Can you really live mortgage free by buying and moving into a tiny house? Well, that is the question of the day, and one that I have also wondered about. Type “how to live mortgage free” on google or youtube and you will find a plethora of testimonials from tiny house owners.
Disclaimer: I am not an expert on tiny houses and I dont have one myself, but the idea strikes my curiosity because of all the rave about it.
So here is what I have gathered in terms of how it works, strictly based on the ever reliable internet. Let’s say our subject’s name is Bree.
Bree and her family currently rent or own their home and have to pay rent or mortgage, which is no small cost. They decide to change their story and start considering selling their house and looking for a tiny home or builder so that they can downsize. The motivation as far as I have gathered is usually saving on cost, and sometimes because someone on the internet told them to.
I think there are so many merits to the idea of a tiny house; but I also want to caution you. Please keep the following in mind when you begin to think about buying/moving into a tiny house:
- A tiny house is not real estate, it is more like a mobile home, an RV, or simply a vehicle. The common argument is that while you buy a regular house for hundreds of thousands, you buy a tiny house for 10s of thousands.
The major distinction between the two is LAND, when you buy a house, it typically comes with rights to the land and in real estate it is the land that essentially appreciates, the house itself depreciates from year to year.
Typically tiny home owners don’t own the land and have to continue to pay a lease to the land owner for as long as the house is parked there. This is an important differentiation to note if you are considering a Tiny House, that is a cost that is not spoken about enough. Of course if you build a tiny house on your own land this does not apply to you.
- The resale value of a tiny house is low because it appeals to only a small segment of buyers. And we know that when demand is low, prices drop.
- Tiny houses are not cheap, sometimes the price are comparative to stick built houses
- Financing is not as readily available as with regular houses. So you either have to pay for it in full or find some other creative financing