As the millennials generation continues to find traditional homeownership less attractive than previous generations, they are embracing a new home craze that appeals to all ages of homeowner: tiny homes. There are many reasons to consider creating tiny home developments for your own use or even just building them for others. For many, owning a tiny home is the only way they can afford a place of their own and live a lifestyle they choose, whether it’s traveling, saving for retirement or reducing their carbon foot print.
It is difficult to know exactly how many people own tiny houses due to the lack of building regulations surrounding the movement. Every state is different when it comes to the permitting process, tiny homes and traditional homes. Keep in mind: tiny homes usually travel, much like an RV or travel trailer, and can be difficult tracking down those who live in them.
Not only do we see more interest in tiny houses via blogs and online communities, but there are also physical communities of tiny houses popping up all over the country. You just have to know where to look. Some of these communities such as Green Bridge Farm in Georgia, you can bring your tiny house to the organic farm surrounded by woods and purchase a one-acre lot for $30,000. The farm also offers the option of leasing a smaller piece of land for about $300 per month, keeping the tiny home owner mobile. The purchase includes access to a four-acre community garden, and many of these communities include the water and electric within the rental prices. As the movement progresses, many are seeking more sustainable means of providing electric by using solar panels on their roofs, further reducing their overall energy costs.
Other states such as Florida, California, Nevada and Colorado offer tiny home communities too. Just imagine, as a real estate investor, how well small, sustainable communities could house and create self-sufficiency among retirement or low income communities. Placing your business name on a community such as that could really boost your long term or passive income stream once completed and fully tenanted.
What defines a tiny home as a tiny home? There are many opinions on this, and, at present, no standard definition. General consensus indicates a tiny home should have 100 to 670 square feet. In the United States, we have become accustom to large living spaces. As a matter of fact, new homes built today are approximately 1,000 square feet larger than in 1973 according to aei.org. What do we do in and with all that space? Tiny homes are proving to be a bit of evolution of our housing industry and market, simplicity beating extravagance.
There are many advantages to living in a tiny house, even if you don’t particularly care about reducing your carbon footprint. Of course, we are speaking in generalities but who doesn’t want to reduce their overall building costs or their sustained monthly costs?
- Less square footage means reduced monthly heating and cooling costs.
- Smaller appliances. Overall means less electricity but also less food waste in your fridge. You only buy what you need.
- You will use less building materials than when you build a large home. Leaving room for certain upgrades that won’t break the bank.
- Since the homes are so small you can use more recycled materials. Bring on Habitat for Humanity Recycle stores!
Let’s look at some other interesting facts about tiny homes and those who love them.
- 68 percent of tiny home owners have no mortgage.
- 40 percent of tiny home owners are more than 50 years old. (Can you say affordable retirement communities?)
- Decreased maintenance compared to traditional home.
- Don’t like your neighbors, move!
- Lower taxes.
- Average cost of building a tiny home is approximately $23,000 and some are even built by the homeowner.
- Traditional sized homes are approximately $272,000. Once you figure in interest over a 30-year mortgage you are looking at almost double your original purchase price and for an investor that is more than you want to invest, usually.
- Approximately 55 percent of tiny house owners have a median retirement savings of $10,000 where as traditional homeowners have approximately $5,000 in retirement savings.
- 89 percent of tiny home dwellers have less credit card debt and 65 percent have zero credit card debt.
- 55 percent of tiny house owners are women whereas 45 percent are men.
- Average per capita income of tiny home owners is $42,038. Is this where our middle class will end up living?
- Those who live in tiny houses are twice as likely to have a master’s degree and on the same level as far as college graduation rates are concerned.
- Most who own tiny homes are in the 18 to 35 age range and 55+ age range.
Tiny homes may seem like a phase of homeownership rather than a permanent decision, especially for younger homeowners who may not yet have families with children, but with all of the positives it is easy to see why it is picking up momentum.
When it comes to choosing your location to rehab, buy-and-holds or investing in real estate in general, variety is the key, spread out your investments to provide protection. Next time, consider looking into creating new, affordable housing developments, which will save you, the investor, time and money in the immediate and distant future.
Statistics provided by restoringsimple.com, the tinylife.com and thespruce.com.
Heather Elwing-Dixon is the assistant editor for Think Realty. She can be reached at firstname.lastname@example.org.