Tiny house as a first home solution for my son?

[LittleBittyBigJohn]

With a good job and a fiancé, I don't understand the desire for purposefully planning on an uncomfortable living situation for several years. Yes you can give a tiny house many of the comforts of home. But, small living is not for everyone. I again echo the others, let the kids make the decision, which it looks like you have talked to your son about it, good on you.

For your own piece of mind, understand that renting is not wasting money. Purchasing or building a house does allow you to potentially build equity that you would not have by renting, yes. But, it is not guaranteed. Especially in the short term. Home prices are still high, I'm personally confident that the housing market bubble is about to burst, but that's just an educated guess. Generally it takes 5-7 years to build enough equity to recoup closing costs, combat interest etc. on a standard home, with standard appreciation. So, if a person knows they will not be able to stay more than 2-3 years, that person will likely loose less money by renting. A tiny home, camper etc does not appreciate and they are not comfortable for more than a little while. A young family will begin accumulating stuff and creating kids. There is pride in building a family, if they feel like they have to temper that by squeezing all their belongings into a tiny space it may not be as enjoyable.

All that and I will add, my family and I are currently (temporarily) living in a mobile home on land that we will be building a house on in the short term, less than 2 years. We made a decision to cash out of our house at the peak of the bubble last year, and bought a nice, lightly used mobile home from a young family that we were able to pay cash for. That allowed us to be on the land we are planning on retiring on and save money while we wait to build. So there is no one-size-fits-all magic answer. everyone's situation and story is different and hopefully we can all respect that.

 

[NoTrespassing]

Sorry for the long backstory; just think it's necessary to get accurate feedback.

My son, currently living at home, just recently graduated from college and landed a very solid job with a stable company, working remotely. We're extremely proud of him. He earned it with hard work.

He and his fiancee are starting to look at rental properties in our area. Pickings are slim in the nearby small towns. If they go to one of the small cities within a 45 minute drive (Gainesville, GA to the south, Anderson, SC to the north), there are many more choices. Pricier, and some iffy neighborhoods the wife and I would not love to see them living in.

We have plenty of acreage with numerous potential home sites, although 75% of our property is in conservation status until 2024. We've always told him, if he ever wanted to build a house on the land, we would help in any way we could. He's open to that. One possibility is building/buying some type of tiny home to put on the property; not a trailer mounted tiny house, but something built on skids, like a 14x40 shed that many people seem to be repurposing for something like this. My back-of-the-envelope estimations suggest a 500 to 600 sq foot building, set up as a 1 bed/1 bath, could be nicely finished for about $40K, including plumbing, HVAC, septic, electrical and fixtures.

We have no zoning restrictions. If we did it in reasonable proximity to our current residence, we could skip digging a separate well. They could use our Internet access (something he needs for his job; we have excellent 1Gbps fiber service). Electricity install would be relatively cheap because of the established power lines on our property. In other words, there are a bunch of fiscal advantages to making a living solution here.

Downsides we readily acknowledge: Less independence from us. Also, they'd be building equity in something that exists on our land. If they left, we'd very likely never rent it to anyone else; certainly not a stranger. We value our privacy. We expect to leave this place to him (he's our only child); barring a financial disaster that forces us to sell, all of the property will be his someday. Any property improvements theoretically benefit him in the long run.

We could also just wait until 2024, and carve off a piece of land on the other side of our property, for him to build a genuine, stick built starter house on. More independent solution for them. They'll have spent about $35K tp $50K on rent between now and then, if they rent until then.

So: Thoughts on tiny homes for this type of solution? What haven't I considered? What are the challenges involved with tiny house type solutions? Thanks in advance for the comments!

I'd pass on a "tiny house" myself. When my neighbor first got married he built a nice 2 car garage with bedroom on the rear of the garage. He walled off the 2 garage doors so when you were inside you couldn't even tell you were in a garage, it was more like a small home. Along with the bedroom there was a bathroom. The "garage" has a high peak fairly steep pitch with an attic. He shingled the roof and finished the outside with log siding. About 3 or 4 years later he added a house and installed garage doors. They still used the original bedroom as the master but added 2 more bedrooms, a utility room, kitchen and living room. The house also has a full basement. The pitch of the house is at 90 degrees to the garage with a covered front porch.

It really turned out nice and allowed them time to save money to build what they wanted.

 

[2manyrocks]

The last two years have been extremely unusual for the amount of liquidity and abnormally low interest rates pumped into the residential real estate market resulting in significant price escalation at a rate of increase not seen before. But...an attempted reset has begun with the actual results yet to be seen.

I mention that the actual results of the attempted reset are yet to be seen because there are many who took advantage of the low interest rates to buy or refi their homes. These homeowners aren't going to want to list their homes to trade up when a replacement home costs so much more and interest rates have effectively doubled. Absent "have to" sales (death, divorce, job loss, relocation....), house listings may continue to be limited...but buyers may also be limited due to home prices and interest rates. So both the supply and the demand curves are changing.

The effects of this transition may start being more apparent after the holiday spending season is over and more rate tightening has occurred.

It's not a bad idea for your son to wait for the dust to clear a bit. People can tolerate things better if they understand it's only for a short term until a situation improves. Whether that means staying with you, renting, a camper, tiny home, building a livable garage towards a permanent home or some other option is something that depends on what choices you have and personal preferences.

 

[EddieWalker]

As a Contractor, I've had 2 really good clients approach me about building a tiny houses. I've known them for a long time and understood what they wanted. They have the money, they get along great with their kids, and it would have been easy money for me. Both of these tiny houses would of been on 32 foot trailers, so a lot smaller then what you are talking about. Neither of them would of been moved very often, it was mostly for a place to live after college while getting established in the work force.

In both cases, the parents agreed to my price, but I really didn't want to take their money, or do those jobs. It just felt wrong to put so much money into something that I didn't think would be used very long, or have any value down the road. I explained my concerns, and they talked it over. By then, several months had passed and they had already started on their lives and where doing their own thing. In both cases, it didn't happen because the kid didn't want it anymore.

That was a few years ago. One of them lives on the East Coast and is renting a place. He is single now and seems to be enjoying the single life. The other is married, working at the local University, doing very well, and they bought a house on their own last year.

In my opinion, it's probably best to let them do their thing, make their choices and figure out how to make it in life on their own.

 

[rbstern]

With a good job and a fiancé, I don't understand the desire for purposefully planning on an uncomfortable living situation for several years. Yes you can give a tiny house many of the comforts of home. But, small living is not for everyone. I again echo the others, let the kids make the decision, which it looks like you have talked to your son about it, good on you.

For your own piece of mind, understand that renting is not wasting money. Purchasing or building a house does allow you to potentially build equity that you would not have by renting, yes. But, it is not guaranteed. Especially in the short term. Home prices are still high, I'm personally confident that the housing market bubble is about to burst, but that's just an educated guess. Generally it takes 5-7 years to build enough equity to recoup closing costs, combat interest etc. on a standard home, with standard appreciation. So, if a person knows they will not be able to stay more than 2-3 years, that person will likely loose less money by renting. A tiny home, camper etc does not appreciate and they are not comfortable for more than a little while. A young family will begin accumulating stuff and creating kids. There is pride in building a family, if they feel like they have to temper that by squeezing all their belongings into a tiny space it may not be as enjoyable.

All that and I will add, my family and I are currently (temporarily) living in a mobile home on land that we will be building a house on in the short term, less than 2 years. We made a decision to cash out of our house at the peak of the bubble last year, and bought a nice, lightly used mobile home from a young family that we were able to pay cash for. That allowed us to be on the land we are planning on retiring on and save money while we wait to build. So there is no one-size-fits-all magic answer. everyone's situation and story is different and hopefully we can all respect that.

I agree that renting is not wasting money. IF you have no alternative.

Scenario 1: He finds a place to rent for $1200/mo. Over 24 months, he spends $28.8K on rent. A straight net cost, no return.

Scenario 2: He buys a used travel trailer for $20K, makes $5k in improvements to some of our land to make it a permanent residence. In 24 months, he sells the travel trailer for $12K. His net expenditure is $13K. He can save on supporting utilities (water, internet, TV, etc.). He's at least $15K ahead in after tax dollars; the equivalent of a downpayment on a decent starter home, and will have avoided renting or buying a home at the peak of the real estate market. Fiscally, it's a win.

As for the "uncomfortable living situation," that's really subjective. He prefers not to live in an apartment, not because of space, but because of proximity to neighbors. They have no immediate plans for kids. We can store their extra "stuff." In fact, if we went the travel trailer option, they wouldn't have to buy any furniture, which is another advantage. They can defer purchasing all of that. I won't have to help carry any couches through doors. That's a very tangible bonus, in my book.

Right now, he lives and works from his room in our house. He eats with us at our table. The fiancee is around a lot (2 to 3 nights per week), so she's here, too. We love them, love having them here. We all get along great. No arguments, lots of consideration by all to keep the household quiet and peaceable. The fiancee knows we love her, knows we are there to help and support where desired.

The wife and I are anxious to get back to having our privacy. But we're committed to the wellbeing of family and friends, when we are useful to them.

The next step is them having their own place. On our property would definitely be more of a baby step. But it has advantages. I've drilled it into his head over the years that making good fiscal choices leads to having good life choices. He drives an 11 year old car, despite the fact that he has the means to go buy a shiny new one. His entertainment and hobby spending is modest. He understands these choices and the impact on their future.

 

[JasperFrank]

Waking up, making your coffee, pull open the silverware tray for a spoon, and see everything is covered in mouse droppings: This is life in a trailer.

 

[riptides]

Waking up, making your coffee, pull open the silverware tray for a spoon, and see everything is covered in mouse droppings: This is life in a trailer.

Waking up, COLD, to a nice blizzard like storm, only to find you ran out of gas sometime during the night.
This too is life in a trailer.

 

[2manyrocks]

Least cash outlay up front is to stay at home for the next few months.

Main issue with any camper is the relatively small size of the living quarters, but typically campers don't care because the camper is just a place to sleep and change clothes because most activities are outdoors. The space becomes more of an issue as time goes by and more time is spent indoors.

Georgia temps aren't terrible. A mini split could be installed that can heat down to -13F. Good housekeeping prevents a lot of issues with mice.

I tend to think the best strategy is to invest in what works long term while trying to avoid sinking money into something short term that can't be easily recovered. Personally, I wouldn't spend $20k on a travel trailer intending to resell it. With the economy headed down, you'd think there would be some better deals on campers than to spend $20k and then have trouble reselling the camper for that.

 

[LittleBittyBigJohn]

Least cash outlay up front is to stay at home for the next few months.

I agree.

@rbstern - You mentioned the $15k net savings in 24 months by buying a camper and improving your property vs renting. Not asking you to post this... But just a thought process for you and him. How many months would it take him to save the same $15k by staying the course and not doing anything? Then he wouldn't need the baby step you mentioned.

It sounds like you have raised him well, and to have a good grasp on money management. One thing I loose sight of more than I should is that money is a tool. Every decision does not have to be made as a fiscal decision only. A comfortable living situation is a subjective thing as you said earlier. A camper may be the perfect ticket for them. I have mulled over that exact decision myself and decided it was not for me at this time. Around here for $20k you would not find a camper with provision for a washer and drier or a dish washer. Hand washing dishes gets old but not the end of the world. With no laundry facility they could not be self sufficient, they would either have to use yours, coin laundry in town, or build a shed and do laundry outside of the living quarters. Again, not necessarily a deal breaker for some, but something someone just starting out would not understand how inconvenient that would be.

If it was one of my kids I would sit them down and help them line out their short, medium, and long term goals. At this point the goals in question would be marriage, employment, and housing - what type and where. If there is a long term goal that they can communicate ~10 years out or so then the mid term goal can be set ~3-5 years. For example if they want to have a house built in 3-5 years on your property then short term goals can be established, such as what we are talking about right now. Short term might very well be live in a camper for 3 years. But, if the fiscal goals can be accomplished sooner by just staying the course for 6 more months, maybe that would be better to them than sinking money, time, and effort to improve a temporary location for longer?

If their goals are not to build a house on your property, this whole conversation may very well be moot.

I'll stop now. I like mentoring younger folks and can get too involved pretty easily. I know you are the dad and probably have more life experience than I do.

 

[MossRoad]

Our first house was 720 sq feet. Thank goodness it had a full basement (not finished) but at least we had a place to store things and a laundry down there. A small workbench. An extra gas stove/oven too. It was cozy with the two of us. 1 small closet in each of the 2 bedrooms. 1 small linen closet in the small hall. A small bathroom with shower in the tub. A small closet in the living room. And a small eat-in kitchen that sat 3 comfortably. If you pulled the table out from the wall to seat 4, it was tight in the kitchen. It think there were 4 cabinets under the sink counter and 4 above. That's it. Once we had a child, it was time to start looking for a bigger place.

It was a very efficient use of space, I'll say that. I wouldn't mind living in a house that size again, but as I mentioned before, I'd need a large barn, too.