Author Topic: Getting Rich With a Tiny House  (Read 16712 times)

freeedom

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Getting Rich With a Tiny House
« on: March 05, 2014, 09:23:10 PM »
It costs me about $1625 per month to live at my house. I own a 2 bedroom and live by myself. I'm thinking of building a tiny house for 30K and paying $250-$300 a month for rent. If I did this I would also drop my commute from 1 hour to 10 minutes. I'm not seeing a downside here.

I was doing some research and posted an add on craigslist to let me park my tiny house in someones yard with an additional small storage trailer. The $250-$300 includes everything. Any thoughts? Any downsides? I'm about ready to pull the trigger and start the process of selling most of my stuff to help finance the build. I have no experience building things, but my uncle is a contractor and said he would help me build it.

Tiny House: http://minimhomes.com/

(Monthly house cost)
Mortgage: $1400
Water/Sewer: $50
Gas: $75
Electric: $50
Internet: $50

NickNam

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Re: Getting Rich With a Tiny House
« Reply #1 on: March 05, 2014, 09:29:04 PM »
I've been fascinated by tiny houses recently. If you're single and it would save you so much money I think it's a great idea. Please write a post about the entire journey there!

FuckRx

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Re: Getting Rich With a Tiny House
« Reply #2 on: March 05, 2014, 09:58:00 PM »

just curious about the following questions:

how old are you?
are you planning on settling down with someone else soon?
how long would you keep this house?
would it be hooked up to electricity and have sewage etc?
what would you do with it afterwards when you ready to leave it?
could you maybe buy a small piece of land and then build it on there and so that way you can at least sell it for something of a profit?

freeedom

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Re: Getting Rich With a Tiny House
« Reply #3 on: March 05, 2014, 10:07:56 PM »

just curious about the following questions:

how old are you?
are you planning on settling down with someone else soon?
how long would you keep this house?
would it be hooked up to electricity and have sewage etc?
what would you do with it afterwards when you ready to leave it?
could you maybe buy a small piece of land and then build it on there and so that way you can at least sell it for something of a profit?

Good questions!

28
I have a girlfriend. We discussed moving out of my state because it has super high taxes. She just went back to school, so we're kind of stuck around here for two more years.
The replies I received were from people who already had electric and sewage hookups in their yard. People usually got them installed for relatives to stay.
I suppose I would bring it with me when I moved, I can always find a place to hook it up... even if it's at a campground. I guess eventually I will buy another house, but even then I could park it in the yard, and rent it out.
Sure I could... but I'm not buying again in this state.

dsiee

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Re: Getting Rich With a Tiny House
« Reply #4 on: March 06, 2014, 12:07:25 AM »
I think tiny houses and MMM are a perfect match. You can't be a consumer sucker when your house cannot fit much more stuff!
I have thought about it too as I'm a uni student and not quite 20. I imagine the savings would be amazing. Unfortunately regulations are retarded in Australia making it a bit difficult, plus the trailer would cost me about $10K.

Anyway, keep us posted! I would love to see a build log and stuff if you choose to go ahead.

Babymoustache

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Re: Getting Rich With a Tiny House
« Reply #5 on: March 06, 2014, 12:25:37 AM »
I really like the idea of tiny houses too, but it does seem to be hard to find places to park them without councils moving you on (from what I read). I thought this was a good realistic article on what it was like to make the transition. http://thetinylife.com/the-things-i-miss-most/

highwayskies

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Re: Getting Rich With a Tiny House
« Reply #6 on: March 06, 2014, 10:01:15 AM »
Also planning to go tiny!  Making the finances work now while browsing.  Hadn't seen the Minim.  Thanks!  (Was the $1400 a mortgage on the Minim?  They estimate $67k on the high end to purchase one pre-built, but you said you were building (estimated at $31k).  Just curious.  We really like this one!

freeedom

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Re: Getting Rich With a Tiny House
« Reply #7 on: March 06, 2014, 10:27:36 AM »
Also planning to go tiny!  Making the finances work now while browsing.  Hadn't seen the Minim.  Thanks!  (Was the $1400 a mortgage on the Minim?  They estimate $67k on the high end to purchase one pre-built, but you said you were building (estimated at $31k).  Just curious.  We really like this one!

The $1400 mortgage is on my existing house... 2 Br, 1200 sq ft. I have been living here for 4 years, but it's an obscene amount of space for 1 (even 2) people. Far too much.

I am going to build it with my uncle for 31k. I am going to take 10K from savings and get a loan for the other 20K. I figure I can pay that loan off in about 8 months without the expense of a house. Btw, it's hard to get a mortgage on a Tiny House. I am either going to get the loan through lending tree or a local credit union.
« Last Edit: March 06, 2014, 10:43:17 AM by freeedom »

ruthiegirl

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Re: Getting Rich With a Tiny House
« Reply #8 on: March 06, 2014, 10:44:50 AM »
You had me until you mentioned the 20K loan.  Any way you can pay cash as you go?  Are you selling your house? 

freeedom

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Re: Getting Rich With a Tiny House
« Reply #9 on: March 06, 2014, 12:04:07 PM »
You had me until you mentioned the 20K loan.  Any way you can pay cash as you go?  Are you selling your house?

Well I have about 20-25k paid into my house, so I'll need a loan in order to get the tiny house built. Then I will pay off the loan ASAP when I sell my house.

Paying cash as I go doesn't really make sense here. It's okay to leverage debt sometimes, especially in the short term.

KingCoin

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Re: Getting Rich With a Tiny House
« Reply #10 on: March 06, 2014, 12:13:46 PM »
Why not sell the 2-bedroom place and buy/rent a 300-650 sqft studio/1-bed? You might realize a large percentage of the cost savings without the complications and inconveniences of a mini home.

freeedom

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Re: Getting Rich With a Tiny House
« Reply #11 on: March 06, 2014, 01:34:12 PM »
Why not sell the 2-bedroom place and buy/rent a 300-650 sqft studio/1-bed? You might realize a large percentage of the cost savings without the complications and inconveniences of a mini home.

Because in my area a 1 bedroom apartment is 1k, so there'd hardly be any savings. I might be able to get a studio for 800... maybe.

Bethersonton

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Re: Getting Rich With a Tiny House
« Reply #12 on: March 06, 2014, 01:52:04 PM »
My husband and I are 18 months into building our tiny house on wheels. We bought a small piece of unincorporated land to park it. We will have rainwater catchment and a humanure toilet; electrical and fiber internet are already there.

It is a ton of work to build a tiny house, a real mental, physical, financial and emotional challenge. We are finally nearing the end and I know it will be worth it financially. A few tips:

1) save up 150% of the money you *think* you will need before you begin.
2) understand that even though the house is tiny that it will still be many, many hours of decision making and hands on building. If this is your first construction project, add to that many many hours of researching/teaching yourself how to do things. 500 hours is a very conservative estimate. That is two eight hour days on Saturday and Sunday every week for the better part of a year. Your weekends, totally demolished. No breaks, no vacations.

Not trying to discouraging anyone, just trying to show people the reality so they can go in with clear eyes. I wish someone had told me those two things before we started building. I love hearing about other tiny housers within the MMM world.
« Last Edit: March 06, 2014, 01:55:12 PM by Bethersonton »

Thegoblinchief

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Re: Getting Rich With a Tiny House
« Reply #13 on: March 06, 2014, 02:15:46 PM »
Another strategy would be to find a 2-4 unit property, but it sounds like you're in an inflated real estate market.

I consider myself a tiny houser, even though it's a traditional house, because we've got 5 people in 730 sqft. A true tiny house is much more of a challenge, mainly because of code compliance and utility hookup. I'd listen to the others and make sure you do research, and be prepared to either spend more than you think, or get it "livable" and finish it while moved in.

Good luck, I totally salute your intentions, just make sure you do the research :)

jfer_rose

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Re: Getting Rich With a Tiny House
« Reply #14 on: March 06, 2014, 02:17:16 PM »

Tiny House: http://minimhomes.com/


Heehee, I know the guy behind this. When worlds collide.

bearman

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Re: Getting Rich With a Tiny House
« Reply #15 on: March 06, 2014, 03:37:49 PM »
Tiny houses are really pretty awesome, and I think they can be a great solution in a variety of situations. I spent about 3 months aggressively researching a "tiny house on wheels" as an alternative to our current home (2,000-sq-ft townhouse). You are right that there are financial savings, especially if you live in a high cost-of-living area - less energy cost, no mortgage / no interest, no insurance, minimal tax, etc. While my wife and I (no kids) were convinced we could definitely live in a space that size, we concluded there were too many peripheral reductions in quality of life, such that it wasn't worth it, given the ROI timeframe.

For example, if you build a tiny house on wheels, then that means there is likely no legal area to park it inside a city limit (other than an RV park). In most municipalities, temporary housing (RVs, etc) can only be dwelling units for fixed time periods (30 days, etc). So that means you'll either need to park illegally in a city or legally in an outer county area. In my case, if I live in an outer county area, then I can no longer bike to work, which I greatly enjoy, and our driving commute would be pretty bad.

The other big deal-breaker for us was the reality that any place you park will likely have drawbacks and be "temporary." When you buy a house, you generally have a large pool of possible locations. Relatively speaking, there are very few places to park a tiny house. And then, any place you find will only last (in all likelihood) for a few years, at most, and then you'll need to find a new place to park.

All that to say, after analyzing the cost savings and weighing the tradeoffs, it became clear that I'd be happier working 2-3 years longer in our current house, with our current enjoyable life, and then eventually build a small home in an ideal location. Of course, YMMV :)

I would encourage you to really analyze the cost savings. You may be able to achieve similar savings by buying a cheaper place with a 15-year loan (cutting your monthly interest cost, tax, etc). What are your mortgage expenses? How much is principal vs interest vs escrow vs PMI? Let's assume you have $300 / month in principal, in that case it will take you 2.5 years to recoup your $31k in building costs ($1625 - $300 = $1325 current cost - $300 new cost = $1025 monthly savings * 12 = $12,300 yearly savings x 2.5 years = $31k). If your current house will experience any level of appreciation, then your return will take longer. If your tiny house "rent" rises, then your return will take longer.

That said, if I had an enjoyable place to park a tiny house (legally) for the long-term and it was within biking distance of my job and close to the things that mattered, I would likely do it as well for a few years and rent out our townhouse. Good luck!

loki

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Re: Getting Rich With a Tiny House
« Reply #16 on: March 06, 2014, 04:05:15 PM »
I'm definitely a fan of small (and in some cases, tiny) houses. However, I'd urge you to think a bit more long term with your decision (at least 5 years). In that time, do you see yourself getting married and starting a family? If your answer is yes, then do you see yourself and your future partner wanting to live in said tiny house? Etc. There's nothing wrong with changing your mind, but if you time things badly, you'll end up either buying or building a house and then selling it at a loss as you move back into your 1200 sq. foot or larger family house. It's really easy to think you'll be a bachelor forever in your 20s, but things can and do change.

freeedom

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Re: Getting Rich With a Tiny House
« Reply #17 on: March 06, 2014, 04:47:47 PM »
My husband and I are 18 months into building our tiny house on wheels. We bought a small piece of unincorporated land to park it. We will have rainwater catchment and a humanure toilet; electrical and fiber internet are already there.

It is a ton of work to build a tiny house, a real mental, physical, financial and emotional challenge. We are finally nearing the end and I know it will be worth it financially. A few tips:

1) save up 150% of the money you *think* you will need before you begin.
2) understand that even though the house is tiny that it will still be many, many hours of decision making and hands on building. If this is your first construction project, add to that many many hours of researching/teaching yourself how to do things. 500 hours is a very conservative estimate. That is two eight hour days on Saturday and Sunday every week for the better part of a year. Your weekends, totally demolished. No breaks, no vacations.

Not trying to discouraging anyone, just trying to show people the reality so they can go in with clear eyes. I wish someone had told me those two things before we started building. I love hearing about other tiny housers within the MMM world.

Wow, 18 months. That's a long time. Are you following plans? I plan on building exactly to specifications, with the prefab SIPS in order to get it built as quickly and efficient as possible. My uncle is a contractor and experienced in electrical and plumbing and we'd be following the plans exactly to spec... I estimated 3 weekends.

Bethersonton

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Re: Getting Rich With a Tiny House
« Reply #18 on: March 06, 2014, 06:29:54 PM »

Wow, 18 months. That's a long time. Are you following plans? I plan on building exactly to specifications, with the prefab SIPS in order to get it built as quickly and efficient as possible. My uncle is a contractor and experienced in electrical and plumbing and we'd be following the plans exactly to spec... I estimated 3 weekends.

Yes we are following plans that we tweaked in google sketchup. But the plans were only for the structure, and that is the easy part. If you have construction experience and free family help plus using SIPs, then yeah, probably won't take 18 months. Three weekends is ambitious but I'm not saying it can't be done. Construction always takes longer than most people think it will, because the windows are back ordered, you forgot a part and have to make another trip to Lowe's,etc.

We made the choice to start building while also starting our own businesses, which has been a challenge. That said, if you poke around the tiny house community online, you will find that our timeline is pretty much the rule, not the exception. Most people have grand plans to finish in 3-6 months but that quickly goes out the window. Two years is not uncommon.

If we had saved up every penny before starting to build, it would be done by now. It still took my husband 25 days to frame and sheath everything working on his own.


freeedom

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Re: Getting Rich With a Tiny House
« Reply #19 on: March 06, 2014, 07:50:57 PM »
I'm definitely a fan of small (and in some cases, tiny) houses. However, I'd urge you to think a bit more long term with your decision (at least 5 years). In that time, do you see yourself getting married and starting a family? If your answer is yes, then do you see yourself and your future partner wanting to live in said tiny house? Etc. There's nothing wrong with changing your mind, but if you time things badly, you'll end up either buying or building a house and then selling it at a loss as you move back into your 1200 sq. foot or larger family house. It's really easy to think you'll be a bachelor forever in your 20s, but things can and do change.

5 years! That's way too long to consider something... I don't plan on marriage, but I would like to start a family at some point.

My rationale is this... I'm moving out of this state, come hell or high water. I can have a moveable living unit that I can haul with me where ever I end up, and live in that when I get there. When it comes time to start a family, I can put the unit in my back yard, and rent it out or use it for camping.

I have discussed the tiny house with the GF, and she likes the idea of living in it until we make some babies.

Prairie Stash

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Re: Getting Rich With a Tiny House
« Reply #20 on: March 06, 2014, 08:07:21 PM »
What's the difference between a tiny house and a RV?

Bethersonton

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Re: Getting Rich With a Tiny House
« Reply #21 on: March 06, 2014, 08:19:20 PM »
What's the difference between a tiny house and a RV?

Number one factor is insulation and condensation.

Two is quality.

Three is aesthetics and customization.

Four is many places might allow an aesthetically pleasing tiny house over a typical trailer.

dsiee

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Re: Getting Rich With a Tiny House
« Reply #22 on: March 14, 2014, 09:44:53 PM »
Also a tiny house doesn't have to be on a trailer. A small cabin on a foundation would still count as a tiny house (in mu opinion).

greaper007

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Re: Getting Rich With a Tiny House
« Reply #23 on: March 14, 2014, 11:17:43 PM »
What about buying an older RV that fits in a parking space.   Something like a VW Rialta, I was seriously looking into that when I had a 150 mile round trip commute for a couple of years.   It seems like you could get away with finding places to park something like that a lot easier than a tiny house and you wouldn't have to worry about building anything.   

Then when your so is done with school, you can just sell it and move to a more affordable area of the country.   I'm in a house that's more than double the size of yours in a really nice suburb of Denver, and my mortgage is the same as what you pay.   (No, 2700 sq ft isn't mustachian, but it was literally the deal of a lifetime, $25,000 under market value and there was nothing wrong with it.   I'm staying here until the kids are out of college).

greaper007

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Re: Getting Rich With a Tiny House
« Reply #24 on: March 14, 2014, 11:20:30 PM »
Also, have  you considered renting your house?   It sounds like you could get way more than you mortgage each month and you get to cash in on rising real estate values to boot.   Maybe even make a deal to park your tiny house in your current yard.

1967mama

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Re: Getting Rich With a Tiny House
« Reply #25 on: March 15, 2014, 02:03:45 AM »

2527

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Re: Getting Rich With a Tiny House
« Reply #26 on: March 15, 2014, 06:54:31 AM »
Why not sell the 2-bedroom place and buy/rent a 300-650 sqft studio/1-bed? You might realize a large percentage of the cost savings without the complications and inconveniences of a mini home.

I agree with this. 

TomTX

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Re: Getting Rich With a Tiny House
« Reply #27 on: March 15, 2014, 09:40:30 AM »
Also, have  you considered renting your house?   It sounds like you could get way more than you mortgage each month and you get to cash in on rising real estate values to boot.   Maybe even make a deal to park your tiny house in your current yard.

Yes! If rents are as crazy as you indicate - rent out the house.

Can you stay with your uncle while you do the build?


mm1970

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Re: Getting Rich With a Tiny House
« Reply #29 on: March 15, 2014, 02:04:54 PM »
I have a friend who moved out of his rental house and into a converted bus awhile back, with his girlfriend.  was only going to be a year.  Now I think it's two.  They are renting a little plot of land in an industrial area, kind of hidden, with a little yard for a pet, probably for only a few hundred a month.

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The Bearded Bank Builder

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Re: Getting Rich With a Tiny House
« Reply #31 on: July 17, 2014, 04:47:07 PM »
I would encourage you to really analyze the cost savings. You may be able to achieve similar savings by buying a cheaper place with a 15-year loan (cutting your monthly interest cost, tax, etc). What are your mortgage expenses? How much is principal vs interest vs escrow vs PMI? Let's assume you have $300 / month in principal, in that case it will take you 2.5 years to recoup your $31k in building costs ($1625 - $300 = $1325 current cost - $300 new cost = $1025 monthly savings * 12 = $12,300 yearly savings x 2.5 years = $31k). If your current house will experience any level of appreciation, then your return will take longer. If your tiny house "rent" rises, then your return will take longer.

This is true, but you're not accounting for the fact that he will have $31k in equity in the tiny house (assuming it is worth around that). This is calculating it as if the $31k is a sunk cost with no resale value. Net worth wise, if he sold the tiny house after 2.5 years, he would have broken even on the tiny house (built for $31k, sold for $31k), plus the $31k he saved while living in it. If he stayed in the house, his net worth would have only increase by the $300/month of principal payments; $9k over 2.5 years. So looking at a net gain of $22k by building the tiny house over staying in the current house. As stated, the other factors are a raise in rent and appreciation on the house.

irishQ

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Re: Getting Rich With a Tiny House
« Reply #32 on: July 17, 2014, 06:49:01 PM »
not for nothing, but...

are we reverting to feudalism and fiefdoms ?

Most medieval homes were cold, damp, and dark. Sometimes it was warmer and lighter outside the home than within its walls. For security purposes, windows, when they were present, were very small openings with wooden shutters that were closed at night or in bad weather. The small size of the windows allowed those inside to see out, but kept outsiders from looking in.

Many peasant families ate, slept, and spent time together in very small quarters, rarely more than one or two rooms. The houses had thatched roofs and were easily destroyed.



C. K.

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Re: Getting Rich With a Tiny House
« Reply #33 on: July 17, 2014, 08:38:42 PM »
not for nothing, but...

are we reverting to feudalism and fiefdoms ?

The difference between the OP and a peasant is choice.
« Last Edit: July 17, 2014, 08:56:49 PM by C. K. »

Goldielocks

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Re: Getting Rich With a Tiny House
« Reply #34 on: July 17, 2014, 10:28:32 PM »
Does it have a wastewater tank that needs to be pumped?  how often?  make sure the landlords understand how that works.  how the waste truck accesses it, etc.  Rural areas would have no problem understanding this, but urban areas, it will be strange to many people.