Buying tiny house vs keeping money in index fund

[Mikaelus]

So my girlfriend and I are thinking of buying a tiny house.

I have about $275K in an index fund, which I've always planned not to touch and just keep adding to. Assuming a 5% withdrawal I could probably live off that stash now, but I continue to work because I enjoy my job and would like to to accumulate more so I have more to live of if I decide to completely stop working.

My girlfriend wants to buy a tiny house, and I've always liked the idea of living in an off grid tiny home like that. We've looked into it and the tiny house and land would cost around $175K.

I want to save up for the house and land and buy it in a couple of years.

She argues that I should take $175K out of my index fund, and just buy the house and land now. She makes a good point that if I had this house I'd be paying much less in rent (I'm currently paying about $8K p.a.).

I really don't want to take from my stash though, so I'm inclined to keep renting and save the money until I can pay all/most of the $175K. I've just started a new job and think I should be able to save this much in about 2 years or so.

I'm not sure what to do. Any thoughts?

I really hate the idea of dipping into my stash, and buying a tiny house and land sounds a bit risky, but maybe she makes a good point. Can anyone see any pros or cons to either plan?

[maizefolk]

How much of the $175,000 is the land? When I've window shopped for tiny houses they've been more in the $30,000-$80,000 price range. My regular sized house (in a LCOL part of the country), cost less than you are planning to spend on a tiny house.

Also, $8,000 is saved rent on a $175,000 investment is only a 4.5% rate of return. In an average year you'd earn significantly more leaving the money in index funds.

[MilesTeg]

So my girlfriend and I are thinking of buying a tiny house.

I have about $275K in an index fund, which I've always planned not to touch and just keep adding to. Assuming a 5% withdrawal I could probably live off that stash now, but I continue to work because I enjoy my job and would like to to accumulate more so I have more to live of if I decide to completely stop working.

My girlfriend wants to buy a tiny house, and I've always liked the idea of living in an off grid tiny home like that. We've looked into it and the tiny house and land would cost around $175K.

I want to save up for the house and land and buy it in a couple of years.

She argues that I should take $175K out of my index fund, and just buy the house and land now. She makes a good point that if I had this house I'd be paying much less in rent (I'm currently paying about $8K p.a.).

I really don't want to take from my stash though, so I'm inclined to keep renting and save the money until I can pay all/most of the $175K. I've just started a new job and think I should be able to save this much in about 2 years or so.

I'm not sure what to do. Any thoughts?

I really hate the idea of dipping into my stash, and buying a tiny house and land sounds a bit risky, but maybe she makes a good point. Can anyone see any pros or cons to either plan?

Buying property and a home at your financial state is indeed a good idea. Currency and stock have no real value, property and homes do. Whether or not you use some of your stash is down to the math.

That said, buying a tiny house is not a good idea. Look for a real house (small if you want, not tiny!) that meets your needs. Don't buy a little piece of crap with a nearly non-existant market and with no real value. If you want something really cheap to live in on some land, buy a used RV for a fraction of the cost of a "tiny house" that will actually have a decent resell market should you decide you don't like it.

(note: I'm talking about the little crappy <500 sqft jobs when I say "tiny house")

[The beatles]

So my girlfriend and I are thinking of buying a tiny house.

I have about $275K in an index fund, which I've always planned not to touch and just keep adding to. Assuming a 5% withdrawal I could probably live off that stash now, but I continue to work because I enjoy my job and would like to to accumulate more so I have more to live of if I decide to completely stop working.

My girlfriend wants to buy a tiny house, and I've always liked the idea of living in an off grid tiny home like that. We've looked into it and the tiny house and land would cost around $175K.

I want to save up for the house and land and buy it in a couple of years.

She argues that I should take $175K out of my index fund, and just buy the house and land now. She makes a good point that if I had this house I'd be paying much less in rent (I'm currently paying about $8K p.a.).

I really don't want to take from my stash though, so I'm inclined to keep renting and save the money until I can pay all/most of the $175K. I've just started a new job and think I should be able to save this much in about 2 years or so.

I'm not sure what to do. Any thoughts?

I really hate the idea of dipping into my stash, and buying a tiny house and land sounds a bit risky, but maybe she makes a good point. Can anyone see any pros or cons to either plan?

2 years to save $175k. Damn, nice salary!

I have a friend who is an urban planner and he recently told me that tiny house home owners rarely ever get their money back when they inevitably sell the home. Real homes appreciate, tiny homes depreciate. Sort of like a car. Just something to think about.

[JLee]

So my girlfriend and I are thinking of buying a tiny house.

I have about $275K in an index fund, which I've always planned not to touch and just keep adding to. Assuming a 5% withdrawal I could probably live off that stash now, but I continue to work because I enjoy my job and would like to to accumulate more so I have more to live of if I decide to completely stop working.

My girlfriend wants to buy a tiny house, and I've always liked the idea of living in an off grid tiny home like that. We've looked into it and the tiny house and land would cost around $175K.

I want to save up for the house and land and buy it in a couple of years.

She argues that I should take $175K out of my index fund, and just buy the house and land now. She makes a good point that if I had this house I'd be paying much less in rent (I'm currently paying about $8K p.a.).

I really don't want to take from my stash though, so I'm inclined to keep renting and save the money until I can pay all/most of the $175K. I've just started a new job and think I should be able to save this much in about 2 years or so.

I'm not sure what to do. Any thoughts?

I really hate the idea of dipping into my stash, and buying a tiny house and land sounds a bit risky, but maybe she makes a good point. Can anyone see any pros or cons to either plan?

Buying property and a home at your financial state is indeed a good idea. Currency and stock have no real value, property and homes do. Whether or not you use some of your stash is down to the math.

That said, buying a tiny house is not a good idea. Look for a real house (small if you want, not tiny!) that meets your needs. Don't buy a little piece of crap with a nearly non-existant market and with no real value. If you want something really cheap to live in on some land, buy a used RV for a fraction of the cost of a "tiny house" that will actually have a decent resell market should you decide you don't like it.

(note: I'm talking about the little crappy <500 sqft jobs when I say "tiny house")

Just to make sure everybody's on the same page...this is what I think of when I hear "tiny house."

http://thetinylife.com/what-is-the-tiny-house-movement/

[Dicey]

...$8,000 is saved rent on a $175,000 investment is only a 4.5% rate of return. In an average year you'd earn significantly more leaving the money in index funds.

This.

Plus, is there any reason you can't get a mortgage on the potential place? Surely you can get one of those for less than you're making on that money as well.

[golfreak12]

Tiny house for $175K ?? WTH ??
I have nothing against tiny house but $175K ?? When I think of tiny house i'm thinking <$80k.
Thats like buying a smart car for $15K vs a compact car for the same price. Worst idea ever. No storage, same gas milage, worst crash rating, bad resell value all for the same price. For what ? so you can park your car easier ??

[Mezzie]

I wouldn't touch the investment money. I know if it were me and I made a major purchase that I wasn't entirely comfortable with (and it sounds to me like you aren't entirely comfortable touching your stash), I would be more likely to find fault in the purchase and be unhappy with it. Heck -- I might even become bitter towards the person who pressured me into it.

Two years is not a long time to wait, but it is plenty of time to really research the exact house design you want and all the pros and cons of that style of living. $8000/year in rent is not bad at all; I'd stick with it while saving.

Also... is there any reason 100% of the cost is falling to you? Even if your girlfriend wanted you to take out your half of the cost from your investments, I would advise against it, but at least it would be a fair proposition. For you to front all the money seems unfair.

I'm only dealing with the emotional side, I know. I'll let the others deal with the numbers. :)

[former player]

What I'm getting from your post is that your girlfriend wants you to spend your money on a house she wants.

If she wants a tiny house, why isn't she spending her own money on it?

Until you are married, and possibly even afterwards, keep your finances separate from this woman.

[jlajr]

Buying property and a home at your financial state is indeed a good idea. Currency and stock have no real value, property and homes do.

I'm sorry, but I cannot allow these sentences to stand uncontested.

First of all, regarding whether buying property and a home is a good idea, regardless of your financial state, I'll refer you to http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/.

In your particular financial state, I would hesitate investing a large percentage of your net worth in one immobile, non-liquid asset. Up until now, you have decided to invest in broad index funds. I don't see anything in your current circumstances that justifies changing that investment strategy.

As a Mustachian with financial independence one of my primary goals, I also would hesitate before taking out a mortgage, which by definition involves financial dependence.

Secondly, currency, stock, property, and homes all have real value as long as someone else is willing to pay for them. Sure, property and homes can directly provide shelter, while the others can't, but I don't think that means the others don't have any real value.

[forumname123]

Buying property and a home at your financial state is indeed a good idea. Currency and stock have no real value, property and homes do. Whether or not you use some of your stash is down to the math.

That said, buying a tiny house is not a good idea. Look for a real house (small if you want, not tiny!) that meets your needs. Don't buy a little piece of crap with a nearly non-existant market and with no real value. If you want something really cheap to live in on some land, buy a used RV for a fraction of the cost of a "tiny house" that will actually have a decent resell market should you decide you don't like it.

(note: I'm talking about the little crappy <500 sqft jobs when I say "tiny house")

This is some of the most ignorant advice I've seen on this forum so far.

[Drifterrider]

So my girlfriend and I are thinking of buying a tiny house.


My girlfriend wants to buy a tiny house, and I've always liked the idea of living in an off grid tiny home like that. We've looked into it and the tiny house and land would cost around $175K.

I want to save up for the house and land and buy it in a couple of years.

She argues that I should take $175K out of my index fund, and just buy the house and land now. She makes a good point that if I had this house I'd be paying much less in rent (I'm currently paying about $8K p.a.).

Here is what I hear:  "My girlfriend wants me to buy us a house with mymoney.  It will be very small, expensive and probably hard to sell.  I pay $8,000 per year now so in only 21.9 years, I'll be even.  The land will have residual value.

[MilesTeg]

Buying property and a home at your financial state is indeed a good idea. Currency and stock have no real value, property and homes do.

I'm sorry, but I cannot allow these sentences to stand uncontested.

First of all, regarding whether buying property and a home is a good idea, regardless of your financial state, I'll refer you to http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/.

I see this linked all the time. It's a terrible analysis of the financial prospects of buying a house -- in particular because it takes a hyperbolic stance and then completely ignores any context for individual buyers. When sized appropriately (not above your needs) and used as a primary residence for a least a few years, a home is a difficult to beat way to grow your wealth (both on paper and more importantly in something with real, intrinsic value). In particular because a primary residence serves both as an appreciating asset AND the bulk of your necessary living costs.

Here's a post I where I talk about it more in depth (see my entry several posts in along with the discussion/refinements): http://forum.mrmoneymustache.com/welcome-to-the-forum/how-to-balance-a-mortgage-and-investing/

Of course, it's all down to the numbers (rent amount, home price amount, time you plan to spend there, etc.) per individual.

In your particular financial state, I would hesitate investing a large percentage of your net worth in one immobile, non-liquid asset. Up until now, you have decided to invest in broad index funds. I don't see anything in your current circumstances that justifies changing that investment strategy.

I disagree. Sounds to me like the OP is starting to settle down, possibly get married. Perhaps I am wrong about that, but the guy is talking about buying a house to live in with his GF.

As a Mustachian with financial independence one of my primary goals, I also would hesitate before taking out a mortgage, which by definition involves financial dependence.

Secondly, currency, stock, property, and homes all have real value as long as someone else is willing to pay for them. Sure, property and homes can directly provide shelter, while the others can't, but I don't think that means the others don't have any real value.

[/quote]

A mortgage does not necessitate a financial dependence. The only time a mortgage entails financial dependence is if you borrow money you don't have rather than borrow money you do have but prefer to keep elseware (such as in an investment).

[MilesTeg]

Buying property and a home at your financial state is indeed a good idea. Currency and stock have no real value, property and homes do. Whether or not you use some of your stash is down to the math.

That said, buying a tiny house is not a good idea. Look for a real house (small if you want, not tiny!) that meets your needs. Don't buy a little piece of crap with a nearly non-existant market and with no real value. If you want something really cheap to live in on some land, buy a used RV for a fraction of the cost of a "tiny house" that will actually have a decent resell market should you decide you don't like it.

(note: I'm talking about the little crappy <500 sqft jobs when I say "tiny house")

This is some of the most ignorant advice I've seen on this forum so far.

Care to make an actual argument or are you just happy to violate forum rules with a blunt ad hominem?

[NESailor]

A mortgage does not necessitate a financial dependence. The only time a mortgage entails financial dependence is if you borrow money you don't have rather than borrow money you do have but prefer to keep elseware (such as in an investment).

Also called leveraged investing which is not without its own set of risks.

Anyway...I'm confused about this whole thing.  $175K seems super steep.  I paid considerably less for 2+ acres near a lake with a small house (1700), a barn, a shed, a tons of useful carpentry tools in the Northeast of all places.  You have got to be talking about some hip place in California at those rates.

$8K isn't much in rent, though, not with the other figures you're quoting.  Homeownership can be great, or terrible.  I'd do a lot more research than "gf wants to buy a house" before jumping in.  I love my house and property but all things considered it's been a terrible investment :).  Fortunately, investment is not what we were thinking when we settled on this one.

Cheers!

[Goldielocks]

I am not sure I understand why you would build a tiny house (typically mobile) instead of a very small foundation-based home, if you are purchasing property which presumably has services?


The advantages of a mobile tiny home are that you only lease or share the property, can move often or every few years, and it is on a mobile platform to get around rules about two homes on one lot.

I think a foundation home, possibly with crawlspace storage area under, at around 500 sq.ft would be ample, and would have resale value, able to get a mortgage, etc.   If your city has minimum home sizes, all the better, and you just build a storage / workshop (unfinished) to the minimum accepted to one side.

The other question that everyone looking to purchase real estate should ask themselves -- do I want to live here for 7 years?

[MilesTeg]

A mortgage does not necessitate a financial dependence. The only time a mortgage entails financial dependence is if you borrow money you don't have rather than borrow money you do have but prefer to keep elseware (such as in an investment).

Also called leveraged investing which is not without its own set of risks.

Yep, it's not without risks, but that's entirely different from saying you are financially dependent.

As far as risk, having all your money in the stock market (all in stocks even!) is vastly more risky than having some of it in a home as well. Diversification is how you mitigate risk, a home/land (something with intrinsic value) is a very good bit of diversification -- if you are planning to stay in one place for several years at least. WHEN (not if) the market tanks you'll be in a particular rough spot if all you have is put into index funds.

[skeptic]

Disclosure: I think tiny houses are supercool.

But: The idea of blowing 2/3rds of your stache on one sounds like a *really terrible* idea.

CAVEAT EMPTOR.

As others have said: tiny houses will likely depreciate.

And getting into land owning/development... there is a whole world of knowledge required so that you don't lose money on a land/development deal. I could tell stories. Long story short, Undeveloped/semi-developed land is an illiquid market with price fluctuations based on a lot of things outside your control (such as the price of corn, in some areas, regardless of whether you are growing any on yours).

You'll want to educate yourself _very_ well on local building codes, utility access, easements, taxes, and what drives local land/home prices before making such a purchase.

I know in some places, a buildable site will run you 50-150k or more, but for your dream you don't really need that. Tiny homes don't need a foundation and, depending on local codes, can often be built without a permit. A common theme is: if it's movable and it falls within a certain footprint (say, 9' x 12') then it doesn't need a permit.

If you really want to live in a tiny house in your situation, I would highly recommend _renting_ the land. You can also buy tiny homes pretty cheap (remember, they depreciate, or at least they seem to in our current market). You may also be able to find actual tiny homes to rent, and try it out for a while.

Often people have a lot of land and wouldn't mind at all if someone parked their tiny home on their land for a small rent, say 100-500/month depending on the going rate. And you ought to be able to buy a tiny home for $15,000-$40,000 or else build one yourself for that price or a little more.

Good luck, have fun, protect your 'stache!

[pbkmaine]

I think most tiny houses are very expensive for what you get. They are trendy, and trendiness is the enemy of frugality. I think it would be a far better use of your money to 1) buy a used trailer, 2) buy a modular house or 3) build a small but not tiny house.

I used to follow a bunch of tiny house blogs, and it seems like 90% of these people have since moved into a bigger house and rent the small one out on Air BnB.

[KBecks]

Tiny houses are a tad.  Don't make financial plans w your girlfriend until you re married.

[mathlete]

Your girlfriend wants you to take $175K out of your savings to buy something that she wants.

Start with that first.

[powskier]

Tiny houses are fashionable and thus way overpriced.
What your GF "wants to do" with your money is a whole other ball of wax, good luck on managing that.

I used to live in a 275 sq ft cabin in a HCOL area, it was built out of 80% recycled materials from construction jobs, it was incredibly cheap( mid 90's) which is what tiny houses SHOULD be, it's the cool hipness that makes them pricey, do not buy cool hipness, the fad will pass.

If you pull out that $ from your index funds there will likely be a tax penalty associated with it.
Mortgages can be had for 3.5% right now and your money should be making more than that in your fund.

[Erica]

You are very innovative!

We bought land a few months ago to live off grid- our goal for years but haven't started to build. First we googled the address, using many search engines. An old real estate listing told us the property had a spring. Now that we own it, it has 3 springs. Secondly we learned it had a 280 sq ft home (tiny home) on it from 1920. Hmmm...hiked the 20 acres for about 5 min and missed it. But it doesn't matter, 25K less in County building fees!! Not that we were necessarily going to go legal anyhow but now we can allow part of the structure to be seen...via google earth, and maybe hide a few other structures like the outside laundry rm/kitchen combo. Because high ceilings can only make a home "about 300 sq feet" feel so big. I get claustrophobia easy.

Looked for land that was under 60K. Why? Because property tax here is limited to 1.25% and I wanted to pay less than $60 a month/$600 yr for my mortgage aka property tax. What we didn't plan for is being told there are criminals residing on the property so I jumped the gun and re-listed the property for alot more $$ within a month. But now we likely want to live there. With an exemption, we will not pay the capital gains tax and will be about doubling our money if it sells. We called first on the listing then walked the property looking for wet spots. Found two springs, then a third after purchase.

Here is the listing when we bought a few months ago-

Decades old listing w/ more details-
We just re-listed it for sale --

We think we have one of the exemptions so will not pay capital gains tax. So we'll do fine keeping the property and living on it, or selling it.
I jumped the gun listing it 1 month later due to criminals... but am not so concerned about that now

Links removed later for privacy since OP has seen them

[Erica]

1. Buy cheap land
Use every search engine possible to google it for an old listing. You may learn more about the land, that it is more valuable than it is being advertised as.

2. Check to see if it already shows a home/cabin on it with the county even if it is old. Check w/county building dept (My husband has this stuff memorized so we never checked) if you are going legal because you may want to build a garage in the future. If records already shows a home, you could save thousands in building fees if you ever choose to build a structure. We will save 25K since our land shows a tiny cabin already. County fees for building a garage or ag building is generally much cheaper

3. Live in a tiny home FIRST as best you can before making it totally legal. You may find you and your wife cannot stand to live together in such a small space so will not be there long anyhow. Most of the time, tiny homes/TH cost more than to build a home of the same square footage yourself. But TH come with mobility which has value depending upon how you use it. Move it later and rent it out later on when you find somewhere you truly want to be.

4. Check land listings daily to get a good deal.

5. Try to buy land with a spring on it. Do research to find where to live off grid which has PLENTY Of water/springs as likely, there may be an unknown spring on the property. I live in Calif so water is becoming like gold here

6. Check Craigslist. Offer the tiny home owner something you have for a trade/partial trade to get the price down

7. Get a renter even if you have to buy an RV to rent out. It's good to have someone living on the property for safety issues just because you'll live way out in BFE. Good luck!!

8. Assume this might not work out and you may need to sell fast. Check out these capital gains tax exemptions PRIOR so you aren't stuck waiting 1 yr+1 day to sell tying up resources-   http://www.nolo.com/legal-encyclopedia/avoid-capital-gains-tax-selling-home-29901.html

9. Spend at least an hour using various search engines to google the property address. You are seeking an old real estate listing which gives more details about the property. But ready most everything, it may give you tips.

10. If the property already has an address on it which isn't zero or one, or a common number assigned to many parcels/lots of land which are vacant,  it is more likely there may have been someone living there years ago in a home. You want to see a REAL address to $ave on building permit fees

11. Talk to neighbors. Find out the goings on which might be happening with your property at the moment. Then check it out.

[Mikaelus]

Thanks for the great feedback guys. A lot of you are putting into words what I've had vaguely knocking around in the back of my mind.

Some things I should probably have pointed out in the original post:

- I live in Australia where land (IMHO) is very expensive. We're looking at a block of land for ~$50K to ~$70K.

- The tiny house is the typical tiny house design that's popular now. We've looked at companies who build tiny houses for around ~$80K to ~$100K.

Probably doesn't change any of the advice, but I thought I'd share this info in case anyone was interested.

[MilesTeg]

Thanks for the great feedback guys. A lot of you are putting into words what I've had vaguely knocking around in the back of my mind.

Some things I should probably have pointed out in the original post:

- I live in Australia where land (IMHO) is very expensive. We're looking at a block of land for ~$50K to ~$70K.

- The tiny house is the typical tiny house design that's popular now. We've looked at companies who build tiny houses for around ~$80K to ~$100K.

Probably doesn't change any of the advice, but I thought I'd share this info in case anyone was interested.

$100k for a Tiny Home? That's straight up bonkers. Don't spend $100k (nearly 40% of your net worth) on a depreciating "asset" whether it be a car, a tiny home, an RV, a camper trailer, a mobile/modular home or anything similar.

If you really want cheap living, you can buy a used mobile home (1000sft+) in my HCOL area for anywhere from 35k up. If you're going to buy a depreciating asset, buy used and buy something that has a resell market. Tiny Homes aren't a "new thing", they're just crappier, more expensive, smaller versions of mobile homes. They (at least the ones like you describe) are mobile homes with a prettier face (at a high cost) -- which is hardly a frugal choice.

[former player]

Thanks for the great feedback guys. A lot of you are putting into words what I've had vaguely knocking around in the back of my mind.

Some things I should probably have pointed out in the original post:

- I live in Australia where land (IMHO) is very expensive. We're looking at a block of land for ~$50K to ~$70K.

- The tiny house is the typical tiny house design that's popular now. We've looked at companies who build tiny houses for around ~$80K to ~$100K.

Probably doesn't change any of the advice, but I thought I'd share this info in case anyone was interested.

$100k for a Tiny Home? That's straight up bonkers. Don't spend $100k (nearly 40% of your net worth) on a depreciating "asset" whether it be a car, a tiny home, an RV, a camper trailer, a mobile/modular home or anything similar.

If you really want cheap living, you can buy a used mobile home (1000sft+) in my HCOL area for anywhere from 35k up. If you're going to buy a depreciating asset, buy used and buy something that has a resell market. Tiny Homes aren't a "new thing", they're just crappier, more expensive, smaller versions of mobile homes. They (at least the ones like you describe) are mobile homes with a prettier face (at a high cost) -- which is hardly a frugal choice.

My guess would be that the girlfriend wants to play "house" in something hip and cute, not in a used mobile home.

[limeandpepper]

Even though you rarely post here, I remember you. I see your current rent, while still pretty cheap, is not freakishly cheap as it used to be! Also, congratulations on the new job!

However I do find this latest post of yours to be concerning. Your girlfriend wants a tiny house, you're open to the idea, then here's the kicker, she wants you to take $175k out of your index fund investments to buy it. And the slightly better alternative you propose of continuing to work and save for the purchase still sounds like you'll be the one paying for all of it? I guess my question is why aren't you going halves? Moreover, you are quite right to see buying a tiny house to be risky, and to be uncomfortable about taking your money out from your investments. And what happens if she doesn't like the reality of living in a tiny house afterwards? I'm also curious about the location of the land you're looking at... most tiny homes seem to be somewhere rural? If you're used to urban living, that would be a huge change.

[paddedhat]

A few points to ponder, while ruminating on various schemes for low cost living in rural North America.  First, many jurisdictions are now regulating the relocation of mobile (manufactured) housing. This can be a flat out ban on installing anything older than a 10 or 15 year old unit on a new site, or having to undergo an inspection, and potential repairs and upgrades to an older unit, prior to getting an occupancy permit at a new location. Second, many "dreamers" are shocked to find that even some of the most remote locations have clear, well written bans on occupying a recreational vehicle on your own property. This can vary from allowing short term use, like several months while constructing a permanent dwelling, to absolutely no use at all, period. Finally, the whole tiny house movement suffers from a serious issue, that being a lot of the finished homes are not legally allowed to be placed in the vast majority of places where traditional homes are welcomed, or where RVs can legally be placed. They are typically neither a legal dwelling per building codes, nor an RV, per government regs. and definitions. I would imagine that there are more than a few disgruntled hipsters out there that shelled out one hell of a pile of Cheddar for a way cool tiny house, and ended up with a  tiny fraction of their "investment" when it was time to move on to a real house. When your selling a used play house on a landscape trailer frame,  reality can be a bitch.

[Erica]

A few points to ponder, while ruminating on various schemes for low cost living in rural North America.

He is not inventing "various schemes for low cost living" nor does he live in North America. He lives in Australia

First, many jurisdictions are now regulating the relocation of mobile (manufactured) housing. This can be a flat out ban on installing anything older than a 10 or 15 year old unit on a new site, or having to undergo an inspection, and potential repairs and upgrades to an older unit, prior to getting an occupancy permit at a new location.

You don't say!

Second, many "dreamers" are shocked to find that even some of the most remote locations have clear, well written bans on occupying a recreational vehicle on your own property.

We're so lucky you chimed in! I mean it's not like most people already know this

when it was time to move on to a real house
 I would imagine that there are more than a few disgruntled hipsters out there that shelled out one hell of a pile of Cheddar for a way cool tiny house, and ended up with a  tiny fraction of their "investment".  When your selling a used play house on a landscape trailer frame,  reality can be a bitch.

Um a tiny house is a used play house on a trailer frame? Little girl, you need to go back to your sandbox.

Mod Note: Everyone brings a different perspective, please keep in mind the forum rules of not being a jerk and not making personal attacks.

[Quidnon?]

I'm going to be the devil's advocate and say, take the money out of the index fund and buy your house without a mortgage.  The P/E ratio of the S&P500 is way above the average, and has been for some time.  Sooner or later, and I think probably sooner, a recession is coming.  When it does, the total value of your index fund could drop by 20%, and stay down for years.  So could the resale value of your house, but you will still own it, so you might not care.  But I'm also of the mindset that a paid for home is a necessity for an early retirement.

But $175,000?!  No "tiny" home for a couple should ever cost that much.

[2Birds1Stone]

Wow, I had the chance to buy a tiny house WITH land for $35k last year, about 90 minutes outside of NYC. I can't believe someone would consider spending $175k on once, especially when that is the majority of their 'stache.

[appleblossom]

OP, is there any way for you to edit the title of the thread to include that you are in AU?
Otherwise you might not get enough aussies commenting and I think for the most part the decision is going to be dependant on factors that are country specific (aside from the girlfriend factor).

FWIW I don't think 175k is crazy, but it will depend on your location and what resale is like. How popular are tiny houses in your area? And can the land be otherwise built on?

Personally I would be hesitant to purchase something at someone elses request if it wasn't also my first choice. Particularly if the cost was all going to be on me.

What is the market like for sub 100sq metre houses in your area? Is that an option?

Also I don't think I saw anything on how much house you are getting for your 100k.

[Stachless]

You may be dating a future professional House Keeper - RUN FORREST RUN !!!

[paddedhat]

A few points to ponder, while ruminating on various schemes for low cost living in rural North America.

He is not inventing "various schemes for low cost living" nor does he live in North America. He lives in Australia

Your command of the obvious is impressive. That said, there are many suggestions from other North Americans on this thread, regarding low cost schemes to avoid the stupidity of wasting horrendous amounts of cash on a tiny house. Oddly enough, one poster from California did an excellent job of describing a very successful and interesting plan that she apparently completed, Oh, wait, that's your post.

First, many jurisdictions are now regulating the relocation of mobile (manufactured) housing. This can be a flat out ban on installing anything older than a 10 or 15 year old unit on a new site, or having to undergo an inspection, and potential repairs and upgrades to an older unit, prior to getting an occupancy permit at a new location.

You don't say!
Please try to keep YOUR location in mind as you make your snarky comments.  In rural America (particularly in the southeast) there is a long held expectation that you have the right to relocate a manufactured home, regardless of age, or condition. The industry lost a significant percentage of their production over the last couple of decades as individual states began restricting the age of used, relocated units. This issue is that many new units end up in rental parks, and nobody is interested in loaning on an asset that becomes essentially valueless in 120 months, since it is trapped in a rented park and at the mercy of the landlord.  Not only are many folks shocked to learn that their future plans for a used manufactured home are severely limited by local and state regulations, but there is currently a bit of a revolt of the issue, here in FL. where I am currently camped. Local officials are coming around to the fact that forcing an owner to abandon a nice, well maintained older home is unfair, and can be devastating to the homeowner who is typically either elderly or poor. I can assure you that this issue is complex, evolving, and highly variable as it quite location dependent. Obviously, there are plenty of rural folks who are totally unaware of any of this.

Second, many "dreamers" are shocked to find that even some of the most remote locations have clear, well written bans on occupying a recreational vehicle on your own property.

We're so lucky you chimed in! I mean it's not like most people already know this

I would propose quite the opposite. Once you leave California, a great deal of rural North America is steeped in the values of doing your own thing, and property rights that include the unassailable right to do whatever you please with your own land. If you dropped the snark, and actually spent time researching before you bang on the keys, you would find that not only are there plenty of folks out there that assume that nobody cares if you chose to live in your RV on your remote, rural land, but that a lot of anti-RV regulations are very local, and in some cases, quite recent.homesteading, van dwelling, permies, etc.... boards are full of folks who are shopping for, or even own, rural property, and are devastated to learn that they can not use an RV on their property. I was shopping in a wonderful, very libertarian commnity in the American Old west. As we got close to purchasing, the local leadership banned sleeping in an RV on your property, and made it a crime to even plug it in to an outlet. The locals were shocked, we walked away.

when it was time to move on to a real house
 I would imagine that there are more than a few disgruntled hipsters out there that shelled out one hell of a pile of Cheddar for a way cool tiny house, and ended up with a  tiny fraction of their "investment".  When your selling a used play house on a landscape trailer frame,  reality can be a bitch.

Um a tiny house is a used play house on a trailer frame? Little girl, you need to go back to your sandbox.

LOL, I would make an extremely unattractive little girl, with the beard and danglie bits, but who am I to critique another's fantasy?  As for my take on all of this, after thirty years as a professional homebuilder, and licensed electrician, and the last two decades as a serious RVer, who is currently living in one full time, I'm hardly clueless on these topics. Your other posts on this thread are interesting and valuable. Please respect the rules and drop the name calling, as it contributes nothing to the discussion.

[Ben Hogan]

How much is this tiny house worth on the market now, and is there a steady demand for them?

[KBecks]

I don't think there is anything wrong with buying a house -- even buying or building a small traditional house.   But, you have to figure out your relationship first.  Do YOU want a house?  Please consider your own wants and needs when you are unmarried and using your own funds.  Will the girlfriend then live there rent free?  Any plans to get engaged?  It's all so fuzzy. 

But let's just figure that you want a house and you have some money saved up.  Great job on the savings by the way.  I am assuming that the money is not in a retirement vehicle.  If it is in retirement, do you have to pay penalties to get at it?   Don't spend your retirement on a house. 

Assuming the money is accessible without penalties in a regular account, then definitely if you find something you want to buy, make sure it's a something that will appreciate in value over time.

Best wishes to you, and the girlfriend too!  Have you seen the thread here about engagement rings?? :)

[ysette9]

nyway...I'm confused about this whole thing.  $175K seems super steep.  I paid considerably less for 2+ acres near a lake with a small house (1700), a barn, a shed, a tons of useful carpentry tools in the Northeast of all places.  You have got to be talking about some hip place in California at those rates.

I just couldn't let this stand. $175k for a house of any size on land you can own is an absolute STEAL in California  almost anywhere. I live in a "hip" part of CA and a 1000ft^2 house on a 3500ft^2 lot is for sale down the street from us with an asking price of $798k.

That said, I believe in buying real estate when it is the right time in your life for the right reasons and when you find something that meets all of your carefully thought-out criteria. I would never buy with someone I am not married to. I would never buy because something is cute or sounds cool. This is a big decision to be handled carefully because it has big financial and lifestyle implications. Good luck whatever you decide.

[MrsPete]

Pretty much in line with what the majority are saying: 

- A house can be a great investment, but a tiny house is questionable. 
- You're likely to outgrow it. 
- You're unlikely ever to sell a tiny house for what you paid for it new.  If the TV show can be believed, they're very "personal", and people want to create their own spaces to reflect their own needs. 
- A small-but-not-tiny house might be a better option; have you looked at fixer-uppers in the 1000 sf range? 
- A used RV will give you roughly the same amount of space and amenities; it just isn't trendy and cute. 
- I totally agree that if you're not married, you absolutely should not combine any finances, especially in real estate.  It's too permanent, too difficult to untangle in case of a break-up. 
- I totally agree that you should not spend 40% of your life savings on any one investment.  I own a decent house, and it represents about 3% of my total net worth. 

[Dropbear]

Aside from the cost and relationship issues that the other posters have asked about, I would like to ask about your potential site for this house, and whether you can find a mustachian solution to this issue?

If your job is anywhere near the city, then it's a good idea to live close enough to walk or ride to work.  However, these appear to be the hardest areas to find a place for a tiny house, because of the sheer cost of land and the limited space to park your vehicabin.  So if you have to go out into the suburbs (or the country) to find suitable land, then you could end up locking yourself into a costly commute?

[Cranky]

It always seems like the appeal of the tiny houses is that they are so cunningly designed, with all those adorable built ins. I think buying a small house and spending some money and time on built ins would be just as cute, and have a better long term value. (I can't believe that people won't get tired of tripping over one another fairly quickly.)

[davisgang90]

I second the recommendation to state that you live in Australia in your title.  Too many folks don't read the thread responses before posting.

I also recommend against a tiny house.  I'd go for a small house and get a mortgage, don't touch your investments.  GF should pay her fair share of the mortgage.

[KBecks]

It always seems like the appeal of the tiny houses is that they are so cunningly designed, with all those adorable built ins. I think buying a small house and spending some money and time on built ins would be just as cute, and have a better long term value. (I can't believe that people won't get tired of tripping over one another fairly quickly.)

Yes and seriously you want a washer/dryer and most likely a dishwasher.  Depending on your climate, a garage?  Some storage for things like bikes and toys.  A small house gives a lot more flexibility and a little more room, a little more privacy, etc.

[Prairie Stash]

it might not be the house she wants, she may be asking for commitment. When she says lets buy a house together that could mean, lets move in and officially have a life together. Since you haven't proposed marriage a house purchase would signal your intentions just as clearly to her. When my girlfriend moved in she was casually wanting to buy her own place still as a backup plan. As we got more serious that conversation faded. Now we're married and its never brought up, it wasn't that she wanted the second house she really wanted the security of commitment. That's my personal history, I could be extremely wrong of course.

I think you should discuss the future of your relationship, she sounds like she wants to get serious, move in and start a long term relationship. Do you want the same? A few conversations about your relationship could quickly prove me right/wrong and in either event it never hurts to figure out where the motives are coming from. Why does she want any house, let alone a tiny house? Before buying a house together, make sure you actually want to spend 50 years together, I think she wants you but do you want her forever?

[I'm a red panda]

When she says lets buy a house together that could mean

I'm not going to argue with the rest of your analysis, but has she said that?  It seems to be "you should buy a house, for us"  Together would imply she is contributing, and that doesn't seem to be on the table.

That's why I'm really wary this is a good idea. Girlfriend is spending A LOT of OP's money; not her own. (Not to mention the fad of tiny houses makes me think resale value will be near nothing...)

[Prairie Stash]

When she says lets buy a house together that could mean

I'm not going to argue with the rest of your analysis, but has she said that?  It seems to be "you should buy a house, for us"  Together would imply she is contributing, and that doesn't seem to be on the table.

That's why I'm really wary this is a good idea. Girlfriend is spending A LOT of OP's money; not her own. (Not to mention the fad of tiny houses makes me think resale value will be near nothing...)

I agree, I don't know if she has or hasn't said anything. What I'm trying to get at is there's something messed up with other people spending your money. Whenever that happens I feel people should spend some time figuring out why the other person feels they have the imperative to dictate your spending. Step back from the purchase and check the relationship thoroughly first.

The purchase isn't for me either, when I bought my house I bought it for myself, my then girlfriend had nothing to do with it. We ended our relationship a while after and I'm glad I bought it with myself calling the shots. Girlfriend/boyfriends should never dictate big decisions, that's reserved for partners. Stick with dinners and flowers until you commit, its easier. Basically he can't contemplate the house until he commits from my viewpoint, it shouldn't even be asked right now as its a terrible idea until then (and possibly after).

[Goldielocks]

Yes and seriously you want a washer/dryer and most likely a dishwasher. 

I wouldn't think a dryer is a necessity for Australia, and a small hand washer (plunger bucket) may be sufficient for many a guy in blue collar trades, supplemented by occasional laundromat use. 

[forumname123]

Yes and seriously you want a washer/dryer and most likely a dishwasher.  Depending on your climate, a garage?  Some storage for things like bikes and toys.  A small house gives a lot more flexibility and a little more room, a little more privacy, etc.

You mean "I" seriously want. Don't assume your wants and needs are universal, as so many in this thread are doing.

I've lived with my wife in <300 square feet for about 3 years and I would recommend it to anyone. If a break-up is imminent, living in a small space will flush that out for you.

Regarding appliances, I prefer hand washing dishes and while a dryer would sure be nice in our humid climate sometimes, it's far from being a necessity. Bikes can be stored easily outside, and more room for toys isn't necessarily a good thing.

[Padonak]

Instead of a tiny house, you should dump the girlfriend who wants to spend your money and get a new, tiny girlfriend.

[Dancin'Dog]

What is a "tiny house" for?

That's like buying tiny shoes.

What will actually fit in a tiny home?  Where does the washer & dryer fit?  What if you have people visit?  What if you decide to have a kid(s)?

How is the tiny house different from a storage shed?

Living in a tiny house puts you in "limbo", because you will immediately realize that it's not a long term solution to your housing needs. 

How will you feel when your next bank statement arrives and you see what you "really did"?!