Build smaller to get past 12 months no rent rule?

Question

Hi,

I am about to start building a small cabin next to my house. I already have done all my homework (unrestricted zoning, no hoa/poa, no deed restrictions..Etc). I have gotten my septic permit, the septic system is installed and has passed inspection. I am about to start my building permit application. Here is my question, I plan on building the whole cabin myself and then renting it out as a short term rental (because I want to and truly enjoy doing things like that). Since I own the land, I can get an homeowner exemption meaning that I do not have to be a licensed GC and I can do everything myself as long as I will be present for all the counties inspections. The limitation is that if I want the exemption, I have to agree not to rent out the place for 12 months after the date of completion.

The only loophole is that if the construction cost is going to be less than 30k, no licensed is needed so no need to apply for the exemption hence no 12 months limitations. The cost is going to be less than 30k because I will build it myself but obviously the county won't just accept my "random" estimate, they will allow to estimate $123/SF of conditioned space and $22/SF of deck.

The floor plan I was planning on building is coming at $37,404 (288 SF floor plan, 90 SF front deck), so my question is : shall I make it smaller to get below that 30k limit ? Meaning that I would probably have to reduce the square footage to 234SF which seem to become rather small at that point!

What do you think? Anyone having some small cabin, tiny house, cottage that are in that size realm as I would love to get feedbacks on what would be too small ? Thanks a lot!

John Underwood · Answer

If you build smaller due to a short term issue you will have a smaller house for ever. I would look long term to make my decision.

Colleen F. · Answer

@Tristan S. don't make it smaller, the 288 is small enough. You are making conditioned space, there is no point if there is no space. We built a true cabin (unconditioned space- no bathroom) this size and it feels tiny. put some standard dimension furniture 60x80 bed in it and you will see. As far as the rest of it goes I would defer to the locals.

Bruce Woodruff · Answer

Clever idea, I might have done something similar in the past :-)

But Inspectors aren't stupid. The footings for the 'living space deck' will be different than the 'open deck', plumbing and electrical stub-outs will be noticed, things like that that....And if you get caught they will become your worst nightmare! Also if I understand the plan, the entry for the porch is where the gable starts so that could be a problem, can't really 'back that in'

Charles Rudnick · Answer

1.Build a 378sq deck.

2.Finish 200sq ft. Leave 178sq ft as a porch.

3.Get all your inspections complete.

4.Close in and finish out an additional 88sq ft.

5.Rent it out

Total of 288 finished sq ft with 90 sq ft of porch for under $30k.

Tristan S. · Answer

@Bruce Woodruff thank you for the honest words.

a) I could try to make it 18'x18'.

b) I do agree with this but I do consider myself fairly handy. That being said, I am sure that building from the ground up is another level and I am setting myself for lots of headaches but hey, I gotta learn somehow.

I said deck, I should have said front porch as that is all it is, with the start of the gable roof over it.

Bruce Woodruff · Answer

a) 234 sf is really small....picture a 15 x 15 room. You will wish you'd built bigger for the rest of your life.

b) You may be a structural engineer but that means little if you've not built from the ground up before. And many times. As a GC, I obviously worked with lots of PE's and generally speaking most were book-smart kinda guys who couldn't build a bird house. Sorry but that's true. Architects even worse.

c) You will not come in at budget. No way. I'll send you a case of beer if you come within 10%. Factor that into your calculations before it happens.

d) I have built an off-grid cabin for personal use. 575 sf. I would say that less than 350-400 sf is too small. Yes they look cute on TV but reality sucks.

One thing you could consider is leaving the deck out of the picture. Until Final is over. Put that money into increasing the size of your cabin.

Tristan S. · Answer

@Kurt West

1. The $123/SF is based on what the county will allow me to use to based my estimate to determine if I will be above or below the 30k, based on some data they have available. She mentioned which documentation this was based on but cannot recall.

2. I was under the assumption that this was a fairly long process requiring testing, the proper insurance..Etc. Would that be worth it for potentially building a handful of structures in my entire life. Are you knowledgeable about the process? I would love to hear about it if it is indeed not too time consuming.

3. I am a licensed residential structural engineer (PE), I design mountain houses for a living so I would say that I am pretty knowledgeable on the subject.

4. I have not, but I have already got my plans drawn and details figured out. I have never done it per se but know exactly how it should be done. I am fairly handy as I have done some remodeling work. I think that between my knowledge from work and own research, I should be able to figure it out.

@Joshua Strickland, that is a good point but an existing cabin here is around 300k min, market is nuts with very low inventory (touristic destination in the Appalachian mountains). My goal with this small cabin is to place it on the same land as my house. The whole cost should be pretty minimal (compare to 300k) and result in a decent stream of income which should offset most of my current mortgage (the whole house hacking kind of deal). I also am looking forward to building it as a personal undertaking as I love remodeling/construction projects (I am actually documenting the whole process on youtube as I go). If I could find a small cabin ready to go for less than 100k, I would seriously have considered it.

@John Underwood you make a good point.

Joshua Strickland · Answer

Just a personal opinion, but is seems like your a long way down this building it yourself rabbit hole. From my perspective I'd ask why not just buy a small cabin now with the money you were going to use to build? It would be an easy way to get your feet wet in the STR game and most importantly you eliminate the whole 12 month wait plus the additional 6-12 months it will take you to build. Seems like a lot of profit your giving up over the next 18-24+ months.

I speak from a similar(ish) situation. I started a new build last October and it won’t be ready until next month. Granted it will end up being less expensive than if I would have just bought a cabin last October, but I can’t stop thinking about the $30-$50k of profit I would have already made if I would have just bought an existing cabin. Not including the appreciation.

I know this didn’t answer your question, but just a thought.

Kurt West · Answer

Couple of questions:

1. Where are you getting your costs from?
2. Why not get your GC license? In NC its a simple test, 2 letters of rec and you need very little in assets.
3. Have you consulted with an architect and/or structural engineer?
4. Have you ever built a small house?

Build smaller to get past 12 months no rent rule?

Build smaller to get past 12 months no rent rule?

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