Though the name would suggest otherwise, the tiny house market is huge. In fact, it’s expected to grow by $3.3 billion between 2020 and 2025 alone.
Tiny houses can be traced all the way back to Henry David Thoreau’s humble cabin at Walden Pond, but they only started getting popular after the 2008 housing crisis. With the market in shambles, many saw tiny houses as a more affordable alternative to traditional housing.
At the same time, tiny houses offer a minimalist lifestyle that appeals to a lot of the younger generations impacted most by the 2008 crisis. For them, the tiny house movement represents a deliberate rejection of the modern hustle and bustle and materialist culture.
What Is a Tiny House?
So what exactly is a tiny house? It’s usually defined as a small house under 400 square feet (or 37 square meters) in size. It can be built on a foundation or on a trailer for easy mobility.
Why List a Tiny House on Airbnb
But you don’t need to live in a tiny house to take advantage of this growing market. For the savvy investor, the tiny house movement can be a unique opportunity to earn passive rental income.
Many people want the tiny house experience without fully committing. Or they want to test the waters before they do. So what better way to offer that experience than by listing a tiny house on Airbnb?
Some airbnb hosts make as much as $21,000 in a year doing this. For real estate investors, it’s a relatively new and untapped opportunity.
Some Things to Consider
That said, before you get a tiny house, here are some important things to consider:
Local Zoning Regulations
Make sure tiny houses are allowed in your area. Since they are relatively new and fall somewhere in between existing property categories, many zoning codes have special requirements for them or don’t allow them at all.
For example, the requirements for tiny houses typically vary depending on whether the tiny house is on a foundation or on a trailer. If you plan to ever move the tiny house, putting it on wheels is more convenient. But that also means it might be treated like an RV that can only be parked in certain areas.
Other times, tiny houses are considered accessory dwelling units (ADUs) and will need to be on the same property as a bigger house.
Ultimately, you’ll just need to verify your local zoning laws. If you need help, you can also check with a local real estate agent. For example, if you’re in St. Louis, find an agent certified to practice in Missouri.
Otherwise, the most tiny house friendly states right now include Nevada, Colorado, Texas, Nebraska, South Dakota, Michigan, Maine, and North Carolina.
The Cost of a Tiny House
Tiny houses usually cost in the $30,000 to $60,000 range. But you can also find them for as inexpensive as $8,000 sometimes.
Building your own tiny house is by far the cheapest option. But you’ll need the skills and know-how.
Also, if you build the tiny house on a trailer, you won’t need to pour a foundation, which saves a lot of money.
Financing
Financing a tiny house is tricky. It’s best to own it outright by paying in cash, but if you need to finance, you can look into personal loans or RV loans. But these will have higher interest rates and shorter loan periods than regular mortgages. You’re typically looking at at least a 5% APR and loan periods of 1-2 years.
Other Fees
Keep in mind that Airbnb takes out a 3% service fee every time you rent your tiny house out. So if you rent it out for $100 per night, they’ll take $3. Take this into consideration when calculating your profit margins.
You may also want to consider registering your rental property business as a limited liability company (LLC). That way, unhappy renters can’t go after your personal assets if they ever decide to sue you. It’s a way to protect yourself in worst case scenarios. The cost of forming an LLC will vary by state, but it’s usually $100-200 to file with a $20-80 annual fee.
Getting Started as a Tiny House Airbnb Host
Once you settle all the finances and legalities, you’re ready to turn your tiny house into an Airbnb.
Give your tiny house some real character and charm. Design and decorate the interior so that it all has a cohesive vibe. Make sure the tiny house looks nice and quaint from the outside, too.
Remember, half of the tiny house appeal is the experience. It’s one of your main selling points after the more affordable pricing. Offer a unique getaway experience for nature lovers, people who want off the grid, or just those who want to try out something new.
You might also sweeten the deal by offering other amenities like free snacks and drinks, Wi-Fi, and entertainment. Install a TV with a Netflix subscription, for example.
All this can increase the value of your tiny house rental. Just make sure it has a consistent vibe. If you’re going for an off-the-grid feel, maybe pass on the TV and hang a guitar on the wall instead. At the end of the day, your tiny house rental is a business. So do what makes sense.
When your tiny house is ready for guests, list it on airbnb. You’ll need to fill out some information, upload some photos, then wait up to 72 hours for the listing to appear on the platform’s search results and start getting your first bookings.
Final Advice
So is tiny house airbnb hosting for you?
If your tiny house can get consistent bookings and you are up for the challenge—definitely. A tiny house rental in the right location can generate an attractive passive income.
Just remember to deliver a unique and quality experience, to be responsive to guests, and to keep the tiny house properly cleaned and maintained. Then reap the rewards over time.
