Investing in a Tiny Home Community/ Park

14 Replies

Does anyone have experience investing in or managing a tiny home community? I want to build a 5-10 tiny home park/ community/ village to rent out, preferably in rural Texas, Tennessee or Central Florida. 

@Frank Boet I don't personally know anything about it, but have seen this local one in Winter Park FL in the news several times and I've read into it quite a bit, Orlando Lake Front Tiny Homes:

It is a 1950's RV park that by road is in  fairly undesirable industrial type location.  However, it is also directly on  lake. I'm sure in the 50s and 60s, it was a much nicer looking location and attracted travelers with their RVs.  However, before its revival for Tiny Houses, it had basically become an RV graveyard of RVs that couldn't make it a few miles down the road and were sort of a long term rental a few notches below a true mobile home.   They've been transitioning to Tiny Houses over the past few years and it is now actually a quite hip location.  Somewhere young professionals or older retirees could actually take pride in (from the rocking chair on their tiny front porch overlooking a lake!).  From what I understand, the owners build them or have them built, and then offer them for AirBnB, Monthly/Annual rental, Lease to own, or for sale.  If residents choose to buy them before completion, which many have, they can customize them to their liking or have one built off site and bring it in.  The upside for the owner is likely the ability to charge a higher lot rent than they would on crummy RVs.

I have heard that it is hard to get counties to ever approve a NEW RV park or mobile home park.  However, if you model what the above mentioned park did, you could likely buy an RV or Mobile Home park that was already zoned as such.  Looking at it for Tiny Houses, you may find one that would be perfect for that but otherwise wouldn't have been a solid deal with regular mobile homes.  I don't know the owners of Orlando Lakefront, but you could even reach out to them and see if they'd be open to discussing some of their properties etc.  It's a really cool idea overall. 

Russell, I noticed that you are in Apopka. How do you like it there? I want to visit that area, Clermont, Mt Dora and invest in a couple of rentals in an up and coming area.

Mobile home parks and RV's are technically different classes of zoning and Tiny houses are deemed as RV designations becuase they don't have a HUD seal and aren't meant to be lived in full time. Not my rules, just the governments.

Still worth it if you can get something in a hip you diligence and see if it works.

@Frank Boet I absolutely love Apopka and all of the growth happening in coming years. I'll try not to be too lengthy, but there is A LOT happening in Apopka that when taken collectively, make a valid argument for it being one of the best suburbs of Orlando.  BP always talks about the allowable unfair advantage in RE of knowing about growth before it is fully realized, and I feel these things make Apopka an extremely desirable market for long term holds especially.  Rent prices are nearly as high as Orlando, yet property values are still 30-50% less than some of the most desirable neighborhoods in Orlando Proper.  

I grew up a few miles away in Altamonte Springs in the late 80s and 90s (born in 85, family moved to Altamonte in 87).  Altamonte grew rapidly and quite haphazardly through the 90s with apartments put next to high end housing, stores and offices being shoved wherever they fit, etc.  Until the early 2000s, Apopka was almost a rural suburb of Altamonte Springs more than it was Orlando, being only accessible by 441 or 436 (The typical 4-6 lane traffic congested local 'highways').  

In 2004 the first major phase of the SR429 Toll Road was completed, connecting I-4 south of Disney (Or "West" in I-4 speak) to the FL Turnpike, 528, and up to 441 in little rural Apopka.  Apopka all of a sudden became more convenient to Disney and the Airport than anywhere that used I4 as access (Altamonte, Lake Mary, Longwood, etc).  This made for a huge new housing boom from 2004 to 2007. 

Further spurring growth, Maitland Blvd was extended into the 414 Toll Road around 2009, connecting the corporate parks in Maitland (Including EA Games, the RDV Sportsplex where the Magic train, and countless multi-story office buildings) to the 429 toll road just south of Apopka.  This now made Apopka more convenient to Maitland than even living physically closer in Altamonte Springs.  The trip to maitland from my house is a straight shot including 10 miles of 75mph toll road vs a commute from Longwood being all stop and go traffic.  

I bought my house in a builder neighborhood in Apopka in 2009. They started development before the crash, but other than lowering the price 35-40% in 2008, they continued building and selling houses like nothing had happened, never dipping below a house per month sales in a 135 lot neighborhood. The overall market slowed, a few builder neighborhoods by smaller builders got abandoned for a bit (leaving the residents with no garbage pickup or street lights in some cases unfortunately with no builder funding for HOA). By 2012, abandon builder projects were picked back up by new builders, built out, and new land is being cleared for neighborhood after neighborhood expanding rapidly toward Mt. Dora, Eustis, Sorrento, and Mt. Plymouth.

When I bought my brand new block 1910 sqft 4/2 house in 2009 for $180k, I looked around in the nicer areas of Altamonte Springs that I knew from my childhood.  The only similar houses in the same price range were in need of a roof and AC at a minimum, many were wood frame or had awkward additions.  Fast forward 9 years and the market in general has recovered.  However, my house is now worth 20-30% more than those same houses that I couldn't afford in 2009 for the same budget.  Apopka's recovery from the recession has been accelerated by its own growth relative to surrounding areas.

In March of 2018 the next major phase of the 429 opened, called the Wekiva Parkway, connecting the aforementioned 429 from Apopka all the way up to SR46 in Mt. Dora/Eustis (A major east/west road in the area).  This now offers the same convenience Apopka has enjoyed to Mt. Plymouth, Mt. Dora, and Eustis, keeping pace with the residential growth in that direction.  However, the big deal is the final phase of the Wekiva Parkway under construction now which will connect from the junction at SR 46 East all the way to I-4 at the 417.  This will complete the "Toll Loop" around Orlando that Orlando has been working on for decades.  It also will reroute all of the tourists who travel to Disney using I-95.  Currently they have to either get on I4 or 417 and slog through Orlando traffic all the way there.  Once this opens, they'll hop on 429 in Sanford and bypass Orlando completely, saving significant time on their trip. All of this connection will make Apopka a Hub of sorts, further increasing housing demand.

In addition to this infrastructure, FL Hospital just built and opened a $203million new Hospital campus at the hub of the 429 and 414, quite conveniently in the middle of a whole bunch of vacant raw land.  One large tract is currently being developed into SF and MF housing and selling quickly.  Another tract was developed into an apartment complex with 3/2 apartments renting for over $1700/mo.  There is talk of further medical development in the same manner as Lake Nona southeast of Orlando has been dubbed 'Medical City'.  Apopka has a ways from being Lake Nona, but in that area of the Hospital it is slowly headed that way.  Additionally, there is a historic Highland Manor at the intersection of 436 and 441 coming into Apopka.  The city has purchased 39 acres of surrounding land and has a "City Center" project underway.  The first to be built will be a hotel to partner well with the Highland Manor as an event destination.  Other foot traffic friendly businesses and restaurants are planned for the development with restrictions in place to ensure it is pedestrian-drawing type businesses.

Lastly there is Kelly Park Crossing coming to North Apopka in the coming years with over 600 acres of planned development.  Publix has already committed to building a store to anchor one of the plazas, but there is multi family, single family, commercial and other use planned for what is currently pasture land.  

3/2 single family houses rent for $1200-1300 if under 1400sq ft and/or lacking a garage and can be found for under $150k with some effort. Larger 3/2 homes in the 1600+ sqft range with a garage rent for $1500-1750 and can be found for under $175k. Duplexes with 2/1 or 2/2 sides rent in the $950-1100 range depending on location, and can be found for under $200k with some effort. Not to say these type properties are all over the MLS at any moment, but I have come across enough to know that 1% deals (rent price of 1% purchase) are still possible to find. I haven't found any that meet that rule closer to Orlando, either prices are too high or rents are too low.

@Ryan Groene I have heard that being the issue with some people even getting clearance for tiny houses on their own property even. I have a friend with 80 acres in Interlachen FL, basically in the middle of rural FL.  Gainesville being the closest city which is still over 25 miles.  He has looked into allowing others to park Tiny Homes on his property as a sort of community land type thing. He could have his own Tiny House and in fact used to live on the property in a 70s Winnebago trailer he rehabbed, but having others there is a no go. He can hunt what he finds on the land, build what he wants, but he can't have his friends live in Tiny Homes there full time if they don't own the land. Many rural areas allow mobile homes on property to be lived in, but they specifically ban RVs from full time rental residence, which is an odd distinction in my opinion since many mobile homes are still registered as vehicles.  I think the only way to make it work would be to buy an existing RV park.  But Tiny Homes are definitely 'hip' so if you could make some profit selling them built on site as well as collect a $550+ lot rent, it could work in the right location.

I would suggest that before you go searching for the right property to do it on (as that is a major hurdle) run some numbers to be sure the idea itself is worthwhile. (Is there a profit margin on building and selling tiny homes? Do you know of someone who could build them?  Would you require residents to buy, or do you have the capital to build them and rent out? Property management of rented units? Park management?  I would almost back into it this way before finding land as its possible the margins on all of the aspects aside from land will paint a picture of limited profit margins. Mobile homes are quite cheap, old ones can be rehabbed and sold to residents, and new ones are the price of a nice car.  Tiny houses can often rival the price of a site built home of larger size, depending on the build quality. If the "Tiny House" side of the business was profitable, then you could set a target lot rent and begin to search for an area where that is reasonable in the price range you have determined. But it doesn't make sense to start searching RV parks if you can't find profit in the 'development' of tiny homes as well.

I don’t think the numbers work for a tiny home for long term rental, they are pricey. However, I dabble a bit in Air BnB properties for a few investors so I know a bit about it for the Orlando area and tiny homes absolutely CRUSH it. As above said , it’s a hip and trendy thing, so the one’s located in Orlando are killing it, some even charging 100 a night ! 

Sorry, little too quick with the *send* button! The community is called the Cedar Springs Tiny Home Village, and let me try to give you that link again!

@Frank Boet didn't mean to hijack your post with such a long semi-related reply, so I'm glad you found value in it :).

@Tyler Gibson that area is quite nice. With how specific you are, I'm guessing you are referring to the duplex located right there on the MLS for $165k? If so, I think that is a great property. Votaw and Thompson are double yellow line two lane roads (I think 35mph the whole way), but are 99% residential north and south on Thompson as well as East and West on Votaw, with small duplexes and single family all along the roads, so having a driveway off the 'main' road there isn't out of the ordinary. The neighborhoods with entrances off of Votaw and Thompson are all single family homes with values in the $200s to upper $300s or more. The duplex listed is rented for $695 per side (Not my listing, just info I've gathered from the MLS and listing agent for buyer clients, none of whom have made a move on it). I feel market rent for that property is closer to $900-1000 per side per month, depending on interior condition which is unknown until offer and proof of funds to show ($1000-1050 per month would require it to be in nice cosmetic rehab condition).

What has kept my buyers from making an offer to dig in deeper on it is almost complete lack of comps. I can pull enough to show that it is worth in the ballpark of its listing price, and the cashflow at that price would be good, but there isn't an immediate value add play to be made for BRRRR refinancing or flip potential without any comps, let alone flipped ones, to compare to. It is really only appealing as a long term buy and hold. However, I feel it could be bought and made into a property that grossed $1800-2000/mo with minimal work, and rents are on the rise here still. Being only two units, that NOI increase doesn't necessarily increase value in an appraiser or Bank's eyes. Its already got a new roof, windows, ACs, and plumbing. If you need a Realtor, I'd be happy to offer and negotiate on that property for you, but even if you've got that covered I wanted to offer my opinion that location would be a good one in my opinion (considering that Interior condition unknown).

@Russell Holmes You hit the nail on the head. I have a realtor that is sending me properties in Orange, Lake, Seminole and Oceola county. This one popped up and up until seeing your post about apopka was not giving it any thought. I am not that familiar with apopka and have not been giving any consideration to that area due to not knowing the market. You painted a pretty nice picture of the future and current situation so now I might give it more thought. 

Thanks for the insight. 

@Tyler Gibson no problem! That location is very convenient to both Apopka and Altamonte Springs, I'd say a C+ to B- area, with nearby A class neighborhoods. There are some pockets in South Apopka that you'd want to avoid due to low rents and low values, but they will be obvious with really low prices and low comps. most of Apopka North of 441 and then the portion south of 441 near the hospital is nice.