START TRACKING YOUR SPEND
Get to know where you spend, how it makes you feel and what really matters when it comes to your money!
Let's stop pretending that being good at money means you need to be good at math. Instead, let's listen to our body and our mind.
If you’ve been considering moving into a tiny home but you are not sure where to start, you’ve come to the right place!
I have long had a personal interest — okay, borderline obsession — with tiny houses since I first saw one in 2015 on a Netflix documentary called “Minimalism: A Documentary About the Important Things.” Since then, I have sunk countless hours into researching regulations, scrolling Instagram pages, watching YouTube videos, tinkering with design concepts, and even planning for a tiny house of my own.
Back in the spring of 2017, I was considering building or buying a tiny home. At the time, I faced many of the typical challenges tiny home hopefuls tend to encounter.
LOCATION: Where do I put it?
MONEY: How do I get financing?
CONFUSION: How do the regulations work? Who can build me one?
In the end, I decided to go and do some extended travelling and see more of the world while I was still in my late 20’s.
Now, four years later, I have decided to take a much deeper, more intentional dive into the possibility of buying a tiny home for myself.
Thankfully, this time around, the answers have been easier to find! It is also is very encouraging to see how far this movement has come. So now, I am excited to share with you some of the knowledge I have gathered during my last few months of tiny house research.
Let’s review some of the real-life consideration factors influencing my decision, and hopefully, some of these takeaways can help you with your decision. Let’s start with the basics.
There is no universal definition for a tiny home. However, when skimming the first page or two of Google, you’ll see that “tiny” is roughly classified as a structure around 400 square feet or less.
Tiny homes can also come in many shapes and sizes. Whether it be a school bus conversion, a van make-over, a retrofitted shipping container or just a mini-sized traditional structure – people have been finding ways to make small spaces livable in creative ways for years.
One version of the tiny home that has risen in popularity above the rest is the Tiny House on Wheels (THOW). In this post, we will look closely at these THOW’s as they are both the most popular and the most applicable to my journey. If I ultimately decide to build a tiny home, it will very likely be one on wheels!
An important note for THOW’s is that the overall size of the home is limited because it is built on a trailer as its foundation. This allows the unit to be moved by any truck or SUV with a hitch and a strong towing capacity. Check out this article for more information on towing capacity requirements and total weight restrictions.
To be compliant with transportation regulations and avoid the need for special permits and procedures to move house, the maximum width of a standard trailer is 10 feet. But, due to the framing and insulation of the walls, the actual livable space inside the home is only 8.5 feet wide. As for the length, the maximum roadworthy allowance is 40 feet long.
For some, cost considerations are a primary factor in choosing to move into a tiny home. For those handy enough to construct the dwelling themselves or with help, the project’s overall cost can be kept as low as the price of an excellent vehicle. However, for those using an established tiny house builder, the dwelling may cost anywhere between $80-200K.
This may not be as cheap as some may expect. But have you seen some of these things?! They are gorgeous. Take a video tour here of one of my favourites by Minimaliste Tiny Homes (pardon their French).
Depending on your approach to acquiring your tiny home and your long-term plans, you may be paying about the same as a basic condo. So why take this route? Let’s keep highlighting some of the reasons.
Many tiny homes, not just THOW’s, come with the ability to drive themselves, be towed, or be relocated at a reasonable cost. In addition, having the ability to change geographic locations quickly and with minimal switching costs makes tiny living an attractive option. Whether you’re moving across town or the country, relocating your home saves you time, energy, and most likely money.
This is a big one for me. I am not the most hardcore of the tiny-home folk who see this as a complete shift in how I want to live my life forever. Instead, I see this as an approach that makes economic sense for now and in the future.
For now, it gets me out of the rental market. I want to be putting my monthly rent toward something that could build some equity for a while now. However, I have struggled to accrue a complete 5% down-payment, let alone a full 10-20% down you arguably should wait to save for lessening or erasing the impact of CMHC fees.
In the future, I plan on using the property as a vacation rental property. There are a dozen of similar units within an hour of my home on Air BnB right now. Each comes with an average nightly price of $120. So aside from using it myself for years and years to come, I’ll be able to have it generating revenue if and when I save enough for a traditional home or reach a point in my life where it is time to start a family.
Let’s face it, a dwelling that is less than one-sixth the size of an average US home is going to require its inhabitants to make some decisions. Tiny house living forces us to examine all of the “stuff” in our lives. It requires us to investigate the utility of literally everything that we allow into our home. Though challenging, the elimination of all non-essential items in our lives can be a truly liberating experience.
With less space inside, we’re encouraged to spend more time outside of the walls we call home. Whether it be spending more time in nature, playing sports, or simply lounging on an outdoor patio, those who choose to downsize their home often choose to upsize their time spent outdoors.
As a society, most agree that now is a very important time to think about what is best for the planet. Reducing your overall footprint is a great place to start, and tiny house living is aligned with that purpose. Tiny houses are often equipped with entirely off-grid living capabilities, and even those hooked up to the grid consume a fraction of the energy required by traditional-sized homes.
There are plenty of adjustments you’ll have to make and considerations you likely won’t have had the foresight to consider. Rather than list them, check out this video by an experienced tiny house inhabitant ranting about everything she doesn’t like about the tiny home.
If you’re in the market for a tiny home, there is a good chance that you do not currently have the wealth to purchase land for a place to put it. This means you’ll likely need to pay someone’s rent to place it somewhere. Municipalities vary in terms of their acceptance of tiny homes but generally speaking, the closer you are to a major city, the more difficulties you will have. This means you’ll likely have to look outside of your city limits which means more commuting.
On top of that, you’ll have to find someone willing to rent you a space on their land. For this to be a feasible scenario, you’ll want to keep your cost to rent the land under $500. For me, I think of this cost as similar to that of a monthly condo fee. Both suck to pay, but it’s just part of the deal.
If you build it, they might not come. If you’re the type of person that likes to host your friends for dinner and entertainment, you may not have the types of get-togethers you are used to. The small spaces aren’t for everyone, and realistically, you’ll only be able to host a few people at a time comfortably. You’re likely to be a bit of a drive for your friends and family to come and see you as well!
Over the last few years, as home builders specializing in tiny houses have established themselves, they’ve also established relationships with the banks. The longer the builder has been completing quality built homes, the more likely they are to offer a direct line to an agency that can provide you with financing.
From a regulatory standpoint, a THOW is treated the same as a recreational vehicle (RV). As a result, the banks also treat these movable dwellings as an RV. This means the financing you’re likely to obtain as a tiny home buyer is similar terms to that of an RV loan than they are a mortgage. This means your maximum amortization term will be 20 years which is a little less than the typical 25-30 year mortgage term.
Another significant difference is in interest rates. In 2021, interest rates are very low, which allows homebuyers to access rates below 2% on a traditional mortgage. Unfortunately, for tiny home hopefuls, these rates are next to impossible to come by because of the RV designation.
As with any loan, the desirability of the terms will depend on your income history, credit score and liquidity available for a down payment.
As someone who is embarking on the journey toward tiny home ownership, I can tell you that for a person with an income of around $80,000 and a credit score of about 800, the interest rate I was quoted on a $150,000 tiny home construction with the minimum amount down ($5000) was 5.5%. This was the ballpark figure I was given in August 2021 by the go-to lender for Tea Cup Tiny Homes. Speaking of which, if you are interested in more on this topic, check out Tea Cup Tiny homes on Instagram or YouTube, as they have a ton of helpful informational content.
Either way, the information about tiny homes is much bigger than the space owners will have. But, all that says is that many people are interested in becoming tiny homeowners, just like me.
What are your thoughts on tiny homes? Would you ever move into one or purchase one for yourself? Let me know in the comments!
Oh no, you missed the live webinar! But, good news: Mixed Up Money is pleased to share a resource for anyone planning for a future child or family.
Mixed Up Money is pleased to share a free resource for anyone looking to cut back on non-essential spending. My most-requested product is these monthly calendars to share on your Instagram story, use as a phone background, or print off to track your spending habits.