When we talk about small homes, many people ask questions about their financial benefits. It is very important to understand that these homes are not suitable for everyone. But on the other hand, these tiny homes can be an opportunity for many people to make good profits.
People who like an Eco-friendly lifestyle or prefer minimalist living like to have tiny homes. Investors can purchase and sell them by using traditional real estate techniques and practices. However, it is very important to understand some basic factors, like the advantages and disadvantages of these units. Here we discuss some basic information about tiny homes.
What is a small house?
If the size of a residential unit is between 100 to 400 square feet, it will be categorized as a small house or tiny home. These houses are efficiently designed to maximize the usage of space. The average size of a residential unit is 2500 square feet in The United States. These small houses contain big windows and high ceilings to reduce the effect of size.
These houses can be constructed as mobile residences and permanent constructions as well. Sheds and warehouse containers can easily convert into these small houses. The idea first appeared in the 1970s, but it gained popularity with time.
Effect of real estate market on tiny houses in 2022
According to a study, the market share of tiny houses has increased by 2.8% in2021 and the trend will continue till 2025. In the small house market, real estate investors are competing with different developmental strategies. They plan various promotional events to enhance the exposure of these houses. There is a prediction that the market share of these small houses will increase to more than 3 billion in the next few years.
Advantages of investing in tiny houses
The biggest advantage of these houses is the price, you can easily get them at a low price, as compared to other residential units. However, price is not the only advantage, there are many other benefits of these houses, which we discuss here.
Profit potential: These houses have great profit potential for investors. You can generate a regular passive income if you rent out these tiny houses. You can rent them out for a short period or a typical duration of one year. These houses are cheap, so you get better rental yields. You can enjoy a good rental return. Moreover, you can rent out them on a per night basis, which has an even higher rental return.
Low utility cost: utility needs of small houses are low and it can save a lot of money for investors. Tiny houses are small, so they require less energy for heating and cooling. Moreover, they are easy to operate through solar panels and can be easily shifted to a self-sufficient level.
Eco-friendly housing: smaller houses can be the first step toward Eco-friendly living. They have low maintenance requirements and sizes are very small so they exert less impact on the environment, as compared to large houses. They are easy to maintain, as you have to clean a small area that requires fewer cleaning materials which is an environment-friendly approach.
Location mobility: You can choose to have a mobile tiny house instead of the traditional one. It will enable you to change the location periodically. Owners can take their house anywhere they go and when they have to sell it, they can move to any market where they get maximum return on their investment.
How to invest in Small houses?
If you are not sure about investing in a small house, you must understand that you can invest in small houses in more than one way. You can use different real estate investment ideas to make small houses profitable for you. Here are some common investment ways for small houses.
Rent out for recreation: These small houses are perfect for short-term rentals if you are at the right marketplace. You can easily manage it with your work. However, it is useful for those who have a small house at a tourist site or if the place is known for having several visitors around the year.
Build a small house: It is another method of investing in a small house. You can build one and sell it at a profit. You can rent it out to generate passive income for you.
Monthly rentals: You can rent out your small house on a monthly basis. Some people want to experience living in a small house and they will be happy to live as tenants.
Flipping small houses: Small houses are ideal if you are interested in flipping properties. The risk in this investment is very low. Investors can repair the house within a few months and can make a reasonable profit.
What can be the rent of a small house?
The price of a small house can be around $5000 to $ 6000. You can easily find a small house for less than $10,000 and rent it out. You can flip it as well but the price of the house depends on the location, size, and features it has.
You can use this house as a tiny hotel and charge on a per night basis. This can be the best return on your investment as you can get $200 to $400 per night. If you have more houses, you can make more profit and it will be easier to establish your company within a few years.
Where to buy small houses?
Many platforms offer tiny homes for sale. Some websites have listings of small houses only and they are regularly updated as well. However, you need to decide first, what is the purpose behind purchasing this house. If you want to rent it out, choose a reasonable area with good facilities. But if you want to flip it, the house should be in good condition and at an attractive location. You can also choose to have a mobile house, but it has other advantages and disadvantages.
Buying a small house can be a good real estate investment, no matter whether you want to rent it out or just flip it for a good profit.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.
As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
