Tiny houses are compact living spaces often built on wheels. They help people live debt free and are often more environmentally friendly than traditional housing. But are tiny houses a good investment? Here’s what you need to consider before buying a tiny house investment property in Australia or New Zealand.
The Pros of Investing in Tiny Houses
One of the key benefits of a tiny house investment is that the purchase cost is significantly less than a traditional home.
Depending on the size and design, he price of a big tiny house in Australia depends on the model, design, features, and location, but it typically ranges from $79,000 to $101,900. Tiny houses offer a way for people to enter the property market without gaining a substantial mortgage.
Another advantage of investing in tiny houses is that they can generate high rental yields through short-term holiday letting.
Platforms like Airbnb have made it easy for hosts to list their properties and attract guests who are looking for unique and affordable accommodation options. Tiny houses can appeal to travelers who want to experience nature, minimalism, or sustainability.
According to Big Tiny, a Singapore-based travel company that builds and rents out tiny houses in Australia and New Zealand, its revenue in the first half of 2021 increased 3.5 times compared to the same period last year. The company also claims that its properties have an average occupancy rate of 70% and an average nightly rate of $200.
The Cons of Investing in Tiny Houses
One of the main challenges of investing in tiny houses is the legalities around living in them on private land. These regulations generally exist at a local council level so it’s necessary to research the laws specific to your area. Some of the factors that may affect the legality of your tiny house include:
– The size and design of your tiny house
– The zoning and planning rules of your land
– The building codes and standards that apply to your tiny house
– The utilities and services that are connected to your tiny house
– The duration and frequency of your occupancy or rental
Another drawback of investing in tiny houses is that they may not appreciate in value as much as traditional homes. This is because they are often considered as personal property rather than real estate. Therefore, they may not benefit from the capital gains that come with land ownership. Additionally, they may be subject to depreciation over time due to wear and tear.
The Requirements and Expectations of Investing in Tiny Houses
Before you invest in a tiny house, you’ll need to assess your finances and calculate all the associated holding costs. You’ll also need to find a suitable location for your tiny house, whether it’s on your own land or on someone else’s land through a lease or partnership agreement.
If you plan to rent out your tiny house as short-term holiday accommodation, you’ll need to consider the following:
– The legislation and regulations that govern holiday letting in your state or territory
– The expenses and fees that come with listing your property on rental platforms
– The cleaning and maintenance costs that are required to keep your property in good condition
– The insurance and liability risks that are involved with hosting guests
– The marketing and customer service strategies that are needed to attract and retain guests
Investing in tiny houses can be a rewarding venture if you do your homework and weigh up the pros and cons. Tiny houses can offer an alternative way to enter the property market, generate income, and support a sustainable lifestyle. However, they also come with legal, financial, and practical challenges that need to be addressed.
Sources:
[Should You Buy A Tiny House Investment? | BMT Insider](https://www.bmtqs.com.au/bmt-insider/tiny-house-investment/)
[Singapore startup bags $3m to build tiny houses for travelers](https://www.techinasia.com/big-tiny-pre-series-a-funding)
[Big Tiny | Tiny Houses | Tiny House Australia | Tiny House Builder](https://www.bigtiny.com.sg/)
[Are Tiny Homes a Good Investment? – realestate.com.au](https://www.realestate.com.au/advice/are-tiny-homes-a-good-investment/)
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