[Melissa]

Looking for opinions/advice from like minded people.

We have two homes one we owe 12k w 200+k equity. The other home we just purchased 280k (16acres) use as a getaway home for now, eventually retire. We are paying extra and amortization sch says will pay off in 7yrs w extra principal pmts.

My question is- we want to put a tiny home on property to possibly get income, and pay off sooner or free up some income. Would you get a loan off equity to do this? Or what options do we have, credit is 750, my thoughts is to get a loan for 50-60k to get tiny home built and make a couple improvements to land( driveway) and entrance, but I’m scared bc we are so close to having our first home pd in full, what would you do?

Selling the first home is not something we want to do. This is primary home bc work.

[Erin]

Have you already looked into the zoning aspects? In many states the zoning in rural areas especially is very prohibitive for tiny homes/adu’s.

When you aren’t occupying the second home, could it be an Airbnb or short-term rental of some kind? Does it have the infrastructure for rv hookups yet? If you’re considering renting out a tiny home full time, the rent amount may not be that much more than what you could make renting a space to someone with a tiny house or RV. In my area, space rent would easily be 700-800, and a tiny home might rent for 1k (and all the maintenance/repairs are on you).

I’d spend the money on getting the hookups (which could still be costly) and rent out the space long enough to build savings to add your own adu if you want to do that long term. But first look at the zoning because it really can be prohibitive and varies widely.

[Erin]

Another thing to consider: Costs of construction/materials have significantly increased since 2020. It will take the entire $50-60k to build your tiny home even if you DIY some of it. You likely won’t have extra for other projects in that budget.

We own a construction company and every project is extremely expensive, even for us, and even if you use economical materials.

Don’t miss: Anyone get a recent HELOC or Home Equity Loan?

[Denise]

Why don’t you just wait until you pay off your $12k first? Make extra payments on that first, then get the tiny home.

[Kelly]

I would talk with a cpa and see what your options are for tax deductible items with a business like that.

I think having a few small tiny homes/cabins/domes/dwellings could be an amazing opportunity. Lots of people fit into this rental category.

[Kate]

Look into the rates for a loan against your home equity. We had a HELOC with over 9% for a bit – it is an incredibly expensive time to use equity for things like this. RV hookups would definitely move toward this without the debt. When rates are better you could do it. Just some thoughts.

Good luck.

[Author]

Posts