Tiny Homes - A Game Changer for Real Estate In High Rent Cities

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Tiny Homes - A Game Changer for Real Estate In High Rent Cities

Account Closed
Charlotte, NC · Member since 2017 · 39 posts · 25 votes

With rent prices so crazy in SF that you can make $100K and not afford to live in the city I really think innovative solutions like tiny homes can be a game changer for real estate investment. There's a new tech company that uses 3D printing to 3D print a tiny home for just $10K. Even the local government in Seattle built a village of tiny homes to combat homelessness. When I was visiting a friend in DC they just opened up a high tech pod hotel called Hive Hotel and it's a concept borrowed from Japan that's been popping up around the world.

I really think that the whole tiny house community, pod hotel, and even "pod apartment" concept in densely populated areas is an incredibly interesting trend to look at. Imagine if you can purchase condemned land or apartments and transform it into a whole tiny house community. Or buy an abandoned 10-unit and turn it into a high tech 20-unit "pod apartment". These would be great options for students and young professionals and better than commuting an hour and living with 5 roommates in a Manhattan apartment. It would be great from a real estate perspective in my opinion because it would dramatically reduce the seed capital required to start investing in these expensive cities.

What are your thoughts?

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Andrew Johnson
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Parth Patel It's a nifty trend. But it's still a trend. Real estate isn't like buying an on-trend narrow tie. Are those still popular? I don't watch enough MTV to know. There's a lot to be said for sticking with what's shown positive results. Micro houses are great but what about zoning? What about parking? What about when you get married and have kids? Half of these tiny houses are RVs without motors. The other half are effectively single wide manufactured homes turned into a duplex. Now you have spiff them up with granite counters, hardwood floors, etc. but they are what they are. Let's say you don't want to go that route and want to keep the fit and finish more modest. Well, after the novelty wears off you've now built the Bay Areas version of the projects. Look at what happened last money with Google's efforts to build in the Bay Area. Traffic concerns took a 10,000 unit development to 1,500. Plenty of high density housing ideas look groovy until you look at second order (parking) and third order (traffic) impacts. Who wants to rent a home where you can't park or have to wait 30 minutes for your Uber to take you to the dry cleaner because of massive congestion?
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  • Rocky Griffin
    Flipper/Rehabber · Edmond, OK · Member since 2016 · 209 posts · 107 votes
    9y

    I have thought the same thing about local college towns. Most students literally only want a place for shower, sex and sleep. They are frequently out doing things an rarely in their living space. However, my concern is this is a very "trendy" concept and will likely fall out of popularity. Then you are left with an object that has less value then a traditional mobile home. 

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  • Bruno C.Pro Member
    Rental Property Investor · Providence, RI · Member since 2013 · 120 posts · 41 votes
    9y

    @Account Closedi love the idea and have been considering jumping into this. One of the major concerns I have is city variances - will cities allow it? Some will of course but every area is different. Of course, you can't bank on it working on the initial purchase, but I think this is a good example of getting highest and best use of the property in some cases.

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    It will only work where it is encouraged by the city and existing community. It will be capitol intensive to develop and would probably be best for established developers. It is risky as it does fly in the face of normal thinking in North America and would risk failure if there is a real estate down turn in the future. It is a specialty market that can succeed but could also easily go out of favour. More risky that conventional real estate investing unless you are in a existing market.

    I would not invest in the stand alone tiny home concept as they are way over priced and basically just glorified RVs for the luxury buyers. Resale and depreciation are major stumbling blocks. Small homes of this type have existed for 60 years in the form of Mobile Homes and RVs which are both more affordable than todays upscale luxury "tiny homes".

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  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y
    Parth Patel It's a nifty trend. But it's still a trend. Real estate isn't like buying an on-trend narrow tie. Are those still popular? I don't watch enough MTV to know. There's a lot to be said for sticking with what's shown positive results. Micro houses are great but what about zoning? What about parking? What about when you get married and have kids? Half of these tiny houses are RVs without motors. The other half are effectively single wide manufactured homes turned into a duplex. Now you have spiff them up with granite counters, hardwood floors, etc. but they are what they are. Let's say you don't want to go that route and want to keep the fit and finish more modest. Well, after the novelty wears off you've now built the Bay Areas version of the projects. Look at what happened last money with Google's efforts to build in the Bay Area. Traffic concerns took a 10,000 unit development to 1,500. Plenty of high density housing ideas look groovy until you look at second order (parking) and third order (traffic) impacts. Who wants to rent a home where you can't park or have to wait 30 minutes for your Uber to take you to the dry cleaner because of massive congestion?
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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    9y

    Trend toward urban living has been going on for last twenty years.  By nature, the square footage of the urban abode is significantly less than a similar priced suburban or exurban dwelling.

    In 1920s a complex called Tutor City was build in Midtown Manhattan near the East River.  Units included studio apartments as small as 240 square feet. These proved very popular and rented quickly.  Eager to find a solution to which this was no problem, the city administrators saw fit to pass an ordinance requiring apartments to have a minimum square footage of 400, so that landlords would not be able to "take advantage" of tenants.  

    Recently there has been a big push to change requirements and lower minimum square footage n NYC. They have allowed a few experimental units of about 280 square feet.  These units have much built in, convertible, multi purpose furniture.  In my opinion, very livable.

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  • Alex Capozzolo
    Investor · San Diego, CA · Member since 2016 · 351 posts · 141 votes
    9y

    @Account Closed stated, the possibilities of these actually happening are usually limited by local laws and variances. 

    ADU's are increasing in popularity as well, with companies like Boxouse that are building sustainable, energy efficient, tiny homes from shipping containers that are purchased for <$2000. 

    The Bay Area is already congested, no doubt about that. And we are also in a housing crisis. The media says that people are beginning to move out of the area to pursue cheaper housing, but I haven't seen much impact of this if it is true. 

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