Should You Buy A Tiny Home in 2024?

Today, I’m taking you on a journey through one of my latest projects—a mobile home park I bought with no money out of my pocket through seller financing.

We’re right in the middle of renovating seven of the last units, and we're debating whether to go with tiny homes or renovate the existing units.

Let’s dive into the details and see what makes the most sense.

Our Mobile Home Park Adventure

We’re at One Long Acre, a park that was once in pretty rough shape.

When Jimmy (property manager) took over property management here, it was so dirty and decrepit that they started calling it "One Acre" because you couldn't even see the full word "Long" through all the trash…it was pretty bad!

• Trash Removal: We’ve hauled out about 10 dumpsters, each 40 yards full of trash.

This park is a prime example of how you can do real estate with no money down, no bank involvement, no credit checks, and no tax returns.

I’ve never even spoken to the seller. Beau has been handling that, and the seller doesn’t even know who I am.

He’s essentially been our bank for the last three years and will continue to be for the next 27 years unless we refinance.

Current Status

• Units: We have 32 units in total.
• Occupied: 25 units are currently rented out.
• Renovations Needed: 7 units need to be either renovated or replaced.

Renovation vs. Tiny Homes: The Cost Analysis

We had a discussion with Beau, our asset manager, and Jimmy, our property manager, about the costs and benefits of renovating existing units versus installing tiny homes.

Renovating Existing Units:

• Cost: Approximately $15,000 per unit, plus electrical work, totaling around $17,500.
• Rental Income: These units would rent for about $500-$600 per month.

Installing Tiny Homes:

• Initial Cost: The tiny home itself costs about $8,300, delivered.
• Additional Costs: Hauling Off Old Units: $2,500. Concrete Work: $4,000. Utility Reconfiguration: Around $5,000. Miscellaneous (Appliances, HVAC, etc.): $6,000.
• Total Cost: Around $33,000 per tiny home.
• Rental Income: Tiny homes could rent for $800-$900 per month.

Detailed Cost Breakdown

Renovation Costs:

• Unit Renovation: $15,000
• Electrical Work: $2,500
• Total: $17,500

Tiny Home Costs:

• Tiny Home: $8,300
• Hauling Off Old Units: $2,500
• Concrete Work: $4,000
• Utility Reconfiguration: $5,000
• Miscellaneous (Appliances, HVAC, etc.): $6,000
• Total: $33,000

Benefits of Each Option

Renovating Existing Units:

• Lower Initial Cost: Renovating is cheaper than installing new tiny homes.
• No Demolition Required: Saves on costs for removing old units and preparing new foundations.

Installing Tiny Homes:

• Higher Rent: Tiny homes can command higher rent, around $800-$900 per month.
• Lower Maintenance: Brand new units have fewer issues and lower maintenance costs.
• Increased Property Value: Newer homes can increase the overall value of the property.
• Attractive to Tenants: Tiny homes are unique and appealing, potentially reducing turnover.

Decision-Making Factors

• Return on Investment: Even though the upfront cost is higher for tiny homes, the increased rent and lower maintenance might justify the investment.
• Long-Term Vision: Installing tiny homes could enhance the park’s overall appeal, possibly allowing us to increase rents across all units over time.

Conclusion

So, what’s the best move?

It’s a tough decision and one that we’re still exploring.

In real estate, it’s all about weighing the costs, benefits, and long-term impacts. Whether you decide to renovate existing units or go with the new tiny homes, the goal is to maximize value and rental income.

Thanks for joining me on this adventure. If you have any thoughts or experiences with similar projects, drop a comment.

Let's keep the conversation going and learn from each other’s experiences.

Let’s stay connected,

Pace