Leasing tiny homes.. Another strategy..

97 Replies

I've been looking into the possibility of tiny homes, airstream, or something similar as an AirB&B spot to plop down somewhere... Interestingly, someone has got creative, and is leasing out their tiny home to someone who wants to put it on their own land.. $700/mo to rent w/ 1 year lease, and $2/mile delivery fee from down near Santa Cruz, for a 175 sq ft tiny home. So you don't have the up-front cost of purchasing, and what to do with after..

In theory, a building like this could generate income off land/space that is underutilized and has a very low or zero marginal cost. Maybe a small community of these on a lot would be enough to pay basic expenses, and could free up time to go find and make some great RE deals..

@Al Williamson  , have you heard of such crazy ideas..?

Anyone else doing short-term rentals on smaller, non-conventional spaces..?
I was also looking at a live-aboard boat as a potential AirB&B, but don't know anything about boats, and maintenance costs..

Wow...that is some crazy stuff.  I guess living in Texas and having all this space makes me wonder...WHY?!?  ;-)

@Hattie Dizmond   Is right, us Texans like our space (we need it it for all the imaginary horses everyone seems to think we own lol)!  @J Martin I think thats a great idea, but i do think it would hinder the flow of applicants coming in. What are your thoughts on mobile homes?

Spoke to a guy who wants to build these on a trailer for his business. I like the tiny house concept and popularity is bound to grow as low income housing options diminish.

His plan is to sell them and finance them.....here comes Dodd Frank again! My suggestion is to build and title the trailer as an RV otherwise as a mobile home as a residence you'll have compliance issues.

Leasing on a long term basis, 10 or 15 years is possible as there is no mortgage with acceleration clause issues.

Also look at "Park Homes" these are micro mobiles, the double wide is popular around our area lakes.

For Texans or those wanting the feeling of space, glass works, sliding doors opening on to larger deck spaces. Decks can be unattached free floating and covered, step down to lower decks, a patio area, fire pit, BBQ area, outdoor entertainment center, overhead heaters can make you take your coat off in 20 degree weather, curtain enclosures that roll up or down and snap in place (canvas type material with windows) allows heating and cooling.

The tiny home can simply be the sleeping, bath and indoor cooking space with a sitting area for really bad weather. Possibilities are endless. Can't recall the name of the Japanese style dwellings that are more of a complex with sliding doors, but think in terms of a main unit with amenities running through a garden or in the woods or over streams. My cabin at the lake isn't tiny but I'm thinking of opening it up bringing more of the outside in.

I'll shut up now.

Almost; J. Martin, I'm a bit of a boatie, suggest you reconsider renting any decent yacht, renters don't generally take care of them and you'll get those dreaming of the liveaborad lifestyle who find out shortly they aren't as salty as the thought they were.....high vacancy.

Now, you can get a tub about 30 to 40' that shouldn't go out past the dock for dirt cheap, 5K for example, redo the inside more for living at anchor than sailing and you might have something, stay away from wood boats if you aren't handy below deck. Your dock fees will be more than the costs of the boat and old wood boats are almost impossible to insure and you need insurance to be in most marinas. Why not stick to land, RE, then buy yourself a yacht to learn, I bet you'll drop the idea of renting it. :)  

Why not just rent RVs?  You can buy them for a few thousand and they're already set up to maximize space and usefulness.  I rent them as residences, not as vacation property.  I have 6 now.

Originally posted by @Al Williamson:

@J Martin 

I'm a big fan of the tiny house movement. I need to get the concept of renting unused space to tiny house owners on my list of ideas. Thanks for the tip.

@Leslie A. 

I think the RV people are a different crowd than the tiny homers. Your biz model of renting RVs as residents sounds like a nice cashflow idea. Do residents park on your property? How do you prevent your investment from hitting the road?

yes, they probably are.  But in addition, there are big, fancy, expensive RVs.  You can go as simple or extravagant as you want.

My RVs are located in an RV park, but we plan to develop our land to place a few, eventually.

 I have a lock on the hitch, but it could easily be cut, I imagine.  They do have heavier duty locks you can buy.  My lease states that the RV is not to be moved from the lot.  It's strictly for staying where it is.

Originally posted by @Leslie A.:

Why not just rent RVs?  You can buy them for a few thousand and they're already set up to maximize space and usefulness.  I rent them as residences, not as vacation property.  I have 6 now.

 What class of tenant are you getting for these, Leslie?

Don't want to hijack the original thread. 

Well, it's hard to say.  I would say maybe average.  Not low class, but not high class, either.  One of my renters makes over $100,000 a year at a permanent job.  I get the idea that he has a hard time managing his money, which works out great for me, since I do weekly rent.  We get what equals out to  $780 a month for this one.

Another one makes about $34,000, but has admittedly bad credit, employed 4 years at the same place.  She's a great renter, seems classy, very clean.   We get $693 for this one.

Another one makes about the same amount of money, but only been on his job a few months.  Has lived in RVs for years and has parents and a brother living in RVs in the same park. $650

The other renters are a nice couple who work in a restaurant and make less money than the others.  The husband has a felony from a number of years back, but seems respectable enough now.  $650

So far, everyone pays on time, but I have a really strict policy and they know it.  All in all, they've all been great renters.  But I've only been at this for less than 3 months, so don't know how it will go long-term.

Originally posted by @Hattie Dizmond:

Wow...that is some crazy stuff.  I guess living in Texas and having all this space makes me wonder...WHY?!?  ;-)

 Hattie, this guy is leasing the tiny homes..

Here's my idea:
There are some vacant lots or empty spots on lots in high-density areas. The idea would not be to rent these to long-term tenants. I would start by doing airB&B for nightly or weekly rentals. If I plop it in my current back driveway, I think I could get about $70/night for a tiny house or an airstream. My idea would ultimately be to have a little tiny home community, with 4-6 of them on one lots, with a tall fence, and some shared amenities. This could produce a lot of cash flow, by making empty suddently residential real quick, real cheap, with high $/ft nightly rental..

This would not worth with a regular trailer or mobile home. It needs to have the "sizzle" of a tiny home or a cool-looking airstream that would attract guests who would like to stay in one. Not just "come stay in my trailer in my backyard."

Originally posted by @Jon Klaus:
Originally posted by @Leslie A.:

Why not just rent RVs?  You can buy them for a few thousand and they're already set up to maximize space and usefulness.  I rent them as residences, not as vacation property.  I have 6 now.

 What class of tenant are you getting for these, Leslie?

 I like this idea too, although it wouldn't work well for my AirB&B idea. People want to stay in a "Sexier" / unique space. That's why I like the airstream or tiny home idea. I think this would also lessen potential neighbor complaints. If I start parking 5 old RV's on a lot, I don't think that's going to fly very long.. Mobile homes and RV's are not a typical long-term living space in the Bay Area, and wouldn't be desirable..

This post has been removed.

JMartin, I think your idea is great!  You will probably have zoning problems if you put 5 on a lot, though. 

This post has been removed.

@J. Martin  You're a little like the Apostle Paul.  "Finally" means there will be at least 2 more chapters!!!  ;-)

Originally posted by @Hattie Dizmond:

@J Martin I get that someone is doing it.  I just don't "get" it...the whole tiny home thing.  Now, to rent them for vacation or something...maybe.  I know there are a whole lot of people that would probably love that.

@Bill Gulley  You're a little like the Apostle Paul.  "Finally" means there will be at least 2 more chapters!!!  ;-)

 I do understand how it would be harder for folks in "everything is bigger" TX lol (really, no offense.)

My vacation home idea is just because it's something unique that I think people would go for, but REALLY, the tiny home idea is that you can live simply and comfortably in a small space with high utility, and have no debt. No big property tax bill. No weekend hours cleaning your house. Its more of a "simplifying your life" move for those that are really into it.. And usually, they'll do it in a place like a forest or great outdoor area. I also like the urban areas. The idea is that you get off your *** and go do something outside all day - go hiking, ride your bike, relax on a chair by a fire outside at night. And you use the tiny house to sleep, cook, do work, etc..

Also, it's expensive out here! So buying a lot with a proper house, or a big house, is expensive!!!

Ya want "sizzle"?  (Oh, you edited your post...)  

OK then, ya want "simple" and outdoorsy?

The "Tiny House" movement is the next BIG thing!  There's even a show on cable called Tiny House Nation that chronicles the build process and transition process that individuals and families encounter in choosing to move to a Tiny Home.  Like others have pointed out, it's a lifestyle choice, not always driven by finances.  

One of the major differences is btwn a Tiny House and an RV is that the houses are built just like regular houses.  RVs are notorious for not being well insulated and have huge electric bills in the extremes of Texas summers.  RVs are built to maximize low weight and aerodynamics for travel and the majority for short-term travel not long-term living.  A Tiny House is just that; fully functional and designed for full-time living with very creative use of storage space.

I'm looking at both creating a Tiny Home Village as well as building a few of them for vacation rentals on the beach and riverfront properties.  The zoning is the same as for RV parks if you have over 4-5 on a lot and then you also start to run into multifamily restrictions depending on your municipal codes.  Talk to your zoning officials FIRST to see if they will even allow the concept.  Some have minimum sizes for dwelling or auxiliary buildings like decks or garages.  You still have to deal with water and sewer/septic issues; although I'm looking at having only those homes with composting or incinerating toilets but there is still gray water to deal with.

As for renting them out short-term you might have to pay local hotel taxes.  In our area, Texas Coast, any stay shorter than 30 days and it's a hotel rent situation (which is as high as 15-20%!) versus 30 day stays which are just monthly rent.  Officials are cracking down on AirBnB and VRBO for not paying taxes.

Anyone in the Houston area on Oct. 29, we're having a free presentation all about Tiny Houses.  I'll post in the Events section with all the details.

@Kurt F.  ,

You're on the right track for the AirB&B sizzle!

Funny, @Shiloe B.  , you rock! Way to get it together..

I think you're on to the same idea as I am... Low cost, high rents/ft, people can enjoy it as a vacation rental since they have so many wonderful things to do, and it is more of a utilitarian/functional place to sleep. Those who want a big hotel room so they can sit inside and watch TV and sip on a soda in the bed can go to the damn hotel!!

Hi, J.  What your proposing is pretty common in places like remote Utah (like on the scenic road between Bryce, Capitol Reef, and Canyonlands) where you can't go to Home Depot after lunch if you forgot the #6 screws.  The "hotels" are little rows of kit homes, like little Tuff Shed cabins, either with bath or with a shared bath house for the group.

In Norway, every campground (and every tiny settlement has at least three) has a row of similar things called hytte.

Your biggest hurdle if you wanted to do it in the Bay Area is probably going to be zoning re: the # of structures per lot allowed.  Also, beyond a certain number of units, you will likely be considered a hotel, so you'll have to follow that set of regulations and pay those fees.  

There's an RV motel in Joshua Tree that I totally love and would get a huge kick out of knocking off elsewhere, although the location there is especially perfect for it.

Originally posted by @J. Martin :

My vacation home idea is just because it's something unique that I think people would go for, but REALLY, the tiny home idea is that you can live simply and comfortably in a small space with high utility, and have no debt. No big property tax bill. No weekend hours cleaning your house. Its more of a "simplifying your life" move for those that are really into it.. And usually, they'll do it in a place like a forest or great outdoor area. I also like the urban areas. The idea is that you get off your *** and go do something outside all day - go hiking, ride your bike, relax on a chair by a fire outside at night. And you use the tiny house to sleep, cook, do work, etc..

I think your synopsis of Tiny House living is correct.  

While the movement has a green / re-use / recycle / reduce aspect, I think that part is almost by default.  The "simplifying your life" and the freedom it allows is the primary driver.  So the tradeoff is less typical conveniences in exchange for greater freedom in all other aspects of your lifestyle.  This is the incentive toward living in a tiny house -- the payback -- and so I can completely understand why certain people pursue life this way. 

So following this line of reasoning, I'd have a concern with your idea of having people rent tiny houses short-term or even long term: it seems to me that the tradeoff incentive is gone.  Where's the freedom benefit -- or other benefit -- in renting something tiny?  There's no ownership, so since a renter would still be writing a check every month, why wouldn't the renter want the most space and amenities possible for the money?   

Especially in an urban area, where by necessity life is often more indoors.

Plus you want to charge them a "high rent".......  Hmm.

This post has been removed.

This post has been removed.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.