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Tiny House Living—Our First Year in Retrospective

Tiny House Living—Our First Year in Retrospective

August 13, 2018 0 Comments

BY Spencer, Tiny Migrations.

Our goal was to take tiny house living to the next level. To build the most extraordinary tiny house that works for us in a variety of ways. Successes and failures, here are the major themes that stand out in our first year of tiny house living:
 

Cost

Tiny House Living—Our First Year in Retrospective

We first considered tiny house living as a financial solution. Living in Northern California, we were spending nearly $30,000 a year ($2,300/month) on rent and we figured that we could come up with a better way to spend that money. Since tiny houses are generally much cheaper than other homes (especially in our area), this seemed like a perfect fit. So did we end up saving money?

Kind of… we decided fairly early in our build process to put everything we could into it. We leveraged every penny of unsecured financing that we could muster and put it all into building a tiny house like no other. Our financing costs were crazy high until we could clear some of the debt. Combined with the cost of paying for land (at $750/mo), we were paying almost $3,000 a month for housing.

At first glance, it seems like our cost of living actually went up! But most of what we pay now goes to paying our principle, so once you take out the cost of interest and rent, our ACTUAL cost of living went from $2,300 to around $1,300. So we’re saving about $1,000 a month (minus depreciation to the home and repair costs), even though we technically pay more each month. This is also just for the first year. Our interest payments decrease over time and within the next year, two of our loans will be paid off completely.

Fortunately, in our case, we’re also not at much risk for depreciation. Since we put a lot of design work into the home ourselves and we were able to generate press and secure sponsors along the way, we were able to get a bunch of stuff for our home for much lower than the market value.

Lifestyle

Tiny House Living—Our First Year in Retrospective

I almost always have the same response when people ask me what it’s like to live in a tiny house: it’s incredible… and we do it with a toddler! If it was just the two of us, it would be paradise.

But I don’t have rose-colored glasses. If I could afford a house as nice as our tiny house, but bigger, I would choose the bigger home. I prefer an incredible home that's tiny, to a marginal home that's bigger.

Living in a tiny home also involves a LOT of work. We’ve done ridiculous amounts of landscaping, we’ve built a deck (two, actually), we’ve styled out a canvas tent, we’ve done a bunch of marketing and press work, we’ve done repairs and an HVAC installation, we’ve tried (and failed, twice) to change to a flush toilet, and we’ve had to hire a contractor to move the house. So much extra stuff that we probably wouldn’t have had to do if we had a foundation home instead.

There’s something undeniably magical about our home and being able to live immersed in nature. We likely wouldn’t have access to this sort of lifestyle if we had tried to buy a traditional home or kept renting apartments.  I love having parties at our place, I love having family and friends come to visit. Visitors tell us that our home is like a respite, a sanctuary for them, and it’s wonderful to be able to share that with others.

Side-hustling: Airbnb

Tiny House Living—Our First Year in Retrospective

Short-term finances attracted us to tiny homes, long-term flexibility is what sealed the deal. We wanted a house that we could live in, but we also wanted a house that we could flip into a vacation rental property to make us money while we traveled. We think the best tiny homes are designed with this principle in mind: buy low, rent high.

We postured for this from the beginning. Right around our year anniversary of living tiny, we were able to launch our rental (we'll post primer on this soon). We left for four months and converted our home into a rental property. Our average nightly rate is around $275 and we hit around 50% occupancy. Our renters love the space and we love sharing our space with others.

This was perfect for our first dip into rentals and we’re pretty confident that with some improvements (hello, outdoor soak-tub!), we can get our occupancy up to 80% or more. If we’re able to hit that rate, we could have the house 100% paying for itself and live in it for free four months out of the year. In my opinion, this is maybe the most powerful reason for spending more on your tiny house upfront. Design it with vacation rentals in mind, and you can almost double the average nightly rate if ever you decide to flip it.

In Sum

As soon as we got into tiny houses, our initial impression was that the current movement had lots of room for growth, but in a direction that few were paying attention to. We’re now even more convinced of that.
 
Tiny houses aren’t incredible just because living with less or debt-free is so great. Tiny houses are better because (a) you can buy a house without buying land, and (b) if you design well, you can have a higher-quality house for less, without lowering your standard of living. Both of those principles are powerful and under-utilized in the current market for tiny homes.