Is The Tiny Home Trend Here to Stay?
In recent years, Americans have been moving into tiny houses and the trend is picking up steam. For some, owning a tiny house provides independence without the expense and upkeep of larger homes. For others, a tiny house is a step to building a self-sufficient and environmentally friendly lifestyle. Whatever the case, owning a tiny house is no longer a rarity.
Even so, many wonder if the tiny house trend is a flash in the pan. We’ll investigate three common obstacles first-time tiny homebuyers face, and we’ll discuss how you can make the most of these challenges in case you wind up selling tiny houses on the off chance.
Challenge #1: Lenders are Uneasy About Tiny Mortgages.
According to The Tiny Life, a tiny house costs on average $23,000 to build yet 32% of tiny house owners have financed the cost of constructing their homes. Unfortunately, many lenders are reluctant to provide mortgage loans to tiny homeowners. Tiny mortgages come with larger problems, and often times it’s not the borrower under the microscope.
Lenders have minimum loan amounts of $50,000 and only offer loans for homes with permanent foundations. In addition, the processing costs are the same whether it’s a $50,000 loan or $500,000 loan, so often times lenders won’t bother with the hassles of qualifying if the ROI is razor thin and the asset is prone to, yes, theft.
Solution: There are plenty of options to overcome tiny house mortgages, including personal loans and registering the tiny house as an RV. However, personal loan rates are not as competitive as mortgages, and can creep into the 8-9% range. The best option for tiny house buyers are direct financing options from the tiny house manufacturer, bigger savings, and even gifts from family members.
Challenge #2: Purchasing Land.
Finding a place to live near downtown can be expensive these days. With its portability and small size, a tiny house may seem like the ultimate commuter hack, however land for tiny houses can be hard to come by. Electrical, water, and sewage lines need to be provided on the lot, and in addition, the cost of a tiny lot may exceed the price of the tiny house in major markets.
Solution: If buying land is out of the question for the tiny house buyer, tiny home communities are sprouting up across the nation each day. Just like renting an apartment, tiny house owners pay a small lease to park their tiny house in exchange for utilities and a place to live.
Challenge #3: Compliance.
But before you buy that Escape Vista Sport, you’ll need to be sure you’re not breaking any laws. Inform tiny house buyers that even having wheels on your tiny house could be illegal in some cities! Only a handful of cities like Fresno allow homes to be built without a permanent foundation, and even then code requires the installation of a porch and removal the axles upon arrival. Know the building codes for your market.
Solution: Read up on your local market’s code for tiny houses. When in doubt, call the city planner’s office for clarification.
Other Factors to Consider Selling Tiny Houses.
From 1970 to 2014, the average property size has grown from 1525 sq. feet to 2384 sq. feet. Since tiny houses are no larger than 500 square feet, moving into smaller properties requires special commitment. Have a conversation with your buyer and make sure they understand the limitations of living in a confined space.
A single recent grad, for example, may not have a problem with small spaces considering the amount of income saved each month. A couple looking to start a family in a few years, however, may not be a good fit for a tiny house. Ask your buyer about where they see themselves in 5-10 years and what could happen during that time.
We hope that this helps clarify the challenges potential tiny house buyers face. If you’re concerned about spending too much on overhead and want to spend more on leads while saving money, schedule your free demo today!