Don't Buy That Tiny House Just Yet
For years (it's been years already) I have been a big proponent of tiny houses. I've written more blog posts than I can remember about the concept with the big idea that serious downsizing into a few hundred square feet can be a huge, financial difference maker for an under-saved retirement plan. I have written about the negatives of tiny house living in terms of being used as a short cut by young people who may not be that eager to work, who in an adverse scenario might wake up at 40 with $4000 in the bank, a tiny house that is pretty worn out and maybe lacking in marketable skills. The impetus for today's post is a meme posted on Facebook by Tiny House LIstings;
It overlooks the idea that if you buy a house for $200,000, you're likely to have at least $200,000 in equity at some point in the future. As an investment, a house may or may not do well but over a slightly longer period, more than ten years maybe, houses tend to go up in value, even if just by the rate of inflation, maybe more if you're lucky. The equity you have after having held the house for a while gives you many options at 40, 50 or 60 even if the price appreciation turns out to have been lackluster.
If you spend $30,000 on a trailer when you're 25 or 30 you are buying a depreciating asset. The value/utility derived could be fantastic and there will be some number of people who buy tiny houses who do in fact put away a lot of money not taking short cuts
As I have been writing about this I have often said I was not interested in a true tiny house, a house on wheels, so much as a very small house, a house house, not a trailer. I love several of the tenets of tiny house living like decluttering/having less stuff. We have varying degrees of success with this idea in that my wife and I don't have a lot of clothes and the like but we have a barn/shed/workshop with a good amount of tools and chances are when we need something for a project or whatever, we have it (hinges, lag bolts, stuff like that) and that is every empowering.
We look at a lot of tiny houses on the internet and a lot of them are now very expensive. An $80,000 tiny house kind of defeats the purpose. You can buy them used of course but that reinforces the idea that they are depreciating assets.
Our interest in looking for a tiny house is for a rental on the other end of our property, we have kind of a big lot. We have gravitated to the idea of going with a shipping container house. If you do some research you will find some palaces comprising many shipping containers that are very expensive and you will also find examples of people buy the containers directly for a couple of thousand or so (might be a little more now) and doing the work themselves which could result in a very economical home that probably is not a depreciating asset. If done too cheaply or not done well then maybe any long term price appreciation would be muted but either way, not a depreciating asset on wheels.
Another alternative to something on wheels is building a very small house. It could be as small as a tiny house, although depending where you live, there might be minimums for square footage. There are of course existing houses that are very small. We have quite a few here in Walker that I have been in. This requires at least one partner being able to see beyond what is in front you (my wife has the ability) to see the potential.
The future you will be beyond grateful if you choose to not live in a depreciating asset for the next 15 years. There's nothing wrong with going on a nomadic adventure. You can rent one these pretty cheaply I bet;
And while you're out on the road you could rent out your potentially appreciating shipping container/very small house.
I think there is a high likelihood that 15 years from now there will be a lot of people in the situation I described above; 40, no money, very little in the way of marketable skills and a tiny house that is very run down. Use the idea to build financial strength and give yourself options in the future, not to take short cuts.