Tiny houses are everywhere---including magazines, newspapers, and even reality TV. But are tiny homes truly cost-efficient? We investigate.

Many people love the idea of a tiny home—it’s a way to clear out all the unwanted things in your life, build better personal relationships, and get closer to nature.

But the tiny house lifestyle is just that, a lifestyle—it works from some, but not others.

Living in a tiny home is not as inexpensive as those reality shows may make it seem, and living without excess is more difficult than we might imagine.

Here’s the real cost of building a tiny house. 

Consider all expenses, not just the house itself

You may see pictures of fully formed tiny homes and think they’re the coolest things in the world. You’re not wrong—they are pretty amazing—but a lot of work goes into creating these tiny spaces. There’s a whole list of things you need to consider before embarking on a tiny house journey.

Time

Unlike a house, trailer, or apartment, most people choose to build a tiny house from scratch. This obviously takes time.

There are very small houses you can build in a few days if you have the know-how and the help, but then you’ll need to put in kitchen appliances, sewer, and wire it for electricity. Unless you’re a professional that knows how to do so, you’ll have to wait on others to come out and do it for you.

Building and labor

If you can’t take the time to build your house and hire someone to do it for you or you want one that’s already built, you’re going to be spending a lot of money at first.

One of the main features of a tiny home is its mobility, so you’ll have to buy a trailer to have the house built on. These typically costs a couple hundred dollars or more, depending on size.

Then there’s the cost of the house itself. A decent, sustainable home, including the price of materials and utilities, costs about as much as an average house down payment.

One company prices their smallest, 8 x 12 home at $25,000. But you can also buy basic, already built homes for a couple thousand dollars from this company, or even as low as $1,000 from this company. The price all depends on how long you want your house to last and what amenities you want it to come with.

Land

There’s no getting around it, buying a piece of land costs a lot and will vary depending on where you are and how much land you want.

If you’re lucky enough to have family or friends that are willing to give or rent you land, that’s where you’d be able to save.

RV parks, campgrounds, and trailer parks are your best bet for cheaper, temporary dwellings, but some parks have limits on the type of trailer they’ll allow—sometimes excluding tiny homes.

If you know people who want to start a tiny house community, you could even consider creating a cooperative that can purchase land in a more rural area where it’s significantly cheaper. That’s what this community did in North Carolina.

Before buying land, take your geographic location into consideration. There’s a reason there are larger tiny home communities in specific areas like Oregon, Southern California, and New Mexico—these places tend to be more community-oriented and there aren’t particularly harsh winters.

Utilities

Utilities are probably where you’ll save most of your money in the long run after your home is built. A smaller place means less heat, electricity, and large appliances.

The perks of living in an RV or trailer park is you’ll have easier access to utilities. If you buy land or borrow land from family or friends, you’ll need to take care of the electricity, septic system, and internet access yourself—this will also be a very high initial cost.

Basic lifestyle needs (furniture, trailer maintenance, etc.)

Like any house, you have to furnish a tiny home. Since they have a severe space limit, chances are you can only fit one, maybe two beds and a couch. This saves you from having an excess amount of furniture and can also save you quite a bit of money, but factor it into your budget.

If your house is built on a trailer and you ever plan on traveling with it, you need to consider two large costs—maintaining the trailer itself and a vehicle sturdy enough to actually pull your home.

While the traveling house community is even smaller than the tiny house community as a whole, it’s important to understand the additional cost. Tiny homes are often heavier than campers or even some RVs, which were built with travel in mind, so you’ll have to factor in the cost of the large truck or jeep you’ll most likely need to pull it.

How to finance a tiny house

Other than simple living, one of the major reasons people want to move into tiny houses is the savings it can provide. However, initial savings aren’t necessarily large when it comes to building a tiny house.

While most people choose to pay upfront, financing a tiny house may not be such a bad idea. You’ll have to pay off the debt, but the time frame will typically be much shorter than paying off a long-term mortgage.

Here’s one individual who broke down the cost of her tiny home process. Since there is no average tiny home experience, the price varies depending on what you’re looking for.

There are a few ways you can go about financing.

You can try an RV loan since technically, if your home is built on a trailer, it’s probably classified as an RV. Some tiny home builders are even getting RV certifications to make buying already-built homes more affordable.

You can also get personal loans, or peer-to-peer loans depending on how much you need to borrow.

Alternatives to tiny homes

Setting aside financial reasoning, most people just can’t hack living in a small house. We’re too used to having space. And if you have kids, large dogs, or are a couple in a long-term partnership, living in such a small space can put strain on many relationships.

While small houses are all the rage, there are alternatives that also offer cost-efficient, minimalistic spaces.

Rent an apartment

Don’t want a huge house?

Do what everyone else does—live in an apartment.

You can save money, have the freedom to move when you want, and you aren’t responsible for large repair costs that come with maintaining a home.

Related: Renting Isn’t Wasted Money

Buy a small home, not a tiny one

You can live in a relatively small home without converting completely to the tiny house lifestyle.

It is possible to live simply and cost-effectively in a regular home. If you don’t need the space, don’t buy a huge home. If you don’t want an excess amount of stuff, don’t buy it.

Obviously that’s easier said than done, but with some budgeting practice and work towards changing your financial mindset, it is possible.

Related: You Might Be Living Above Your Means And Not Even Know It

Buy a trailer home

Long before the tiny house movement began, there were already tiny homes on trailers.

Trailer homes, both in parks and on their own, are rarely as expensive as a tiny home and almost always come with the major amenities like sewer, electricity, heat, and appliances.

If you’ve got your own piece of land but you don’t want to build something yourself, having a trailer home can give you the simple life you’ve always wanted.

Also, since some trailer parks have such intense restrictions on what constitutes a trailer or not, sometimes it’s best to just go with a standard trailer instead of trying to convince the landowner to let you park a tiny house in their park.

If you’re really adventurous, live in a camper or van

If you’re really into the idea of living in a small space and you truly want to adopt a minimalist lifestyle, there’s a way to do it where you don’t have to spend a ton of money building a home: live in a camper or a camping van.

Yes, I know how unrealistic that sounds, but is it really much different than having a small house on wheels?

Living successfully out of a van is not ideal for most people, but if you truly want to live a lifestyle with less, you live in a relatively warm and safe place, and/or you’re one of those lucky people who gets to travel across the country, living in a camper or van truly is cost-efficient.

While van living does take some planning, adapting, and money, it’s doable. Just ask all these people who have made it a part of their lifestyle.

Some have managed to buy a used van for under $10,000 and fix it to match their lifestyle for only a couple thousand dollars, making the cost of starting your van-living experience only about $12,000—half the cost of a tiny home.

The biggest difference between van living and living in a tiny house, however, is the fact that most people who live in vans, or even campers, can’t sustain that lifestyle. Tiny houses tend to be more permanent.

Summary

There’s a reason the tiny house community has only spread so far. While it’s possible to save money and live a simpler life, the upfront cost and the lifestyle itself are obstacles that are too large for most people.

It’s best to know what you’re getting yourself into—try renting a tiny home for a while, or live in other small spaces before you think about building your own home.

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About the author

Total Articles: 105
Christopher Murray is a professional personal finance and sustainability writer who enjoys writing about everything from budgeting to unique investing options like SRI and cryptocurrency. He also focuses on how sustainability is the best savings tool around. You can find his work on sites like MoneyGeek, Money Under 30, Investor Junkie, MoneyCrashers, and Time. You can find out more about Christopher on his website or via LinkedIn.