Tiny Home Financials -- What Will it Really Cost?

 With U.S. residents spending up to half their income on rent — and the average price of a new home being $371,200 — it’s no wonder more and more people are looking to downsize in an effort to save money. Developers hoping to solve the housing crunch have put forward ideas such as shipping container homes or even adult dorms, but tiny homes are still the biggest pull for everyday Americans.

Tiny houses are typically less expensive than traditional homes, but nailing down an average price isn’t as simple as it might seem. Like their larger counterparts, tiny homes vary widely in price because they're diverse — they have different sizes, systems, materials, and construction methods. And, since their aren’t nearly as many tiny houses as there are traditional ones, gathering the data on pricing is slightly more complicated.

However, if you’re considering building a tiny home of your own, there are certain costs you can expect to incur. Let’s take a closer look.

Property & Financing

If you’re building a mobile tiny home, you won’t need to worry about buying land. However, if you wish to build a permanent dwelling, you’ll need some land to put it on. Land prices vary widely; depending on where you live, you’ll spend anywhere from $1,500 to $196,000 per acre. Supply and demand dictate that the more interest there is in a given piece of land — and the closer you get to urban areas — the more expensive it’s going to be. Conversely, inexpensive land is lower priced for a reason. It may be remote, unstable, or undesirable for a number of other reasons. It’s incredibly important to do plenty of research before buying.

Financing for tiny homes is notoriously hard to get. Even traditional mobile homes are becoming hard to finance, and they usually have to have a permanent foundation under them just to qualify. If you need to finance your tiny house, you have three options:

• Secure a traditional mortgage loan through a bank or credit union. To do so you will need to place your tiny home on a permanent foundation and adhere to city or state codes on minimum square footage.
• Obtain financing through major tiny house RV builders, such as Tumbleweed and the Tiny House Building Company.
• Acquire financing through online lenders that specialize tiny home loans, such as Lightstream.

Whatever you do, be sure to know where the money is coming from before you get started. You don’t want to get yourself in a pickle.

If you are building a permanent structure, you’ll have to apply for permits. This can range from hundreds to thousands of dollars depending on where you live, and will likely include a plan review, building permit, electrical permit, mechanical permit, and plumbing permit.

Building

How much the tiny house itself will cost depends greatly upon whether you buy it pre-built, or build it yourself. According to the Spruce, the median cost for a pre-built tiny home is $59,884. The (relatively) steep price tag rests on the time and skill it requires to construct a move-in ready tiny house. Generally speaking, the lowest price you’ll pay for a professionally built tiny home is $20,000-$25,000.

As for the DIY approach, well, it all relies upon your materials and skill set. The Spruce interviewed seven first-time builders (with no prior construction experience) and found that the finished costs for their tiny homes ranged from $12,000 to $35,000.

If you do decide to build it yourself, you may want to make life easier (and perhaps safer if you’re particularly inexperienced) by starting with a completed shell. A tiny house shell normally includes the outside of the house, solid structure, and weatherproofing. The interior is totally unfinished, leaving you to design it yourself.

However, if you’re going for the full DIY experience, you can save a significant amount of money if you know what you’re doing. Start by attending a tiny house building workshop. This will help you to avoid making costly mistakes when constructing your home. Seek salvaged finish materials to reduce the overall cost of your tiny house and increase its character. Secondhand cabinets and appliances, reclaimed wood for flooring, trim and moulding remnants — all are great money-saving options.

It’s also important to know where not to cut corners. Don’t skimp on the trailer or foundation, as these are the all-important footing for your tiny home. Windows should never be single pane, as they will let heating and air-conditioning escape and cost you more in utility bills each month. And while salvaged lumber may seem like a great way to save money on framing, chances are you’ll spend more in labor costs trying to make it work. It’s best to purchase new materials for the structural components like your foundation and framing, and save the repurposed goods for finish materials.

If your tiny home is a permanent structure, you may be required to tie into the local power grid and water/sewer system. The main factor in determining how much this will cost is how far your house is from the nearest connection hookups. If the installation is fairly standard and routine, it could cost you as little as a couple hundred, but if the power company has to install yards and yards of line or pipe to reach your house, it could cost in the thousands.

Other Costs

If your tiny house is mobile, you'll need a vehicle that can pull the weight of your dwelling. You’ll also need a place to park. Besides fuel costs, your biggest monthly expense will be land. Some RV parks welcome tiny houses, but you should expect to pay $250 to $1,500 per month for a spot. If your tiny house is a permanent structure on land you own, you’ll be responsible for property taxes each year. Regardless of mobility, you’ll need to protect your investment by buying insurance.

Ultimately, the cost of your tiny house will be dependant on the choices you make about what you need. Whether it’s mobile, permanent, pre-built, DIY, reclaimed, or brand new, your tiny home should suit your needs and reflect your values. In the end, all that really matters is that it truly is “home, sweet (tiny) home.”

About the Author:

Liz Greene is a makeup loving, dog hugging, anxiety-ridden realist from the gorgeous City of Trees, Boise, Idaho. You can follow her on Twitter @LizVGreene or catch her latest misadventures on her blog, Instant Lo.