Are Tiny Houses A Bad Decision?

Are Tiny Houses A Bad Decision?

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[yamamancha]

This caller is confused about the point of a tiny house. A tiny house is about accepting and adopting a lifestyle that enables you to live in a tiny house.
Dave is right about demand. Most Americans cannot live in a tiny house. However, the cash saved from a tiny house lifestyle would mean she could be in Step 7 faster and longer than the average person. It also means she wouldn't be a living a lifestyle of stupid consumer decisions.

If this caller is interested in a tiny house, she should be studying more about the lifestyle, and not worrying about ROI.

[hoseainchrist]

If it were me, I'd buy land, build a tiny house on that land (not a wheeled one) save to build a net-zero house, and then convert the tiny house into a shed or use it as a guest house. Tiny houses can be a good stepping stone to bigger things.

[jenniferbringman]

Or you can sit and watch your landlord raise your rent every year. I’am building a tiny house. No regrets for me!

[americanskeptic]

Dave is wrong about this. I don’t think he knows very much about the Tiny House Movement. The question is not about turning over a highly taxed “asset” for a future profit. It’s about a frugal, simple lifestyle that breaks away from the herd. I don’t want to deal with cooling and heating hundreds of square feet that I don’t use. Or feeling like the house or apartment looks “empty “ so I need to fill it up with accessories that in the end have only yard sale value. I don’t want to buy a bunch of lawn care equipment and set up a shed or area in the garage to store it. I don’t want to live in an apartment complex with no privacy and random strangers. I want a small unit customized for my needs that doesn’t cost me 3/4 of my monthly check to support. I doubt that the tiny house will sit on a sales lot for years waiting on a buyer like the many suburban homes and condominiums I have seen my whole life do. I don’t think Dave is aware of the radical lifestyle shifts that are quietly growing...he says to live like no one does so you can live like no one tiny house is a step in that direction, IMHO.

[SoCalFreelance]

As the wealth gap widens with generations with little to no savings I see a very strong demand potential for tiny homes. Drop $35-$50K and you have a genuinely nice place to live compared to hundreds of thousands for a traditional house.

[RLWSNOOK]

I don’t understand telling someone to rent because a tiny home might go down in value. Who cares if it goes down in value? If your rent is $1, 000 per month and you rent for 2 years that’s $24k gone, you easily could build a tiny home for $24k and even if it’s worth $5k at the end you’re still ahead.

[hitchjack]

The average person doesn’t save up and pay cash for a house. I sometimes wonder what planet Dave is on. This young lady also might not want to live in a regular sized house. She realistically could pay cash for a tiny house and avoid a mortgage. It’s a great option regardless of depreciation. The minimal depreciation would easily offset interest associated with a 15yr mortgage.

[sunset]

If a Tiny House would save them $100, 000 +
Why is that bad ?

[abarbar]

Dave should know, land is what causes traditional homes to increase in value. No one makes land, so once you're in, you will always have an asset that is scarce in supply

[DPT]

I'll disagree with Dave on this. Tiny Homes can be a great way to live on a budget and are a more manageable asset for people with low income or who are deep in debt. Instead of saving for decades for a larger home, you can save like crazy and pay cash up front for a tiny home in a couple years, and use the money you save on a large mortgage to payoff debt and learn a minimalist lifestyle that can correct previous bad habits.
Bear in mind there is an active demand for new and used tiny homes, so a used one for $20-30K is reasonable. Dave needs to examine the market and trends of tiny homes, He is basing his info on the larger home market that he has experience in. The quality of a tiny home is general better then an RV or mobile, so the depreciation is less for a THOW (TIny Home on Wheels). The demand for tinys is high, and there is a boom right now in the tiny market. They give the owners flexibility of where they live, and living in a tiny prevents the owner from buying too many things that they don't need. A tiny can support the baby steps as they help correct the bad spending habbits that got people in debt.

[rsegrest]

This is not a cut-and-dry issue, but I think that when I was single I would have done well to get a Tiny House instead of the townhouse that I paid a traditional mortgage on.

Looking back, I probably could have paid off or saved up to buy a tiny house quickly. This would have eliminated mortgage interest and given me more cash flow. I probably spent about $40, 000+ on mortgage interest (~6% per year) on my $105, 000 townhouse from 2004-2011. It took a year to sell it after my wife and I moved into a bigger house! I sold at a profit but only netted about $15, 000 after all that.

Add the interest to the utilities that would have probably been a lot less on the Tiny House (~$7, 000, I'd say), and the fact that my A/C broke in the first month I owned the house and warranty didn't cover a complete replacement (another $4, 000), and the taxes and insurance that I had to pay (probably another $7, 000).

That is ~$60, 000 worth of expenses that did not go to paying off the principal of the house, which I could have used to own a very nice Tiny House free and clear.

[Helthurian]

Buy a tiny house and use the savings to invest. Boom, you just created more wealth than the majority of homeowners.

[johnhodg]

Dave, I disagree with you on one point. It's not the reason to buy a Tiny House . They aren't bought on speculation like a real or normal size house, people buy them to save money, you know the stuff you always tell people to save. I am surprised that you told her it was a bad investment. I think she should. It's a great way to save for a regular size house in the future. Just think, no Rent, no monthly Electric Bill,
no Mortgage, no Water Bill, no Land Tax, etc.... ( just my two cents ).

[Jsaves]

Don’t give bad advice if your not up to speed on the Tiny house movement Dave

[andyfam]

I think If your saving for a big house it's not bad to buy a cheap tiny house. Save that rent utility money

[flowergrowersmith]

The matter of tiny houses' future market value has never been mentioned in any of the stuff I've seen on tiny houses. It doesn't seem to be a reason that people get tiny houses. It seems to be an alternative to the insecurity of endlessly renting. I could be wrong, but it seems that tiny house owners don't want to upgrade - it's possibly also a philosophical thing about using less resources etc etc..

[jj-qw]

Why sell the tiny home if you can rent it and generate income after is been paid off…. FYI A HOME IS NOT AN ASSEST WHEN YOU LIVE IN IT AND STILL PAYING IT OUT OF YOUR OWN POCKET…. IS A LIABILITY! CASUE IS TAKING MONEY OUT OF YOUR POCKET.

[Jsaves]

I disagree with you Dave. The Tiny house movement is growing all around the world and that includes Shipping container homes. People are sick of investing in huge wasted spaces and the huge mortgages that come with them.

[douglaz]

You know what Dave the world is changing. A new economic lifestyle is being born whether you like it or not there will be more tiny homes . This speculative economy is slowly dying

[aquio]

If you pay off a tiny house which is easy because its cheap, you don't have rent payments for life. You don't have to sell it.