The Tiny House Trend: Is It Worth Investing?

December 30, 2015 by Luis Rojo

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Have you heard of the tiny house phenomenon? It’s about living small, but it’s becoming a big trend. While the average house size in the United States is around 2400 square feet, tiny houses are generally 600 square feet or smaller. Some tiny house dwellers have downsized as far as 100 square feet. Does this movement have staying power? Is it worth taking a closer look?

No More Clutter

No More Clutter

Minimalism started as an art movement after the end of World War II, but it’s become much more than that. Advocates of minimalism describe it not as an aesthetic but as a lifestyle, and Americans everywhere seem to agree. The mentality? Purging your life of everything but the basics allows you to live more meaningfully.

Tiny houses are just one part of the minimalist living movement, but – contrary to the label – they’re a pretty big part. Ryan Mitchell, the founder of the annual Tiny House Conference, explains that there’s also a social component to the movement; tiny house dwellers across the nation enjoy keeping in touch with each other and sharing tips and ideas for downsizing.

Are Tiny Houses the Next Big Thing?
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People who live in them love their tiny houses, and they’re not the only ones. It’s widespread enough to have multiple HGTV shows dedicated to the phenomenon, with titles like Tiny House, Big Living, Tiny House Hunters, and Tiny House Builders all receiving significant air time. Tiny House Nation and Tiny House Hunting air on FYI, a subset of the A&E Network. But what makes these homes so popular?

Advantages of Tiny House Living
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Tiny house advocates cite a few different reasons, but everyone seems to agree on one thing: Tiny living is better living.

Some reasons for their appeal include:

• Financial. Although financial straits are overall looking better, the middle class is still struggling. According to a MarketWatch survey, 62 percent of people in the United States live essentially hand-to-mouth – which amounts to the vast majority of Americans having no savings for emergencies.

Members of the middle class are also spending more than ever before on housing costs, with around 20 percent of households spending more than roughly one-third of their income on rent. Again, this doesn’t bode well for emergency situations.

With this in mind, it’s easy to see why tiny houses are a financially viable option. Material costs, property taxes, and repairs are far less extensive on properties with low square footage.

• Environmental. Tiny houses have a stunningly low carbon footprint. People who want to lessen their impact enjoy discovering new and innovative ways to live full, enriching lives while inhabiting a smaller space. There’s simply not enough room for excess stuff, which means tiny house dwellers produce less trash and shop more conscientiously.

• Aesthetic. The minimalist movement is all about prioritizing space. Tiny houses do not lend themselves to clutter; rather, they require intentional arrangements of furniture and household items. The aesthetic of downsizing appeals to many tiny house owners.

Is It Worth Investing?

If you’re not a millennial, you might see the tiny house phenomenon as a quirky trend without much staying power. Believe it or not, however, tiny houses have caught the attention of homeowners across the nation – as well as the interest of realtors.

According to Marko Rubel, a real estate investment analyst, the cost of building a tiny house tends to cap at $40,000. The starting price is around $10,000 – and it averages out at roughly $23,000. Variations in cost depend on a few different factors, such as location and types of building materials. Some tiny house owners also pay for the upfront costs of solar panels and other renewable energy sources.

Altogether, though, the cost is considerably lower than that of building a large or even average-sized home. Tiny houses can be built on smaller lots, and they take far less time to build.

As a result, the market for tiny houses has grown significantly, with the pool of potential homebuyers expanding. Because of the low overhead cost, people who otherwise would have only been able to rent are afforded the opportunity to build and own properties – while prospective tiny house renters have the benefit of enjoying a new lifestyle for a low monthly price.

Know the Market (and the Downsides)

While viable, the tiny house market is decidedly a niche – which means as a buyer, you’ll need to consider all the variables before you leap into making a purchase. Tiny homes aren’t for everyone.

The main drawback is lack of space. Downsizing is a great option for people who don’t need much room, but if your potential tenants have a large family, young children, or multiple pets, living in a tiny house might be too close for comfort. The same applies for people who have large collections of personal items or family heirlooms, unless they’re willing to part with things or place them in long-term storage. They’ll have to think hard about whether they can or want to make these radical changes in their lives.

As an investor, it’s also important to know the local market. The tiny house market is burgeoning across the nation, but it’s becoming especially popular in Wisconsin, Florida, California, and Texas. No matter where you live, there could still be reason to invest; due to their size, many tiny houses are mobile. They can be built in a low-cost area and, once complete, relocated to a permanent site.

Work with Green Residential

Ultimately, it’s up to you – but as a homeowner or prospective property owner, it can be hard to decide where to invest your time and money. At Green Residential, we’re here to work with you from start to finish, no matter what your niche might be. From tiny houses to multi-tenant condos, the options are virtually limitless.

We work with our clients to streamline the complex process of managing multiple properties and handling tenant relationships, reducing their stress and maximizing returns. For more information about how we can help you, contact us today over the phone or via our request form, and we’ll get back to you as soon as possible.

Luis Rojo

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