When people are buying a house, a question that comes up well too often is the resale value. People understand that a home is not static and the possibility of moving to another city or another state exist.
This reality is particularly heightened among tiny house owners. You see, even with a growing tiny house movement, it is very likely that many people will outgrow their small space. Downsizing in your 20s or 30s sounds exciting, but if you were to follow the well established path of getting a spouse and starting a family, you might find that you need a bigger house.
It is not uncommon for people in an average house living in it for all their lives. Resale value may not be very important to them.
But for tiny houses, the high probability of moving out makes it a very important factor.
Of course, with any kind of real estate, buyers are looking for a property that will make them a tidy profit once they sell it. And it is generally agreed in the US that most properties do infact appreciate in value as the years go by. To confirm this, you just need to compare the home market of 10 years ago vs what it is currently.
Do tiny houses appreciate or depreciate in value?
The answer to this is not very straightforward. Tiny houses cannot be expected to follow the same appreciation trajectory of traditional houses. The tiny living movement tends to attract very passionate people, who either design their own houses from scratch, or tweak commercial models so much they become unrecognizable.
This unique aspect of every tiny house may not be a good thing when it comes to selling it. Features you may have added or removed from the dwelling so as to fit your lifestyle may conflict with a potential buyer’s lifestyle.
Generally in the real estate market, the more uniquely customized a house is, the harder it is to find a buyer. Everyone has their own taste, and most people in this market prefer to work with a blank canvas.
Of course there are functional (rather than cosmetic) customization that will push up the price. For instance, adding solar and battery storage will no doubt be a good thing. Having a composting toilet is another example and buyers looking to live off the grid will be very interested.
Another aspect that can be bad for the resale value is having your tiny house on wheels. If you’re constantly on the road, normal wear and tear will be accounted for when the sale price of the house is determined. Having your tiny house on a permanent foundation is much better for its resale value.
Laura Fuduli, a contributor at Answers Financial – a top auto and home insurance agency, agrees that you’re better off with a permanent structure. “If your tiny home is on wheels, try to think of it like an RV, which can depreciate like a car.”
And of course, as everyone who knows real estate will tell you; location, location, location.
Tiny houses are, at the end of the day, still houses. Their value will go up and down depending on the value of other houses in the same locale. So, if you built in a good neighborhood to begin with, you stand a better chance of recouping your money with a good profit on top.
Obviously, as mentioned, this will not be the case for motorhomes, trailers and other RVs.
There are exceptions to all these of course. For example if your tiny house is so unique that it becomes a collectible, someone might be willing to pay a premium. Or if you own the land beneath it and oil is discovered, or some major aerospace company is scooping up acres upon acres of land and you happen to be on their path… really, it’s on a case by case basis.
You have determined whether your tiny house has appreciated or depreciated. But now the hard part comes… selling it.
Is it hard to sell a tiny house?
Let’s first get the philosophical aspect out of the way.
Will you find it hard to let go? Many tiny home owners tend to be attached. They are part of a movement and desertion leaves feelings of guilt. Not to mention the many ‘I told you so’s’ from friends and family members who thought tiny houses were just a fad.
So, deciding to sell your tiny home will be hard. It needs a lot of emotional strength.
But what about the actual act of selling?
As with any piece of real estate, there isn’t one answer fits all. First of all, tiny houses are not covered by most mortgage plans. In most cases, you’ll have to find a cash buyer, which can be very challenging.
Today there are several house listing websites specically tailored for tiny homes. This in theory makes it a lot easier to sell than it was some years ago. There are benefits to listing your tiny house on a website where people are literally coming to look for tiny houses, as opposed to a general real estate website.
How fast your house goes will depend on many things. As mentioned above, ‘location location location’. Some areas are simply good for the real estate market than others.
How much customization you’ve made to your house, and whether these are cosmetic customization or functional customization will also play a big role.
When actually listing it, you’ll need to be as professional as possible. Good pictures go a long way in selling a product. Getting people to come see your house in person will depend largely on how you present it online. It’s wise to use the services of a professional photographer.
But at the end of the day, it will all come down to price. It is very important to price your tiny house right, and there is no shame in bringing the price down over time. If your house remains on the market for too long, it’s probably priced too high. Your realtor should guide you throughout the process.
Are tiny houses a bad investment?
Tiny living is first and foremost a movement for people who believe in sustainable lifestyles. These are people passionate about minimalism, inspired by many things. Key among them could be care for the environment, or love for the outdoors, or desire to adventure, or digital nomadism.
Many people joining the movement do not look at tiny homes as investments. But in some cases they can turn out to be pretty good investments.
First of all, if you add up all the money saved by not paying mortgage or rent or power bills, you are looking at a very tidy sum. What the tiny house does is free up some of your money so you can make sound financial decisions.
If you’re merely treating your tiny house as an investment, there are several options out there to make money out of them. Airbnb comes to mind.
Tiny houses and cabins are popular vacation rentals across America. You can quickly cover your cost of buying or building in under 3 years.