Are you considering renting out a tiny house but looking for advice on how to startup? Keep reading to learn how to manage tiny home rental property.
Demand for tiny houses is skyrocketing. This may be impacted by tough economic times. Though, recession presents an opportunity for real estate investors that don’t have the cash to buy full-size homes but do have the money to start a tiny house rental business. Importantly, this is an ideal opportunity for a traditional homeowner who can put one in the backyard.
Maximize your revenue stream while providing quality opportunities for others to try out the tiny lifestyle, on a short or long-term basis. Here are the top tips for managing a tiny home rental property.
1) Be Prepared to Purchase Your Tiny House Rental in Cash or Make a Hefty Downpayment
Banks are getting tighter than ever as defaults on loans rise due to COVID conditions. Consequently, we expect them to be very focused on loans that are seemingly safe and familiar. Chances are that a conservative view on lending won’t roll out the welcome mat for your tiny home investment property. Additionally, be aware that new tiny house specific lenders require a good credit score and a 20% downpayment.
The good news is that tiny homes are exceptionally low cost compared to other kinds of housing. Granted, you may want to invest a little bit more in your tiny house so you can stand out in what may prove to be a competitive rental market in the years ahead. In any case, make sure you have cash on hand to buy your unit, make a hefty downpayment, or purchase the materials required to build it.
2) Check to See if You Can Legally Permit a Tiny House on Your Land
You can’t have a tiny house rental without land to put it on. We’re guessing that you plan to place it on an existing parcel that you own or plan to acquire new land to accommodate your property. Whichever way you go, you want to make sure your land allows for tiny homes (site-built, modular, or movable).
Many zoning laws classify tiny houses on wheels as temporary structures and limit or outright prohibit their placement. And the same goes for short-term rentals in select areas. Though, some rural areas have unrestricted zoning or allow for extended RV camping. If you play loose with the law and rent out structures without the right permits, you could receive a code violation that could ruin your rental plans.
3) Consider Renting in Vacation-Friendly Areas
Implementing how to manage tiny home rental property tips is a lot more enjoyable when the property you’re managing is generating money. One of the best ways to ensure that outcome is to have a property in an area frequented by tourists.
Tourists, particularly those visiting woodsy or beach locations, love the allure of tiny house living as a break from their norm. We appreciate that you can’t move your land, but if you’re in the market for a new parcel, look carefully at places that attract travelers.
Surprisingly, many short-term tiny house rentals on Airbnb are experiencing fairly solid bookings despite the pandemic. But you also may want to consider being open to short or long-term stays.
4) Survey the Pulse of Your Community
You don’t need to be in a big vacation market to turn a profit as a tiny house renter. It may be that local demand is enough to sustain your tiny home as a long-term rental unit. Consider the pulse of your community. Is there a high interest demonstrated by local tiny house enthusiasts’ Meetup or Facebook groups? Is there a low vacancy rate on rentals and demand for more?
If the answer is no, you’ll want to rethink investing in tiny homes at your location. If the answer is yes, proceed with confidence! But if unsure, you could do some polling in local Facebook groups or an ad on Facebook Marketplace or Craigslist.
Also, for pricing decisions, look up the local cost of studio apartment rentals. Be sure to look at what amenities and utilities are included with the rent. From there, you can create a fair price point for a tiny house long-term rental. While for short-term accommodations, you can reference similar listings on VRBO or Airbnb, and further, you can consider variable pricing that adjusts the rental rate based on time of year, etc.
5) Ensure Your Tenant’s Living Space Is Transparent
A common experience we hear with tiny house landlords is that tenants move in and quickly start expanding their use of the land they’re on far beyond their house’s borders. To avoid any conflicts, make clear in your rental agreement how much land around your unit is available for use and any boundaries or rules. Being transparent ahead of time will save you a world of headaches down the line.
6) Supplemental Income Can Make a Huge Difference
Our last tiny home rental management tip is perhaps the least talked about but one that can move the needle in a big way. If you’re finding that your unit isn’t renting out enough as a long-term or short-term rental property, particularly during down seasons, seek alternate means of income.
For example, couples getting married might love to use your tiny house as a backdrop for a photoshoot. Similarly, film studios might like to shoot various pieces of media in or around your home.
Mastering Managing Tiny Home Rental Property Takes Practice
Reading how to manage tiny home rental property tips can go a long way when it comes to setting the stage for your success. At the end of the day, though, the best teacher on this front is experience.
If you’re passionate about the idea of being a tiny house landlord, jump in, learn as you go, make adjustments, and enjoy the ride! We’re confident it will be a fun one. For more helpful guidance on all short term rentals, like buying cheap land, listen to this Tiny House Lifestyle Podcast episode featuring the illustrious Airbnb Superhost, Kristie Wolfe.
Featured image: Tiny House Block in San Diego County, CA
by Alexis Stephens, a Tiny House Blog contributor