Tiny House Dream or Nightmare?

Depositphotos_42678537_m-2015.jpg

So this post is nothing more than an attempt to solicit advice from anyone who has experience or an opinion on buying or building a tiny house.

If you do, please share your thoughts on my extremely half-baked, hastily written idea below. I actually want to hear if or why it’s a terrible idea, so any feedback is appreciated!                                                           

Background:

Over the last few months, I’ve been spending a TON of time brainstorming a long term housing plan for my older sister, and a few days ago I thought I might have found a solution.

I’m actually pretty excited about the idea even though I have NO actual plan and zero knowledge whatsoever on the subject.    

My sister’s housing situation has stressed me out a ridiculous amount for a really long time. Ever since I graduated college (almost 10 years ago), she’s been in between unstable housing situations. This was about the time her mental health started declining.

My other older sister and I have only been partially successful in helping get her into safe, affordable housing over the years.

I talk a bit about her situation here, but long story short, she struggles with several very severe mental illnesses.

She and I are actually half-sisters (as is the case with most of my siblings, we’re related only by one parent).

Apparently, the side of the family we don’t share has a long line of individuals who suffered from the same problems, so genetics certainly plays a part in her condition. 

On top of that, our childhood, and some of her horrifying experiences afterwards, were probably the perfect storm for her sharp mental health decline.

A few years ago, she literally lived on the streets of a major city for over 6 months, when she disappeared completely and none of us knew how to contact or help her.

In the past 6 years, she’s lived in almost a dozen different apartments. The #1 reason she gets kicked out is that she gets loud and starts disturbing and bothering other tenants.

When she’s in between apartments, we’ll cover her motel/hotel costs, but all of that gets extremely expensive and isn’t sustainable in the long term.

She can’t live with either of us because of how severe her condition is – she can be extremely aggressive and borderline violent when having an episode (which happens frequently).

She refuses to take medication, and ultimately we can’t force her to do so, although it would improve her situation tremendously.

The side effects of the medication she needs can be debilitating, although it would help her cope with her condition and see through her delusions.

Her Long Term Housing Needs:

We’ve been covering her housing costs for years, but I’ve been very concerned about how this is going to work out long term. As her baseline deteriorates, which it will without proper medication, it will get increasingly difficult to find and keep her in safe housing

I’ve spoken to 2 separate clinical psychologists recently about her condition, and they’ve both offered similar advice for a long term housing solution:

  • She needs to have her own home on a plot of land, which is completely secluded from any other neighbors, yet not TOO remote so that it’s unsafe.
  • It has to be in a short distance to a town where she can walk or bike to stores, the bank, post office, etc.
  • The area / town has to be extremely safe. This is critical because she is vulnerable in almost every way. The property itself should probably be gated for added protection.
  • She needs to be within several hours of family, so we can check in on her frequently.
  • The house should be big enough to comfortably live in, yet small enough so that she can manage it easily in her condition.

Renting long-term is a No-Go:

It’s clear that we can’t continue to rent for her forever.

Aside from the fact that she keeps getting evicted, from a financial standpoint the amount of money we spend on rent each month would easily cover a mortgage payment for her in the state we live in.

Between what my sister and I contribute and the 400 she gets from Social Security, we have almost 1800 a month budgeted for her.

I expect to support her for the rest of her life, because of how severe her illness is. I factor this into my short and long-term financial plan.

I’ve been really concerned that we’re ‘throwing away’ money each month by paying her rent, instead of using that money to invest in a property that she could potentially live in for the rest of her life.

What if something happened to one or both of us, and she only had the Social Security money to live on? She would be back on the streets, probably indefinitely.

Buying a House for my Sister:

We decided that we need to find a house for her that fits all the criteria above, but where the mortgage is affordable enough so that there’s plenty left over for us to allocate to other costs like utilities, food, transportation, healthcare, etc.

I certainly don’t want to rush this decision. In fact, we decided that we’ll continue renting for her for at least 2 more years, just to allow enough time to thoroughly think through all options.

We know that, on her budget, we could afford a house under 75k for her.

The problem is that most houses in that price range within 3 hours of where I live are absolutely terrifying.

For the vast majority that I’ve seen, I would never feel comfortable letting my sister stay in even for 1 night, let alone long term.

The Tiny House Option:

I don’t know why the heck this didn’t occur to me before, but a couple days ago I was reading an article about a program aiming to design tiny homes that someone living below the poverty line could afford.

I was seriously blown away by the value for the price of the house featured in the article, and it occurred to me that maybe this is what we could do for my sister.

Instead of spending 3x the money on a terrible house in poor condition in a potentially unsafe area, why not just buy a plot of land and either buy or build a great quality tiny house on it for her.

For those who don’t know about ‘tiny houses’, the term generally covers houses under 1000 square feet, although most range between 100-400. Typical costs for pre-made houses are between 20-50k, although prices can go over 100k for luxury models. If you prefer to DIY, you can probably build a house for under 35k.

House Profile:

Here’s the thing, my sister LOVES small houses. Actually, she insists on living in only small places  (<400 feet). We got her an apartment a few years ago that was about 800 square feet, and that lasted all of one week – she hated it so much!

We wouldn’t want to buy her anything too small though, not matter how efficient the design. I think 300 feet is the minimum we should do.

We would definitely want to upgrade to a nicer model, because some of the designs are pretty basic. Some of the more affordable versions of the ‘luxury’ houses are beautiful, and I can see my sister loving living there.

Here’s the type of houses we think she’d like to live in – these range in price from 19k – 80k. 

  1. https://www.tinyhomebuilders.com/tiny-house-marketplace/details/luxurymodern-tiny-house
  2. https://www.tumbleweedhouses.com/tiny-houses-for-sale/
  3. https://tinyhousebuild.com/photo-gallery/
  4. https://www.tinyhomebuilders.com/tiny-house-marketplace/details/26-getaway-shack
  5. https://www.tinyhomebuilders.com/tiny-house-marketplace/details/texas-sized-tiny-house
  6. https://www.tinyhomebuilders.com/tiny-house-marketplace/details/tiny-house
  7. https://www.tinyhomebuilders.com/tiny-house-marketplace/details/custom-300-sq-ft-incl-lofts-craftsman-on-wheels-featured-on-tiny-house-nation

To save even more money, we could technically buy the blueprint and materials, and build the house ourselves (or pay someone to build it), although I don’t think that’s likely.

The cost:

Alright, since I’ve had little time to think this through, I haven’t had time to properly research all the costs involved in detail.

Land:

I think the cost for a plot of land would probably ballpark 25k for something that fits the profile we need, with the proper water, gas, sewer, and electric hookups on the property.

We’d have to get a realistic estimate of site improvement costs before actually buying anything.

As far as zoning laws, fees, permits – I have zero idea what that would entail.

We  have plenty of time to figure it out though – it could easily take us years to find something we feel comfortable buying. At that point, we would have thought through all the options and consulted the appropriate experts before buying anything.

House:

I’d want the mortgage to be affordable enough so that we could easily pay it off within 7 years.

From the limited research I’ve done, here’s my guesstimate at what the very high level costs would be to either buy a premade house or build one.

Even if this is off by 15-20k, we’d still be better off long term compared to renting for her indefinitely.

Option 1 – Buy Premade House
Cost
Pre-made tiny house, plus installation costs, fees & permits 50000
Land 25000
Total 75000
Down payment 20000
7 year plan – 3% Mortgage, including property taxes and insurance 873 / month
   
Option 2 – Build a Tiny House
Cost
Purchase plan & materials, plus installation costs, fees & permits 35000
Land 25000
Total 60000
Down payment 20000
7 year plan – 3% Mortgage, including property taxes and insurance 661 / month

I’m fairly certain, if we went with buying a tiny house, we would just buy a pre-made model.

In either scenario, we’d have plenty left over in her budget for utilities, food, transportation, healthcare, etc.

Plus, her base housing costs would be covered after 7 years! That’s far preferable than continuing to pay 1000 every month (not adjusted for inflation) on rent for the rest of her life.

Another option I thought of was doing a 15 year loan plan for her, instead of 7. If we did, Option 1 would drop to 525 per month, and Option 2 to 410.

We have a budget of 1800 per month, so we could invest a significant chunk of the remaining money for her each month. That way she’s in an even better position once her mortgage is paid off.

                                                                               ———————–      

So that’s my jumbled post on contemplating buying a tiny house for my sister in a few years.

I really am just stumbling on the idea, and don’t know anything about it.

I have no idea if the concept would really be a nightmare to implement in reality, or if it could turn out well. I have zero knowledge about the restrictions or actual costs involved.

I am excited to research more over the next few months. I’m hoping to talk to people that have actually bought or built one, and see if they have solid advice or caution against going that route.

We are years away from making any actual house purchase (tiny or ‘regular’), but I do want to start researching as much as possible so we know the options and impact.

If anyone has ANY advice whatsoever (or helpful posts, articles, resources), it would be sooo appreciated.  I need to hear the good, the bad, the ugly!

15 thoughts on “Tiny House Dream or Nightmare?

  1. I don’t have any experience with tiny houses… but good luck with the research and decision! Your good will towards your sister is admirable. I hope everything goes smoothly as you and your family determine the best housing situation for your sister!

  2. I have no experience with tiny houses BUT I have a similar scenario to what my parents did for college for me. They bought a house and then rented it back out to me. I ended up purchasing the house from them during grad school, and I now use it as a rental property. But something to keep in mind/look into: can you use it as a rental – a rental with your sister and if she doesn’t live there for some reason, can you use it as a rental afterwards.

    1. I love that your parents did that for you! And that’s a really good point re: using the property as a rental. If we went with the ‘tiny house’ approach, I’m not sure how rentable it would be if my sister couldn’t/wouldn’t live in it over the long-term. Something for us to think about, for sure..

  3. You are an absolute saint Ava. You are standing by your sister more than I have for anyone (I’m am an only child.) I think a tiny house sounds like a great plan and one that won’t be so expensive. Is there a legality issue with a house smaller than 600sq? Because I heard it was illegal for a dwelling to be under 600sq.

    1. Aww shucks, thanks Lily!!!! :o)

      Honestly, my oldest sister was THE saint in our family. She was always the kindest person and always helped me when I was younger. Her and I were really close growing up.

      I’m not sure about the legality issue for a house over 600sq. I think it varies by location, to be honest. I know in our state, houses under that range are allowed, but the rules vary by town.

      I hope in a few years the zoning laws relax and smaller houses are allowed, because that would really help a lot of people living under the poverty line out!

  4. I’ve always been attracted to smaller spaces as well! I have no first hand experience to offer, but I have just finished reading The Big Tiny, which is a great first hand account of building & inhabiting a tiny house- it also touches on some of the legal issues. Best of luck!

  5. Not into tiny homes personally, but some things I would consider:
    1. Can you get a loan for a tiny home and at what rate? (Many lenders may be wary due to small mortgage and unknown resale.)
    2. What is your plan in case you need to move your sister out of the tiny home? Would you be able to sell it (as in, would anyone in your market buy it) and could you recoup your costs?
    3. How would you handle the costs if she destroys the home?
    4. Why a tiny home vs. some other type of manufactured home, RV, etc.?

    Good luck with everything. Sounds like a rough situation.

    1. Points #1,2 and 3 could easily bar this idea from ever happening.

      Re: #1 – I know some tiny house manufacturers do offer financing, but the interest rates are awful (current rates at 6% – 7%), which we would never do.

      #2 – There does not seem to be a viable market in our area for tiny homes. They’re extremely rare, and from what I see, do not sell quickly. The resale value/prospects appear poor.

      #3 – That’s a big concern for us, and frankly there’s no good answer. We’d have to be well-insured, but she could cause a lot of expensive damage that we wouldn’t necessarily be able to recoup.

      For #4 – the small manufactured homes and/or mobile homes that we see in our price range, don’t seem like something we’d want our sister to live in, ever. That’s one of the appealing factors with the tiny house – you can buy or build a brand new house that’s in much better condition compared to an alternative.

  6. Can you get a mortgage to buy an empty lot of land in your area? In Canada banks would not do mortgage for land purchase, for example. I’ll need an unsecured loan or line of credit. Having your other outstanding debt, will you be able to borrow more? Speak with your bank’s representative about it.

    1. Hi Svet! Thanks for your comments and great question.

      Since writing this post, I decided that I’m not going to even consider this route until our net worth reaches 600k (with our current mortgage), and 900k without the mortgage. This will be in ~4.5 years.

      After that point, if I did still think getting a house for her was a better idea than trying to rent long term – my other older sister and I would just split paying 80% of the cost in cash. We’d like to pay 100% in cash, but we’ll see.

Leave a Reply