Are Tiny Houses Good Investments?

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There are varying opinions on this topic. The loudest voices often coming from those who have never lived in a tiny house who shout from the rooftops, “What a waste!”

Now, while each person is certainly welcome to their own opinion, I do find it odd that these individuals have:

A. Never owned a tiny house.

B. Use traditional housing numbers to show how a non-traditional dwelling is not a good investment without really looking at the big picture.

Tiny houses are different from traditionally built houses. This does not mean they are not valuable, will not retain their value (when maintained properly), or provide financial freedom that allows you to shovel back savings. But why should you believe me?

1. I have “owned” a traditionally built house. And I use the term, “own” loosely. Really, I had a giant mortgage that would accompany me for the next 30 years.
2. I own and currently live in a tiny house. I truly own it outright. No mortgage… nada.

So, while I may not be a realty expert, I do have perspective from both sides and can speak to the monetary value created through tiny living. Let’s dive in, shall we? 

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Myth 1: Tiny Homes don’t retain their value:

• Many believe that tiny homes lose their value similar to trailer houses. This is not true.
  • First, tiny homes are not built like trailer houses. When correctly constructed, they are built from high quality materials that will stand the test of time. They are well insulated which create efficiencies for heating and cooling that you will not find in campers or trailer houses.
  • Second, when maintained and cared for properly, the quality of construction remains high. We had our tiny house built in 2020 for around $55K. It would now sell for $75-$80K. Not too shabby for a two-year return on investment. 

Myth 2: The price per square footage is really high!
My gut response to this is, “No shit, Sherlock” (pardon my French).

This is one of the most common arguments used when trying to convince people that they should not go tiny. This, again, is using traditional house math for a non-traditional dwelling. Are they wrong? Nope. The price per square foot is high upon initial assessment.
What they do not consider is the taxes and interest accrued with that 1500 square foot house you’re purchasing over a 30- year period. Let’s break it down:

Ruh Roh. The price per square foot isn’t looking too hot when you factor in everything that truly goes into a mortgage. Not to mention how you are getting way more bang for your buck in the efficiency of each square foot of a tiny house. And, to top it off, even if you had to take out a 5-year loan for that $75K tiny house, you’re still going to come out on top with your savings… let’s look at that next! 

Myth 3: A Traditional House will get me a higher Return on Investment when I sell!
If you’re looking at outright numbers alone at time of sale, you’re probably right. However, when you look at amount freed up (your opportunity cost), you’re missing out on a lot of mullah!
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Mullah that could have gone to other investments over the years! So, what’s the opportunity cost of savings for the traditional homeowner? Let me paint the picture:

Okay, now we’re getting somewhere! If you look at the table above the numbers start to tell a bit more of the story around the true nature of a tiny house investment.

• As a tiny house homeowner, I paid $37,403 less over 7 years
• Interest is no one’s friend and paying rent is often seen as “throwing your money away”, so I classified these as non-value-added metrics. So, who spent more? You guessed it! The traditional home buyer spent $19,556 more than a tiny homeowner on money they’ll never be able to regain.
• And whoa, a tiny homeowner has less than half the monthly minimum amount required! That’s a total of almost $55,000 they were able to free up over those seven years!

AND this savings does not account for lower utility bills and lower maintenance costs. (Cha-Ching! Cha-Ching!)
And this is only the monetary savings! Don’t’ get me started on the work-life balance tiny has gifted me with! More time spent with those I love = PRICELESS.
Look beyond the initial (Traditional) numbers my friends. People are eager to spout off the surface numbers, but when you dig into the overall numbers spread across years, you’ll see, tiny houses are good for the soul AND can be good investments. 

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