Rent to Own a Tiny Home
August 21, 2017 by Marty Orefice | Real Estate, Rent to Own
Call it a social movement. Call it economically savvy consumers. Call it what you will, but tiny homes are cost-efficient and can be relatively nice.
While the movement is small, it’s recently made a big splash. HGTV shows
“Tiny House, Big Living,” “Tiny House Hunters” and “Tiny Luxury” and fyi shows “Tiny House Nation” and “Tiny House World” have helped draw national attention to it.
What is a “Tiny” Home
Tiny homes are usually between 65 and 400 square feet. According to the 2010 U.S. Census, the average home in the United States is 2,392 square feet. The median home is 2,169 square feet. Homes are biggest in the Northeast and smallest in the Midwest.
Tiny homes usually contain a living room, a kitchen, bathroom and a sleeping loft. While these homes are ideal for singles and couples, they can still work for small families. Tiny house designers fit so much inside of small spaces by focusing on how much space people actually need to do things and taking advantage of the space in the most efficient way possible.
Benefits of Tiny Homes
Living tiny isn't for everyone; however, an increasing number of people are getting excited about it. These are the benefits to living in a tiny home.
1. Getting rid of clutter. In a tiny home, you have less space than a full sized home. Naturally, you'll need to clear out unnecessary possessions because you simply will not have the space for them in your new home.
2. Purchasing less to fill and upkeep a smaller home. If you're starting from scratch, and don't have any possessions to get rid of, you might have concerns about purchasing furniture for a new home. However, purchasing is only a tiny portion of what you would need for a full-size home.
Additionally, a smaller home means fewer cleaning supplies and fewer household items. For example, if you use an air freshener in a full-size home you'd need to purchase more than one to cover the full home. In a tiny home, one air freshener will likely cover the home.
3. Less time cleaning and looking for things. Smaller space means fewer places to clean and fewer places to look when you misplace your car keys.
4. Utility bills are less expensive because it does not take a lot to power a tiny home.
5. It's less expensive to build a tiny home than it is to build a full-size home. Therefore, mortgage rates are lower, down payments are lower and taxes are lower.
6. Better for the environment. As mentioned above, it takes less energy to power a tiny home. It also takes less energy and fewer resources to build a tiny home. Additionally, lots of tiny home owners power their homes with solar panels and collect rainwater instead of using city utilities. Therefore, people who live tiny have a smaller carbon footprint.
7. Tiny homes are a good option for affordable housing not just for those looking to spend less, but also for cities looking to house the homeless.
8. Tiny homes are a great place to bond as a family or as a couple. Frankly, there isn't enough room not to bond.
Problems with Tiny Homes
Living in a tiny house has a lot of benefits, but it isn't without its faults. If you set your mind to it, you can work around the drawbacks, but know them before you make a firm decision. You want to know tiny living is right to you before you invest a lot of money into it.
1. It's tough to raise a family in a tiny home. One of the purposes of tiny homes is to limit yourself to only the space you need. If you live in a home built for two people and suddenly you have a third on the way, the small space doesn't work as well.
Some families get around it by building a second tiny home – one as a kid's space and one as a parent's space. Others expand the homes they already have.
However, while there are ways to make family life in a tiny homework, starting a family is a big reason why people leave the tiny life. If you do plan on having kids, you may want to take that into consideration when you purchase or build a tiny home.
2. There are a lot of zoning regulations for tiny homes – and any other sized home. Many townships don't allow tiny homes. There are ordinances in some cities that list minimum square footage for homes, that are much larger than what qualifies as a tiny home. Townships cite concerns about dwindling property values, which tiny homes could further impact.
Additionally, at the moment there is a limited amount of cities that allow tiny homes. Therefore, when a city or township begins allowing them they become a target destination for people to move to. Everyone with dreams of owning a tiny home will begin to view that town as one of the few places to fulfill them. Officials do not want their town overrun by tiny homes and, thus, many motions to begin allowing them are denied.
One of the appeals of tiny homes is that you could plop them down anywhere you have the land. However, zoning regulations force owners of tiny homes to park in trailer parks.
Many tiny homes even move. The problem with putting a home anywhere you want is trying to figure out which township or city's regulations to follow when building.
Some cities allow tiny homes so long as they are an accessory to the main home. So, if they are in the backyard of the main home.
Others allow them if they're built on the same type of foundation that full-sized homes are built on, but building that kind of foundation causes the cost of tiny homes to skyrocket. Therefore, there is no economic benefit to living tiny in these areas, it's a lifestyle choice instead.
Some townships require you to hook up the home to utilities, which isn't a huge issue, but part of the appeal of tiny homes is making them sustainable. So, using solar power and rain catching tools instead of city utilities.
3. They are potentially dangerous. In the case that a fire is started in the kitchen, smoke can accumulate quicker in a tiny home because there's less space for it to travel through. The smaller space also makes it more difficult for help to arrive.
4. They increase urban sprawl. Affordable housing is usually in multi-story, multi-family homes. Though apartment living is usually larger than 500 square feet, they tend to take up less space on the ground than tiny homes do because of the number of units built upward. The issue with increasing urban sprawl is that it makes it more difficult to walk from place to place.
5. There isn't a lot of personal space. The flip side to being in close proximity to loved ones is that it is hard to find your own space when you need it.
Renting to Own Tiny Homes
Renting to own is a great way to get started on owning a home. However, if you’re not sure that you can save up enough money for the down payment or make mortgage payments once you buy, you might want to consider renting to own a tiny home.
The rent payments while you rent to own will be lower. The seller in a rent to own situation is trying to make a positive cash flow while he or she is waiting for you to purchase the home.
The down payment you’ll need to qualify for a mortgage will decrease. Typically, down payments are 5-20 percent of the cost of the home. Tiny homes are usually less than $30,000; therefore, down payment will be between $1,500 and $6,000.
The mortgage payments can decrease. If you use the lowest down payment option and are charged a 4 percent interest rate on a $30,000 tiny home, your monthly payment will be $136 a month. A $136 monthly mortgage payment is considered affordable by the Department of Housing and Urban Development for anyone that makes more than $4,900 a year.
Even your utility bill will decrease because it takes a lot less to power a tiny home than it does to power a full-sized house.
Renting to own a tiny home could be a great path to homeownership that will not leave you with the heavy amount of debt that a normal home would. Especially, if you’re looking to stop making rent payments but need to get your foot in the door first.
Additionally, it gives you the opportunity to try out living in a tiny home before you make a big financial commitment to living in a tiny home.
