Hello all. I am genuinely seeking market feedback on a potential project I am considering- please do share your views even if you think they may be perceived as negative- I actually place great value on comments that point out the not so obvious flaws in my plan.
I am a licensed construction contractor with 25 plus years of experience.
For some time now I've been fascinated with the whole tiny home movement.
I've come to point in my life where I realize that having 'stuff' is more of a burden than of benefit. I'm not alone in this concept in that I think many others are starting to realize the multitude of benefits of a more minimalist approach to life.
So I could go out and just buy a small piece of land and build a tiny home for myself and be down with it BUT I have far more lofty ambitions in taking this movement to the next level.
And just to be clear I am interested in developing tiny homes that have foundations and are not built upon a trailer- there's a big difference in how zoning/building codes deal with these two varieties of tiny homes.
I live just outside of Washington DC where a single family home easily costs $500,000 or more- and this isn't even the most costly real estate market in the country but I think it's costly enough to make tiny home communities the next huge trend in housing.
I've put together a rough business plan and if done properly it will be difficult not to fair well financially BUT there are some obstacles that must be overcome. In Virginia the greatest obstacle I see at this point are zoning and building codes. Currently these laws/codes have minimum sizes for SFH (single family home)- for example in Louden county which is a rural and rather wealthy county 50 miles outside of DC they recently RAISED the minimum square footage (SF) of a SFH from 1,200 SF to 1,400 SF- not exactly what I view as a very Earth friendly move. Many local governments in my area claim to be making every effort to be 'earth friendly' and they are indeed acting accordingly however when it comes to supporting the building of tiny homes they fail miserably.
These municipalities primary source of revenue is of course property taxes based upon the value of the land and structures built upon it. Many tiny home dwellers of course prefer a small structure (200-500 SF) but larger tracts of land than is the average for the typical SFH- this of course runs contrary to the municipalities objective of keeping property tax revenue high hence the residence to tiny homes by local governments. I'm not sure what the solution is to this problem which as with so many other things comes down to MONEY.
In my area it isn't uncommon at all to see McMansions (I'll define as 5,000 SF or more) being built on 1/4 lots which often includes the tear down of a perfectly good existing home that may typically be between 1700- 2,500 SF. This is a VERY common occurrence in the municipalities that surround DC and I'm sure is common in other parts of the country as well. If municipalities want to be truly 'earth friendly' perhaps they should impose a significant fee for McMansions of perhaps $50,000 or say that would be set aside in an interest earning account with the gains being used by the county to offset property tax revenue of the tiny homes built in the community. My philosophy is that If you choose to hoard a disproportionate of the planet's resources then you should be made to supplement those of us who choose a more responsible course and choose to use far less than average of the planet's resources to sustain our existence. Your thoughts on that solution as a means to offset property tax revenues associated with tiny homes?
For now my sights are not set on trying to change the policies that essentially forbid tiny home construction in holy developed municipalities surrounding large cities- instead I am focusing on finding communities within 2 hours of these cities who would welcome the sort of economic growth that tiny home communities would bring to areas where only the land value is taxed on property that would otherwise have no structures to tax. I have been on contact with a small city (population about 300) that's less than a 2 hour drive from DC. What makes this town attractive is that they have municipal water and sewer. This existing infrastructure makes tiny home construction/developments more feasible due to the cost and average required for a well and septic system. My research shows that a well and septic system, generally speaking, requires approximately one acre of land- this can of course vary depending on the lands percolation BUT I think one acre is a good rule of thumb.
Some people indeed do want to live in a more isolated, off the grid, sort of lifestyle and for those folks a well/septic system is the best course of action to take in that their land options are far greater than building lots that have access to municipal water and sewer. The downside is the cost of a well/septic system which can easily exceed $10,000. There are also hookup fees associated with tapping into a municipalities water/sewer system. The particular city I am communicating with currently charges $5,200 which is very significant relative to the cost of constructing even a larger tiny home. Fortunately the city I am referencing has indicated they are willing to negotiate this fee especially if the plan was to build many tiny homes in their community. Small rural cities like this are eager to attract new residents to spur local economic growth. This also makes building in their communities the path of least resistance relative to the municipalities closer to the urban areas who tend to focus more on maximizing property tax revenue as opposed to overall economic growth and sustainable, affordable housing.
I'm optimistic that this cool little town will be appealing to my tiny home buyer market. Certainly this sort of development won't attract the off the grid crowd but I think it would be very attractive to several groups of folks such as retirees/empty nesters, younger people who could otherwise not afford to buy housing, and minimalists who aren't seeking off the grid living but instead trying to reduce the 'stuff' in their life, minimizing their carbon footprint while still enjoying modern amenities.
Question for all- If I could offer you a tiny home that has a full concrete poured basement, living floor, and one or two small sleeping lofts above, full bathroom on main floor, washer/dryer, nice tiny kitchen with a convection oven, microwave, and three burner cooktop and even a deep freezer in the basement as well as a very efficient heating and air-conditioning system- overall sq footage of the main floor and basement would be around 500SF - overall dimension would be approximately 12'x20' as well as a 1/4 acre lot all for $75,000 (or about $600/month total mortgage, taxes, insurance) would that be an attractive deal? I'd be curious to know people's thoughts on this- particularly folks who live in and around urban areas that have high housing costs.
I've crunched the numbers on a 10 tiny home development and have concluded that with about $150,000 of start up money (or less) I could break ground and get the first couple of tiny homes up and sold using the proceeds to start repayment to investor as well as funding the next couple of homes. Fortunately I have found an investor who is interested and this was relatively easy. After all that's not a huge sum of money and my analysis shows that my investor will see at worst a 29% Return over 18 months or less and at best double their money in 18 months. Then of course after we have the process down we move on to the next development.
I'd love to hear people's thoughts on this. I realize that the tiny homes I am proposing or on the larger end of the spectrum and certainly don't represent 'off the grid' living but I do think they strike a nice middle ground.
One think I forgot to mention is that due to traffic congestion a good deal of folks in the DC area 'telecommute' many for instance work out of their homes 3 or 4 days a week and go into the office once or twice a week or less. This makes the distance from the city (which of course equates to affordable land) not such a big deal. Many commuters that live just 25 niles from DC spend 1.5 hours or more EACH WAY so driving for two hours on uncontested roads once or twice week wouldn't be much of a change for many.
Your thoughts on this topic are much appreciated especially in regards to what you'd like to see in a tiny home scenario. Thanks for reading. TINY HOMES FOR ALL!
