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Is The Tiny House Movement Coming In Style?

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Forge Your Wealth is meant for education and entertainment and should not be considered financial advice.

My little brother had this strange idea. He wanted to take a shipping container, plop it on some land, and live off the land in a modified container home. Everyone in my family thought that was a wild idea, including myself. However, I have seen some videos on HGTV and looked more on YouTube. I can now see his idea is not as wild as I thought. In fact, the concept of tiny houses has become a movement. In this post I will address the idea of owning a tiny house and whether it is a good idea for your finances.

What Fits The Definition Of A Tiny House?

A house is technically qualified as a tiny house if its area is under 40 square meters (400 square feet). These can include houses built from shipping containers as previously mentioned, mobile homes, trailers, or any fixed structure that is small. You would know a tiny house if you see one.

The Good

Upfront Costs

Tiny houses can cost very little money up front. They could cost as little as $8,000. Most used cars less than 10 years old cost more up front. And this is an abode. Even the tiniest tiny homes can feel more like home than a traditional vehicle ever could.

Usually Mobile

While some tiny houses are permanent structures many are mobile. These homes can allow you to move around freely, even more so than by renting.

Very Efficient

Many people go to quite extreme measures to save on utilities. And who can blame them? I know a heating or electric bill of over a hundred dollars is not uncommon. Throw a rough winter and poor insulation in there and these could cost more than the rent. Tiny houses require very little energy to make a livable. With less space, you need less energy to heat it up or cool it down.

Easy To Maintain And Repair

Tiny house, tiny solutions. If you want a clean house, you hardly need any effort or equipment to clean it. Furthermore, most issues around the house are easy to fix. You hardly need a ladder to fix the roof. You probably only need to replace a few kitchen tiles.

The Bad

Before I get started, I want to say that I have no intentions of living in a tiny house. I have lived under a bunch of branches, pine needles, and ferns through a thunderstorm, but I will not spend thousands for a tiny house, at least not as my primary residence.

Tiny Houses Tend To Lose Value

As much as I say that houses are not assets I cannot deny the fact that houses tend to appreciate in value. It’s just as soon as you add the property taxes, the insurance, and the maintenance and repairs, you lose the asset edge.

However, tiny houses do not even appreciate in value, but depreciate. They depreciate in a very similar manner of cars. You can expect your tiny house to lose over half of its value within 3 years. In other words, if you ever expect to make money off your tiny house, you will have to build it, and sell within less than 3 years.

No Traditional Mortgage

Since tiny houses depreciate in value they do not receive mortgages, at least not traditional ones. You will have to pay in cash or receive a different loan which will likely have higher interest rates. While tiny houses sound like an excellent deal at around tens of thousands of dollars some luxury tiny homes cost over $100,000, not unlike some modest houses. Can you pay for all of it upfront? If not, you may have to lose some money to larger interest rates.

Usually Mobile

I know I put this up as an advantage, but it can very easily be a disadvantage. Mobility is a good thing when you want something to be mobile. But what if you do not want your home to be mobile? Nature is a very powerful force. Wind, landslides, and floods are strong and not uncommon. Simply put, a tiny house, especially one on wheels or concrete blocks is not going to put up much, if any fight at all, to these forces. Manufactured homes are only built to withstand winds of 110 km/hr, you can expect a tiny house to face major damage with winds around these speeds. If and when a natural disaster happens, you may find your tiny house is moving to a destination you wish not to reside.

You Cannot Hide Anything

If you own a tiny house, you can smell your kitchen trash in your bedroom no problem. I have heard jokes that you can never hide farts in one of these unless you own a dog. Oh and if you have a dog, anyone allergic will have the sniffles when they cross your threshold. If you do not clean anything it will stick out. If your home is not aligned, it will lean heavily. Your tiny home will need to be next to paradise or it will not feel like home.

Other Things To Consider

Container Homes

Many people have the idea of making a tiny house out of shipping containers. While I think this is a very creative idea, it is not very practical. Shipping containers are designed to carry cargo, not to be livable.

Have you ever seen the inside of a shipping container? I have. It’s not very homey, not unless you like walls and ceilings of metal ridges. You may line up the inside of the shipping containers just to cover the looks. A standard shipping container is 8 feet wide and 8.5 feet tall, if you add any siding to the inside that is 6 inches thick that will eliminate a foot. The new dimensions will be 7 feet wide and 7.5 feet tall. You will hardly have any space.

Furthermore, you will need to cut into the container. Shipping containers are designed to hold cargo that do not care about seeing sunlight, nor leaving as they please. If you expect any windows or doors, you will need reinforcement after the cutting.

Zoning And Residence Laws

So far very few laws really support tiny houses. Many places only allow houses with a minimum residential area. Tiny houses on wheels like RVs cannot just be parked on land, more often than not you will need to rent a space in a trailer park. Many residential areas require at least one larger house. Furthermore, if your tiny house requires any oil or natural gas hookup, that will be difficult to establish.

Final Thoughts

I love innovation as much as anyone, but there just seems to be little purpose in the tiny house movement when I looked at many of the angles. Most of the issues with affordable housing could be solved not with new versions of houses, but with the open idea of building more housing the accommodates people.

Author: Papa Foxtrot

Most of my life I was careful with money and learned where I should invest it. I was very lucky to have parents who taught me financial literacy when I was young. Unfortunately, I am very lucky because many people lack the financial literacy I know. The purpose of Forge Your Wealth is to teach people who are just starting out in life how to obtain their wealth or anyone who just realized they may need to learn more to handle their finances. I currently have a PhD in biochemistry, just started a job in industry (will not disclose where exactly for personal and professional reasons) and am currently married to the love of my life. I am one of the lucky few people in America who graduated with no student debts, my wife was not. Over the series of a little over 3 years we paid for our wedding with no debt and paid off her federal student loans.

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