Tiny house movement thrives amid real estate bust

[flintlock]

http://news.yahoo.com/s/ap/us_tiny_houses

As Americans downsize in the aftermath of a colossal real estate bust, at least one tiny corner of the housing market appears to be thriving.

The houses, which pack a range of amenities in spaces smaller than some people's closets, are sold for $40,000 to $50,000 ready-made, but cost half as much if you build it yourself.

Gee only $50k, what a bargain!

[BigBagel]

Re: Tiny house movement thrives amid real estate bust

Living the dream!

[don]

Re: Tiny house movement thrives amid real estate bust

truly a mobile home...


jumping out of bed not recommended...


What iTulipers want to know: what would they rent for?

[ThePythonicCow]

Re: Tiny house movement thrives amid real estate bust

Gee only $50k, what a bargain!

You can get a decently equipped 1200 sq ft trailer manufactured home for under $40K.

[LorenS]

Re: Tiny house movement thrives amid real estate bust

Ski bums have been living out of cars and pickup trucks for a long time.

Someone has to raise the next generation. My house has room for the kids to bounce and play. Sure they can go outside, but it's not good to be cooped up when indoors.

[Jay]

Re: Tiny house movement thrives amid real estate bust

Ski bums have been living out of cars and pickup trucks for a long time.

Someone has to raise the next generation. My house has room for the kids to bounce and play. Sure they can go outside, but it's not good to be cooped up when indoors.

I lived in my car and tent for a year. It was one of the best experiences of my life. And I did do a whole lot of skiing that year...but figured out a way to find a roof for most of the winter.

BTW, I have taken the opposite track when it comes to rentals. I have now doubled my square footage in the middle of the real estate crisis for less money. You just need to look hard and jump at opportunity. I suggest talking directly to the real estate agents for empty homes that haven't sold and try and work something out with the owners. Make sure you have a decent lawyer in your corner if you do it. This is an excellent arbitrage opportunity.

Edit:

One of the members here asked me to clarify what I was trying to get across here, so I thought I would paste my reply to him for everyone in case others were interested;

No problem. Basically, my wife and I started contacting real estate agents for properties on the market that hadn't sold for a year or more that we were interested in. We asked them if the owners might be willing to rent. Most of the owners had never even considered it. Almost all said no, either the agent or the owner. A few said yes on terms we weren't comfortable with. Two said yes and agreed to our terms. We chose the better opportunity. Essentially the only homes in our area that are on the market in the nonconforming jumbo price range are sitting because no one can get financing. Those homes for the most part have to be on the market, due to financial reasons or social ones. The family we are renting from is going through a divorce and neither are local any more. They were very happy to have our rent fall into their laps. It is found money to them. There really isn't much of a rental market for the single family homes the size of the one we are renting so no one was even thinking this way around here. I guess they could have rented it out to a bunch of college students but that would carry the risk that the house would be destroyed. The owners checked our credit and background and were satisfied that we would treat their home well. There is the risk that the divorce (between the owners) could get messy and the home could go into foreclosure or bankruptcy. I discussed this with a lawyer (and about 7-8 other scenarios including the Feds looking for property and income taxes, etc.) and in my state we would have 3 months minimum for the worst scenarios which are foreclosure and bankruptcy. The 3 months is in fact written into our lease just to protect us further. The lawyer also said that if either of those things were to occur, the bank or bankruptcy court would likely PAY us to get us out sooner. So the way we look at the situation is as a very cheap rental in a great place with the small risk we might be paid to move in a few months. I guess you could also look at it that also if those issues come to pass, we would probably have the first option to buy the house from the bank at a great price. Not that we necessarily would but the option is cool. The banks usually contact the renters first to buy as it is much easier than to deal with the foreclosure or short sale process.

[cjppjc]

Re: Tiny house movement thrives amid real estate bust

I lived in my car and tent for a year. It was one of the best experiences of my life. And I did do a whole lot of skiing that year...but figured out a way to find a roof for most of the winter.

BTW, I have taken the opposite track when it comes to rentals. I have now doubled my square footage in the middle of the real estate crisis for less money. You just need to look hard and jump at opportunity. I suggest talking directly to the real estate agents for empty homes that haven't sold and try and work something out with the owners. Make sure you have a decent lawyer in your corner if you do it. This is an excellent arbitrage opportunity.

The little lady has shown great patience Jay. Someday I'm sure you will reward her.

[goodrich4bk]

Re: Tiny house movement thrives amid real estate bust

You can do better buying used in a park that is declining. When sellers are forced to sell due to illness, death or simply poverty (they cannot affort the rising space rents on a fixed income) there is absolutely no financing available for buyers. I have a client who routinely buys good condition older homes (i.e. 1978 Fleetwood Double) for under $10k here in California no less.

[ThePythonicCow]

Re: Tiny house movement thrives amid real estate bust

You can do better buying used in a park that is declining.

Price-wise, I agree. Dirt cheap.

I would find living in an old trailer depressing (unless it was one I had bought new long ago and maintained and improved it to my whim along the way.)

Everything is likely nearly worn-out, and was bottom price cheap to begin with.

So ... what would your client --do-- with multiple older trailers? You can't live in more than one of them at a time. You can't sell them for any decent profit.

Does he rent them out?

[Serge_Tomiko]

Re: Tiny house movement thrives amid real estate bust

You can do better buying used in a park that is declining. When sellers are forced to sell due to illness, death or simply poverty (they cannot affort the rising space rents on a fixed income) there is absolutely no financing available for buyers. I have a client who routinely buys good condition older homes (i.e. 1978 Fleetwood Double) for under $10k here in California no less.

It can be hard to do deals though.

One little known fact: the best performing real estate asset over the past decade after farm land has been mobile home parks. The very sad story you tell usually works out where the tenant defaults, ends up being evicted, and the owner now can rent the plot along with their abandoned home for twice the rent.

It is very rare for a tenant in those parks to have the funds to move their home if they fall on hard times. Just as with any land lease, the improvements revert to the landlord.

[ThePythonicCow]

Re: Tiny house movement thrives amid real estate bust

One little known fact: the best performing real estate asset over the past decade after farm land has been mobile home parks.

The nice lady who runs the front office of my trailer park always drives a new, fully tricked out, full size, urban assault vehicle. She dresses with class well above that of her tenants. She has held that job since the park opened, twenty years ago. She is the daughter of the park owner. Life is good.

[ThePythonicCow]

Re: Tiny house movement thrives amid real estate bust

It is very rare for a tenant in those parks to have the funds to move their home if they fall on hard times. Just as with any land lease, the improvements revert to the landlord.

Aha - so that's how it works. Whenever I've run the numbers in my head for the return on the trailer park where I live, it always came up a little bit tighter than made sense to me.

I had not factored in the gains possible from repossessing abandoned homes and renting them out, at twice the base lot rent.

Thanks.

[Jay]

Re: Tiny house movement thrives amid real estate bust

The little lady has shown great patience Jay. Someday I'm sure you will reward her.

She's getting a mansion, a new kid, and likely free live in help for her patience. She's feeling just fine right now. Just because we rent doesn't mean we don't live well. I am happy either way, nice house or tent. For me the moment means more than the threads but I also understand that there are a lot of ways to live. In the end we are all dirt.

[goodrich4bk]

Re: Tiny house movement thrives amid real estate bust

I had not factored in the gains possible from repossessing abandoned homes and renting them out, at twice the base lot rent.

Be careful here. This is not my client's experience. He is buying trailers at a deep discount and removing them from the parks. For about $15k he can set them up on slab foundations in northern california counties that are desparate enough for tax-paying residents that they allow mobiles on vacant residential lots as long as they are fixed to a permanent foundation. My client then sells the fixed mobile as a home for about twice his lot plus mobile price and carries all the paper because there is no financing. Homebuyer gets a home with privacy (no park) and land ownership for more than most sellers are asking for a mobile in a crowded park full of meth heads. The monthly mortgage is less than the mobile home park owner is charging for slip rent plus mobile rent.

On the other side of this activity, the mobile park owner is getting bled dry. I'd be very reluctant to be a mobile park owner right now. Home prices have fallen so much that many former "tenants" of mobile parks can rent a real home in a real neighborhood with better schools. A 3 or 4 brm can be rented out much more easily than a double-wide, and extra income activities are easier to hide in a real home than in a park where the walls are made of aluminum and are 10 feet apart.

[goodrich4bk]

Re: Tiny house movement thrives amid real estate bust

One other client anecdote. This client has a park appraised for $3.5 million. During the boom, all the new home manufacturers were willing to put new homes on his lot with no money down to buyers paying $60 - 75k for the home. As soon as the financing disappeared in 2008, the homes lost 75% of their value. The buyers defaulted, which means the manufacturer NOT the lot owner gets to repo the home as long as the back rent is paid. So sometimes the home just drives away, leaving the lot owner with an empty slot. More often, the manufacterer's finance company wants nothing to do with the home and will sell it to the lot owner. Many lot owners thought for awhile they'd make a killing on the trade, but because the financing has never returned prices have gone down, not up. Yes, they can rent the damn things, but have you ever seen the profile of a mobile home renter? Bottom bottom of the bottom of the barrel. Really, you do not want to be in the business of renting aluminum housing to meth heads.

Just to give you an idea how desparate my mobile park client got, when his bank appraiser came buy to check his rent roll, he rented two dozen cars for the day and bought a lot of junky toys and patio furniture. He then parked the cars next to the vacant mobiles and spread the toys around the yards. The appraiser never knocked on any of the doors and my client got a short extension of his loan. I'm waiting to see what he'll do for an encore at maturity.