Tiny Home, Big Decision

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Tiny houses are all the rage right now! I’m seeing them pop up in backyards all over Nashville. However, despite the numerous HGTV shows that show us how these tiny homes are made (& decorated) most of us don’t know a lot about the financial side of things. A huge part of the appeal of tiny homes is the financial freedom that comes with avoiding a large mortgage payment (along with the mobility & low environmental impact) but how much do tiny homes cost & where do you get the financing? What hidden costs are associated with tiny home buying? What do you do with all your stuff? Let’s find out…What Makes a Home Tiny-

The Cost of a Tiny Home

The first question is, how handy are you? There are pretty significant differences between the cost of a DIY tiny home versus one that is professionally built. According to Portland Alternative Dwellings, a tiny house can cost between $15,000 & $80,000 with Ryan at TheTinyLife estimating the average DIY at $23,000. Professional builds can creep up over $100,000. Keep in mind, these costs are still significantly less than the average “regular” home price ($188,900). Ideally, you want to save the money to purchase the home (or materials) outright without having to get financing. However, financing options do exist:

  • Traditional mortgage: If you are building a permanent structure (not on a trailer like most tiny homes) you may qualify for a traditional mortgage loan, this will also require following all building codes. Many tiny homes do not meet the minimum size for a primary residence.
  • Builder: Many professional builders offer in-house financing plans.
  • Peer-to-to peer lending
  • RV loan
  • Specialized tiny home lender

Hidden Costs & Savings
Another huge question is, where will you put your tiny home? Many cities have zoning codes that limit where tiny homes can hang out. If the city permits it, you could put your home in the backyard of a willing friend or family member, or rent space from someone. If not, RV parks or rural land lots are an option. These all come with an additional monthly cost so be sure to factor that into your budget. Consider also what utilities you will still be paying & how that arrangement will work with your “landlord” as you will likely be hooking up to their water & electricity.
On the flip side, how much money will you save by not accumulating so much stuff? Space is limited in a tiny home so minimalism is necessary. You can also make some money selling off all your old stuff that’s not moving into the tiny house with you. In addition, if your tiny home is on a trailer you can say goodbye to those hotel bills when you go on vacation!
Other considerations
A non-financial question, are you mentally prepared to live in a small space? Downsizing to such a drastic degree will change your relationship to your family, your stuff & your community. Consider how those relationships will change & what you will need to do to ensure a smooth transition. Here are some questions to consider when deciding whether a tiny house is right for you:

  • Emotional:
    • How emotionally attached are you to your things?
    • Can you limit your shopping?
    • What is your impact on the environment & how does that make you feel?
    • How settled are you in your current city?
    • What is your comfort level with close spaces?
  • Financial:
    • Build or buy?
    • Do you have the cash available?
    • Is financing available to build if you don’t have enough cash? Check your credit score!
    • Do you know where you will put your tiny home?
    • How will you handle utilities?

If you want advice on preparing for your tiny home purchase, connect with a Financial Stability Specialist at Apprisen! Visit www.apprisen.com or call 800.355.2227.
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