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Should You Add a Tiny Home to Your Single-Family Rental in Winter Springs?

Adorable Tiny Home in Winter SpringsOne of the methods that single-family rental home investors use to maximize their earning potential is to add units, specifically tiny homes, to an existing property. The tiny house movement, which started with individuals looking to simplify their lives by downsizing their living space and their possessions, has grown into a legitimate investment opportunity. But despite its growth in recent years, it doesn’t mean that everyone should build a tiny home. It still may not be a good— or legal— option for the moment. So, before deciding to build a tiny home in Winter Springs, make sure you learn about it, especially about the opportunities it holds and about the problems you may encounter.

If you have a project that adds to your property’s value while simultaneously increasing your rental income, it’s certainly something you should consider. And, when you first look at it, it really seems like building a tiny home on your rental property is a great way to realize both benefits. So, what specifically is considered a tiny home in this case? It’s generally accepted that a tiny home is a detached dwelling that is under 400 square feet. They can be on wheels, similar to an RV, or built on a permanent foundation.

There is a strong demand for affordable rental homes right now because of the high housing prices across the country. There is also a growing interest in a lifestyle of fewer possessions and a smaller environmental impact.  When you put these two things together— the high housing prices and the downsized lifestyle— you can see why tiny rental homes are one housing trend that renters in many markets may welcome. When you construct a tiny home next to an existing rental house, your investors get to increase their rental income without having to deal with the costs of buying another property. And usually, adding structures to the property will increase the property’s appeal to renters needing multiple units as well as add to the property’s overall value.

There are some things you still have to consider before deciding to add a tiny home to your rental property, however. Probably the first thing to consider is cost. It may be a tiny building, but tiny homes still cost anywhere from $30,000 to $180,000. This means that even just a moderately affordable tiny home will still be a large financial investment. To further complicate the matter, financing for a tiny can be difficult. Many lenders do not offer mortgages for tiny homes, and other types of loans would require you to pay it off at a much higher interest rate.

Going further than the cost of building a tiny home, you would need to take the l local zoning regulations and building codes into consideration. In numerous cities, there are strict zoning laws that prevent property owners from adding rental units to a single-family property. In fact, several could have regulations that specify exactly how big a detached dwelling needs to be for it to be legally occupied.

Local governments can also be very strict about building codes. Many require that all dwellings are built on foundations and that tiny homes should also meet the same requirements as any other house. There may also be some additional governmental requirements such as permits, inspections, and utility service work, adding to the cost of construction. This is why learning the city ordinances and building codes in your area is a must.

Another thing you need to consider is what your tenants think about an additional tiny home. If there are long-term tenants living in your rental home, they may not like the idea of a second dwelling on the property. Adding another unit adds people, cars, and increased activity around the property. It may also cause disputes or other arguments. Although such feedback is not guaranteed, you must try to understand your current tenant’s needs when making your decision.

Finally, although tiny homes add value to an investment property, they don’t appreciate the way we would want them to. It’s quite different from how traditional houses appreciate. This is true especially for tiny homes on wheels. These homes are considered depreciating assets and won’t grow in value at the same rate that the land and other structures likely will. Tiny homes built on foundations tend to fare better on resale value but may still lag behind traditional homes.

As a result, choosing to add a tiny home to your investment property might not net you the results you want. Nevertheless, the more you understand in advance, the likelihood that you will be able to succeed regardless of where your present-day choices lead you. Whether or not you choose to go forward with these kinds of plans, you can make use of the advice offered by a Winter Springs property manager. Give us a call at 321-972-6823 for more useful information.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.