For most people, the biggest expense in their life is housing. It is also one of the reasons that people can’t build up significant savings to invest and retire early. Some people have come to realize that they don’t need all the space in a modern large house and they choose to downsize to something smaller either because of financial necessity or because they want to have a smaller footprint and the lower associated costs that come with it. This realization has caused many people to look into and buy tiny houses. Of course all of the TV shows about tiny houses has helped fuel this fascination with them.
I’m all for minimalism, and not having more space than you need and generally living below your means, but to me there is a pretty big flaw in the idea of some of these tiny houses. The problem I have is with the ones built on a trailer. These are basically large sheds with no plumbing and of course no land under it that you own. I’m not trying to tell people how to live so if they want to use a composting toilet, go for it, but to me that would get old very quickly. The composting toilet is not my real problem with these, it’s the price.
Yeah, but on the tiny house TV shows they say it’s a good deal, and it is hand crafted with all kinds of neat little hideaway storage spaces. How can you go wrong with a tiny house?
Tiny House on a trailer: 192 Square Feet, priced at $52,000. This is $270 Per Square Foot.
Large House in NC on about 1 acre: 5478 Square Feet, priced at $500,000. This is $91 Per Square Foot.
Obviously, the house costs ten times more in dollars and someone shopping tiny homes is not cross shopping $500,000 homes. But the point I’m trying to make is that people who are buying these one off tiny houses on trailers are overpaying and there are better options out there that won’t leave you with a depreciating shed that you probably took out a loan to buy. Remember, it is the land under the house that appreciates, the house itself always depreciates.
Here are some better priced options:
If you want a tiny house on a trailer because you like the idea of living anyplace and being able to move your house when you feel like it or when you change jobs, then just buy a manufactured trailer. A quick glance on EBay shows that this 28 foot, 2008 trailer sold for $5000. It is a ready made home, made in a factory using economies of scale to keep the price down. Just like if you need to drive to work, you’re not going to hire craftsmen and engineers to design and build you a car. You just buy a Toyota because they make millions of them much cheaper than you could ever make for yourself and they are easily resalable. Also, buying a trailer like this is a cheap way to really find out if you like living in the woods or your friend’s backyard with no plumbing. You might find that you don’t really like doing it or having to move every few months. If you change your mind, then you can easily sell it without losing too much, compared to selling a custom tiny house.
Whatever you do, please, please, don’t do what I saw a young guy do on one of those tiny house shows. He convinced his mom to foot the bill to spend about $24,000 to renovate an old yellow school bus into his new tiny house on his mom’s property. He also had to recruit a bunch of family members to help with free labor. A school bus goes for about $1500 on EBay. Do you know how much you can sell a school bus that has $24,000 of “updates”? I don’t know either, but it is probably less than $5000. He could have just bought this trailer and saved $19,000.
So he put $24,000 and many hours of labor into this:
When he could have bought this for $5000:
Similar to this is the option of a self driven RV. It gives you the same ready made tiny house with the added bonus of a truck to move it wherever you want. You will be surprised how cheap these are. I found this one on EBay also. It is a 2003, 30 feet long and sold for $14,000.
If you want something a little more permanent, you can buy a manufactured home starting for around $20,000 brand new and much cheaper if you buy it used. Of course, you will still have to buy the land to put it on because the rental rates in trailer parks are really outrageous.
Small House or Condo
Lastly, your best option is to buy an actual small house or condo. Easier said than done right? Where are you going to find a house or condo priced similarly to a $50,000 tiny house? The answer is that there are literally thousands of them for sale in the US. If you buy an 800 square foot house for $50,000, that is only about $62 a square foot. Not all of them are in the greatest location or in the greatest condition, but if you do your research you can find something in the general area where you want to live. Obviously they will not be close to the expensive cities where high paying jobs are, but the whole point of having an inexpensive house is so that you don’t have to work if you choose not to right?
Here are two examples I got on Realtor.com from a 20 mile radius search of Fort Worth, TX and Raleigh, NC:
Texas condo 616 square feet, $94 monthly maintenance, $473 yearly taxes, listed for $34,000 on Realtor.com
This house in North Carolina is 1050 square feet, $598 yearly taxes, and listed for $38,700 on Realtor.com
So if you want to better your financial position, skip the cutesy tiny house trailer and buy a small house or condo with actual plumbing and electric. It will hopefully appreciate and is easily sellable or rentable if need be and you will be that much closer to financial independence.