Why a Tiny House Might Not Be As Affordable As You Think

Tiny homes, commonly defined as any main dwelling under 500 square feet (the average tiny home is about 225 square feet ), have long been something of a specialty. There are even entire reality television shows dedicated to people looking for, building and buying tiny houses. The concept is often sold on two main ideas: simplicity and minimalism, because tiny houses require less space and resources and are naturally suited to a minimalist lifestyle (because there is no place to collect junk), and cost, because tiny houses are much cheaper than more traditional houses .

And it’s true—the average cost to build a tiny house is about $45,000 compared to about $280,000 for a traditional house . That’s a lot of money! And that’s one of the reasons tiny homes are often put forward as a solution for money-strapped people who are looking for that starter home to climb the property ladder . Of course, tiny homes obviously have other issues as well, including squeezing your life into 225 square feet or sleeping in a grave-like attic. But if you can finally call yourself a homeowner, it might be worth it.

Except for this: tiny houses are actually not as cheap as you might think, because there are a lot of hidden costs associated with them.

Hidden costs of tiny houses

If you’re thinking about becoming a Tiny and cramming your life into a more accessible and simple space, don’t be surprised by a buy-in of less than $50,000 (which can be even less if you’re planning to build a house yourself; some kits can be purchased for less than $10,000 , the rest of the cost is covered by equity). No matter what the discrete cost of buying your tiny home might be, there is a long list of costs that many people overlook until the bills come in.

  • Land. If you are buying a tiny motor home, you will need to find land for it. This could mean buying a piece of property zoned for that purpose, or spending on rent. This can increase costs significantly, but can still be cheaper than a traditional home (after all, the highest property taxes in the country are just over $9,000 a year ). However, these are additional costs that you should keep in mind.
  • Contractor rates. If you’re hiring a contractor to build your tiny house, you might assume that a smaller house means lower building costs. And you would be very wrong about that. In fact, building a tiny house can cost three times as much per square foot . This is due both to the difficulty of fitting everything into such a small area, and to the fact that contractors often inflate their estimates in order to make a small job profitable for them.
  • Lack of funding. If you think you can buy a tiny house for $30,000 with a down payment of $6,000 and a tiny mortgage (with a tiny monthly payment), you may need to think again – and come up with the full purchase price. Most lenders consider a tiny motorhome to be a recreational vehicle (RV), meaning you may have to look for an RV loan, which usually has higher rates. And tiny houses on foundations often don’t meet lenders’ minimum loan requirements. You may be able to finance your home through a builder, but again, these types of loans often come with higher rates.
  • Technique. We tend to think that small things are cheaper, but in the case of household appliances, this is not the case. This is because appliances designed for tiny spaces are specialized products . For example, in a large house you get a huge selection of standard size ovens, but in a tiny house you will have much less choice. Also, you won’t be able to just use the appliances you already have if you currently live in a big house.
  • New car. If your tiny house is on wheels and you need to move it, even if it only happens a few times a year, you may need to upgrade your car to a truck with the right capacity. If so, consider the extra money as part of the overall cost of your tiny home.
  • Insurance. Insuring a tiny house can be tricky, especially if you built it yourself from a kit – insurance companies expect professional standards in home building and may glare at your efforts. While not having insurance on your home can save you money in the short term, it means that the cost of repairing or rebuilding is entirely your responsibility, which is a huge added risk. You can get homeowner’s insurance (or insurance on wheels) for a tiny house if you look around, but it can cost more than traditional insurance because mobile tiny homes have a higher risk of damage, and many insurers consider tiny home policies to be more beneficial. special product and charge the appropriate fee.
  • Higher cost of living. Everything from your utilities (especially if your home is mobile) to your laundry (if you don’t have room for a washing machine) can cost more in a tiny home, even if you have existing utilities on the land where you placed your home . . If you need to run water, sewer, and power lines to your location, it will also cost you a lot of money . And be aware that money-saving strategies like buying groceries in bulk won’t work because you won’t have storage space to take advantage of.
  • Bottom resale. One of the traditional arguments for homeownership is that most real estate appreciates in value as you raise capital. But tiny houses are not always appreciated . If it’s not on its foundation, your tiny house could be depreciated like a car due to expected wear and tear. And even if it stands on a foundation, it may not acquire value like large houses. If you’re buying a tiny house because you think it’s the first rung on the homeownership ladder, be aware that it might not work .
  • Storage costs. While many people think they are ready for a minimalist life, people very often have no real idea of ​​what that means or what you need to give up in order to fit your life into this tiny space. And if you’re not ready to part with your treasures, that will mean another hidden cost for the storage option.

Tiny homes remain a good option for many people, both financially and lifestyle-wise: just make sure you know all the costs before committing.


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