What are Tiny Houses and Are They Worth It?

Tiny houses are taking the world by storm. A lot of people are selling their larger homes and building or purchasing a tiny home. And they’re saving a lot of money in the process. A friend of mine recently did this for the purpose of being able to travel with the money she saves on her mortgage.

When we discuss “tiny homes,” the traditional definition is a home that is 400 square feet of space or less.

It's a simple life, and it’s a lifestyle where materialism is not the norm. When you move into a tiny home, you’ll have to ditch all of the clutter, but you’ll still have all of the basics: kitchen, bathroom and bedroom.

How Much Do Tiny Houses Cost?

Tiny homes were originally designed for affordability, and it made a lot of sense. Home prices are skyrocketing, so a great way to avoid these skyrocketing costs is to cut down on the overall size and space of a home.

But then everyone started to see these small houses on HGTV and other television shows.

The end result?

Even tiny home prices started to rise.

In terms of cost, tiny homes still cost significantly less than their large-scale counterparts, and the end cost is dependent on what luxuries a person chooses to include. Some custom-built models, with all of the best high-end features and appliances, can cost $150,000 or more to build.

But these are not your normal tiny home by any means.

Costs will also vary depending on if you have a builder build the tiny home or if you choose to do all of the work yourself.

If you want to build the entire home on your own, you’ll spend:

• $35,000 - $50,000 on average

When hiring a builder to construct the home for you, the price will normally range from $50,000 to $70,000. You'll want to discuss all of your needs with local builders to find a builder that will fit into your budget.

And if you want to have a custom tiny home built, the price can be as much as $100,000 or as low as $80,000, depending on your concept.

The size of the tiny home also plays a major role in just how much money you can expect to spend. If you choose a tiny home that’s 200 square foot or smaller, you’ll find that the price is more around the $25,000 mark.

Where Are Tiny Houses Legal?

Tiny homes are being built all across the country, and legality varies widely from city to city. The American Tiny House Association is the best resource for trying to find where or if a tiny home is legal where you plan on living.

You'll find that if the tiny home remains on wheels, it’s often considered an RV, so you can maintain it in a yard without an issue.

How Do Tiny Houses Get Electricity?

The majority of tiny homes will connect to standard hook-ups, so they will be able to get water and power from a utility provider. If you don’t have utilities on your land, you’ll need to have utility lines run to the property so that you can properly hook into them.

But some tiny homes will have solar panels, which allows the owner to live off of the grid.

Grid and off-grid combinations are also very popular and will allow the homeowner to power their home primarily using solar. If something goes wrong, the home’s power will revert to the grid.

Water often comes from a spigot and hose, and this is provided through an RV white hose to ensure that the water tastes just like it would out of the tap.

Extension cords may be the source of power for the tiny home, too. You'll find many of these homes will hook into a 20 amp or 50-amp service without an issue.

Sewer service can be provided by the city, or you can opt to use your home’s own septic tank for sewer service. Of course, the tiny home’s sewer system will need to be hooked up appropriately for the service to work.

Internet and cable will be provided by a standard provider.

You'll want to inquire with your local authorities to find out what building permits are needed to have utilities installed.

How Much Land Is Needed?

The amount of land you need is dependent on the city or county you plan on building in. You'll find that there are some cities that have not updated their building codes, so you can plan to purchase a lot of land required for a larger, traditional home.

This is, again, something you’ll need to check on in your area.

And if you’re wondering how many tiny houses per acre can be built, the answer is the same.

A lot of cities still have old rules in place that require a home to be 1,000 square foot or larger, and in this case, the lot will need to be at least this amount to build a home. One way to circumvent this rule is to keep the tiny home on wheels.

When the home is on wheels, it’s considered an RV and can almost always be parked on a property.

You'll also find that you may be able to travel with the tiny home, bringing it to RV camps or tiny home communities.

Buying Land for Tiny Houses

Land restrictions may be in place that have different requirements. I know I recently looked into purchasing a lot of land, and the built-in rules required that a home be built. The land is not allowed to have a mobile home placed on it.

Tiny homes may not be included in these restrictions, but square foot restrictions may exist in the land’s deed.

Owners often include these restrictions because they do not want to sell the land, have the buyer put up a trailer, and lower the surrounding property values. It's all about the value of the land in this case, and a tiny home may lower the value of the surrounding land.

It's essential to examine the deed and have a lawyer involved in the purchasing of the land to ensure that there are no restrictions forbidding tiny homes or restrictions on the square footage of the home.

The biggest hurdle is finding land that is the right size and affordable.

Many tiny home owners want a tiny home to cut back on traditional home costs. If the land is too expensive, it doesn’t make sense to build a tiny home. It's a major problem for many potential tiny home owners in states where land is overpriced.

You’ll need to check building and zoning laws before buying land.

If you’re not allowed to build a tiny home in your area due to building or zoning laws, it doesn’t make sense to enter the land purchasing process. But if local laws and codes allow it, you'll have plenty of options available to buy land:

• Traditional real estate websites
• Private land sellers
• For sale by owner options

Land may be financed by the owner, or you will be able to secure a loan from a traditional lender. This will require an approval process, and you can expect to have to pay a large, upfront percentage to secure a loan.

This down payment may be 25% - 30% or higher.

Durability of Tiny Houses

A lot of potential owners are worried that their tiny homes won’t be durable. While these homes may be smaller, they’re built to local code. These homes are built like a regular home, and professional builders will ensure that the home is properly constructed.

Tiny homes are built with better material than an RV or trailer, and the homeowner can choose the materials that finish the home.

When placed on a foundation, these homes can be nearly as sturdy as a small home. But when they’re not placed on a foundation, they are vulnerable to damage from high winds and tornadoes. The lightweight design is the key reason that these homes are less durable when not on a foundation.

A foundation makes the home much sturdier, and in this case, they may be as sturdy as a traditional home.

Of course, you’ll want to find a builder that has a good reputation to build the home.

Smaller in size, tiny homes are often better insulated and have much better energy efficiency. You'll often save a lot of money on utilities, aside from just the size difference.

Building or Buying a Tiny House

Deciding whether to build or buy a tiny home can be a really difficult decision. When you build, you’ll need to deal with:

• Unexpected cost variations
• Utility hookups
• Permits
• Builders
• Different lending requirements

When you buy a tiny home, you’ll bypass all of these issues and be purchasing the home at a set price. You don’t have to worry about builders being slow or other issues that pop up during the building process.

But you can also save a lot of money by choosing to do a DIY build.

A DIY build is all done by yourself, so you’ll have to pull up your sleeves and get your hands dirty. You'll save a lot of money on labor costs, but you’ll still need to hire a plumber and electrician to come out and perform the final hookup for you.

The great thing about being your own contractor is that you can source all of the materials.

This means that you’ll be able to start saving money from the very start. Tiny home kits are also available that will come with instructions and everything you need to get started building your tiny home. When you have a kit, it’s a lot easier and faster to build the home even if the kit is higher priced.

Keep in mind that the home will still require inspection, and it’s a lot of work to do on your own. You can do it, and many people have, but there may be some portions of the building process where you’ll need help from a friend or professional.

What Are Tiny Houses Suitable for?

Tiny homes can be used for anything, so they’re a very versatile home. You have two main options when building your home:

• Foundation. Adding a foundation means that the tiny home will be considered a home. You'll often have a higher value for your home, and it will be far more stable when added to a foundation. Keep in mind that there are significant additional costs when building a foundation, so this will need to be factored into your budget.
• No Foundation. If you wish, you can keep your tiny home on wheels. When your tiny home is on wheels, it’s considered an RV. The great thing about this is that you can tow the RV around with you, allowing your tiny home to be a traveling home. Since the tiny home is considered an RV, you can bypass the majority of issues you face when building a tiny home. Zoning and building restrictions will not apply in most cases.

The great thing about tiny homes is that you can use them for:

• Traveling
• Rentals
• Permanent residences
• Airbnb

You can use a tiny home for more than you can a traditional home – especially with traveling if the home is on wheels.

Renting Your Land for Tiny Houses

You’ll also find a growing trend of land owners renting their land for tiny houses. This is a great way for a land owner to make extra income, and it will come without many restrictions because tiny homes on wheels are considered RVs.

Keep in mind that land owners will often want to:

• Visually see the tiny home through pictures before renting out their land.
• Determine which utilities will be needed to hook into the tiny house.

There are a lot of land owners that will convert their land into tiny home / RV parks or even mobile home parks. This opens up a world of opportunity in terms of rental income that can be made off of the tiny home.

Many lot owners will want at least $100 or more a month to keep a tiny home on the property.