Building A Tiny House Behind Our First REI Has Been A Great Idea

[Jensen Roll]

Investment Info:

Single-family residence buy & hold investment in Graham.

Purchase price: $63,000
Cash invested: $2,500

My wife and I purchased this 3 Bed 1 Bath as our first home and have put almost no money into fixing it up. After living here for about 1 year, we started building a tiny house in the back yard (all to code and permitted). The home currently brings in $800/mo and the tiny house brings in $400/mo. Total investment in the main house was $65,500 (mortgage) and total investment in the tiny house was $35,000 (built for cash). Main expenses for the property are the mortgage ($358/mo), water ($48/mo), taxes, maintenance, and capital expenditures.

What made you interested in investing in this type of deal?

We purchased this home as a place to live at the time, with an understanding that it would be a great rental in the future.

How did you find this deal and how did you negotiate it?

We were looking in Graham for about 6mo before we found this deal. We wanted a house in Graham, because we are excited about it's growth and affordability.

How did you finance this deal?

We financed the main house with a traditional mortgage and we built the tiny house with sweat equity, left over materials, and savings (I am a GC by trade).

How did you add value to the deal?

The main house on its own was a good deal that cash flows well and being able to build the tiny house behind the main house only added to the value.

What was the outcome?

Overall, this has been a great first investment.

Lessons learned? Challenges?

It is important to plan out parking before adding more density to an existing lot.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

As a General Contractor, I was able to do almost all of this deal without too many others involved. We did bring in an electrician to help with wiring the tiny house.