Any experience with Tiny Homes?

Question

My realtor in San Antonio advertised a Tiny Home project and I'm tempted to buy, but also hesitant. The tiny homes start at $130K new construction and believe them to be severely overpriced for this market and house size (700-1000 sq ft).

But..analyzing this property, it could net $400-$500 cash flow per month; plus the Tiny Home trend has done well in Austin, and I don't want to miss the San Antonio wave.   I've attached the link to the property below, any input would be appreciated.  Thanks!

https://www.zillow.com/communi...

Seth Teel · Answer

@Kalvin Wilburn

I am looking at the rental comps in the area.  The highest rent for a 2/1 under 1000sf is $825/month.  Rents don't break $1000/month unless it's a 3/2 with  +/- 1500+sf .

Also, to reiterate @Rick Pozos. This price per square foot relative to the area in sky high!

While many investors achieve great cash flow in the adjacent neighborhoods, this is not an area where I'd invest in my first rental property.  These are the reasons: The area has a high rental to owner percentage, property values are slightly better than stagnant, given the low rent it can be difficult to find a quality tenants.

Plenty of other areas of the City to invest.  Good luck in your search.

Kalvin Wilburn · Answer

@Seth Teel, @Rick Pozos, @Joseph Cacciapaglia I really appreciate your analysis.  With this being my first true rental investment your advise is highly valuable.

Rick Pozos · Answer

Hey @Kalvin Wilburn, just because your Realtor recommended it, does not mean that it is a great deal. He/she is recommending it because he/she will get a commission on selling you one of the tiny houses.

Austin is WAY different than San Antonio. 700sf for $130 is $185/sf. If you know San Antonio retail prices, you know that is super duper high priced for the area. Plus, that is starting price, not final price. Be careful.

Joseph Cacciapaglia · Answer

If you're looking for true tiny homes, there are a couple of properties made out of a single shipping container (about 360+- SF) on Poplar street that I think would make an interesting investment. There are two that are asking $65k each, or both for $109,900, as of this morning. These aren't my listings, just properties that I recently checked out with another investor. The biggest risk with these, is that there are no real rent comps. I checked with my PM, and she believes we could rent these between $595 and $695 in today's market. If so, it seems these could work pretty well, especially if you get some discount from the ask.

If you're really more interested in the not quite tiny homes, 500-1,000 SF, then there are a ton of different properties out there. We would have to narrow down the geography for me to give you a few suggestions. If you're already working with an agent, they should pretty easily be able to sort by size, and be able to recommend a few good locations for investing. I think it rarely makes sense to buy new construction for a rental.

Joseph Cacciapaglia · Answer

You have to be careful when analyzing new construction deals like this. The pricing advertised is often the "starting" price. I'm not sure if that's the case with this particular builder. The finished product, with all your options selected, can often be significantly more expensive. We have good luck renting these smaller 2/1, but I wouldn't expect to rent these for enough to justify that price. I think if you really want to look at tiny homes, there are some better options here in SATX. However, I really like the not quite tiny market, which this falls right into. I mostly work with investors on larger deals, but the tiny home market is one that I'm personally excited about. What's interesting, is that we have a ton of older homes in this size range here in town.

Season Price · Answer

Hi, Kalvin. I'm not familiar with your neck of the woods, but I have built two tiny houses for personal use (stick, built block foundation, and shipping container), and looked into several communities when I was scouting land for my off grid projects. You might want to connect to some of the tiny home communities on Facebook, if you haven't already. I think there my be more of a concentration of information in those groups to help you if you are interested in looking into tiny houses. I'm interested to hear what comes of your research. Good luck!

Kalvin Wilburn · Answer

@Bjorn Ahlblad skipped you on the reply, but I'm estimating $1000 - $1100 per month based on similar sized homes in the area.

Kalvin Wilburn · Answer

Joseph, thanks for the insight.  I see you're a real estate agent, any similar properties you can suggest for investment?

Bjorn Ahlblad · Answer

@Kalvin Wilburn those houses are beautiful! Small but not tiny. How much do you think they can rent for?

Any experience with Tiny Homes?

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