Micro properties next new thing?

Question

http://www.forbes.com/sites/petertaylor/2016/07/19...

Please check out this interesting recent article posted on forbes! I'm curious what others on the BP community think about how this will impact the future of real estate!

Jenifer Levini · Answer

If you think Warren Buffet might know a thing or two about investing then you'll appreciate that he has focused a billion dollar portion of his company, Clayton Homes, the largest home manufacturer in the US, on tiny homes starting in 2014. Here is a press release:
http://media.claytonhomes.com/press-releases?item=...

If you think that 84 Lumber, a $2.5 billion company might know something about the housing market, you'll appreciate that they are betting big on tiny homes by rolling out their own lines of tiny homes and tiny home kits for do-it-yourselfers. Here is some info:
https://84tinyliving.com/

Over 45,000 people from 20+ countries showed up one weekend in Colorado Springs to shop for tiny homes!http://www.tinyhousejamboree.com/

If you think this internet thing is just a fad, then dont pay attention to the addition of a new type of housing to the housing mix. Its probably just a fad, like the internet or the mobile phone.

Andrew Mullen · Answer

I think this is absolutely brilliant! I remember reading about this guy moving into a dumpster and I thought it was a pretty interesting move.

Here's why I am in love with this idea:

1. Americans are broke and we spend way way way too much on housing. Why? We don't have to live this way.

2. These units are mobile which gives you the ability to move freely across the country, world, etc. A move will be as easy as calling an uber.

3. They're energy efficient and everyone is concerned about their carbon footprint these days!

These homes provide lean and free living...that's freedom...being a debt slave paying a huge mortgage payment for a McMansion is not.

Sign me up!!

Anthony Gayden · Answer

Trailer parks are considered very undesirable by many, so perhaps this is a way to re-brand and develop a new image for an old idea.

Jason V. · Answer

If your market is an area where it's normal to see a guy with a man-bun riding a penny-farthing to his nearest artisinal vegan restaurant, you may have some success with renting "tiny homes."

(I'm a tad biased. I hate all fads and anything even remotely trendy.)

Jeffrey H. · Answer

This is one of the main hurdles for the tiny house movement - zoning.  Trailer Park mismanagement gave many cities heartburn and they have done as much as possible to ensure that new Parks are not developed within their city limits.  In 95% of municipalities there is not a legal place to store a tiny home, except temporarily in an RV Park.

Addressing why this issue would not reoccur with tiny homes is the key to this gaining traction.  This is not something to invest in for money primarily, it's a movement and needs to be a passion.  There is easier money and fewer headaches to made elsewhere, even turning around Trailer Parks back into Mobile Home Courts.

Certain cities have been receptive to trying out tiny homes, and those are where I would focus if this is something to be seriously considered.  These homes are not cheap, and the hippies want them to be nice.  Oh, also, insurance for these is only offered by a very limited number of providers - the most common policy is a renter's policy, which will not cover the structure burning to the ground or flooding.

Tim Shin · Answer

I think it will depend on the city you're in. If you are in a "hip" city that has a shortage of affordable housing (like Austin), I think it's a good idea if you can make them cool, sustainable, and green whilest being sturdy enough to transport out to wherever these mobile millennials are going to live. In markets like Houston, I think it's more of a speculative bet.

Lafayette "Ronni" Davis · Answer

Hi Scott,

Very interesting read. Clearly, Kasita's Founder, Jeff Wilson, is on to something.

In "Zero to One, by Peter Thiel, he postulates, building a business that is completely new. Not copying someone or following someone else's lead.

It appears that Jeff Wilson, may be at the start of revolutionizing housing. Let us consider AirBnB, Uber, Apple, Amazon, UPS, and WeWork, just to name a few. Housing is basic to all. Micro housing is no longer a concept. Today, 51% of all females, live alone. Marriage rates have steady gone done. In our major cities centers, productivity soars, and crime has decreased. Housing, regulation, non-discriminatory laws, tenant selection, and an entire cottage industry has developed around FIXED housing.

Now, take the term 'mobile' and 'housing' and connect them together "mobile housing". That's powerful. What happens when local, state, and federal governments and their agencies are no longer able to bring in enormous tax revenue via settlement cost, appraisals, rehabs, construction permits.

Micro housing may literally change how the housing market works. Consider for a moment, what is happening all around us? Look at Common (www.common.com), We Live (welive.com), and Open Door (www.opendoor.io).

Given the social pressures, demographics, economic, medical, life long singles (men and women). Student debt, and the earth's diminishing resources. Micro'mobile housing, could be the response to an entire New Wealth attitude. Live better with less. Or Less is more.

Scott Beyea · Answer

thanks for the input everyone! This is why I posted this; I thought people would have many varying opinions. I am not personally brave enough to start with this, but I absolutely believe there is a future with micro-properties that will outlast "fad" status.

Jeffrey H. · Answer

Clayton doesn't seem to be selling these today on their website like all their other products.  Where are they or where did they go?

The comparison to the Internet and cell phones is not relevant - are you suggesting that tiny homes will be used by 85% of the population one day?  I thought the mullet was a better comparison - it's a discretionary choice and lifestyle decision that was popular for ~10-12 years.  They can be replaced by an RV, mobile home, or apartment at a moment's notice once they change their mind one day.

And what about things like this that call the whole thing into doubt on a popular website consumed by the very people that would buy them:  http://www.treehugger.com/tiny-houses/is-the-tiny-house-movement-big-lie.html

I'm not saying there isn't a place for these in the housing segment, I just think it's reached its peak.  People are also starting to find alternatives that are more suitable and less zoning issues, like micro apartments.

If you're an investor and early adopter into focusing solely on this product then you are brave, and if you make a ton of money on it then you deserve it.  I want my investments to have predictable demand, and other investors seem to like throwing cash at that approach.

Russ Draper · Answer

I think the logistics of this "fancy mobile home" doesn't work for apartment buildings, at least not right now.  I think it would only work in the most expensive cities to start and I don't think they would end up being that mobile!  Micro-apartments might be the next big thing but this sort of canister housing probably isn't.

Micro properties next new thing?

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