outskirts of an existing city, where most new developments are built, as they are quiet and further from downtown crime and hubbub.

Minuses:
You pay a premium for newness.
Just because there is a warranty, it doesn't mean that there won't be issues.
Being centrally located makes commuting to work and fun easier

« Last Edit: August 16, 2017, 02:37:33 PM by Sun Hat »

YttriumNitrate

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Re: Aspiring to FIRE, Contemplating a "Tiny-ish" home, Clear my head!!
« Reply #19 on: August 15, 2017, 02:01:07 PM »
On the BiggerPockets forum, it seems that the humble duplex is reigning champion type of housing for financial independence and retiring early. I doubt trendy tiny houses (with imported granite and Italian marble) will be knocking off the duplex as the favorite anytime soon.

The model house on that web page certainly is cute with an HGTV look, although I wonder how much time was spent to get the look perfect for their target demographic. I'm guessing there was a good hour long debate on the giraffe / zebra pictures on the wall.