No one is talking about this!! How to Fund a Tiny Home

We showcase a lot of tiny homes on this channel, but how do you actually afford a tiny home is a question I'm often asked. What if you don't have a ton of cash to buy a tiny home and how can you finance a tiny home? This is a subject that not a lot of people talk about when it comes to the tiny house movement. So today I'm going to. Now, first, I want to explain why tiny homes are more difficult to finance than a traditional home. The truth is most lenders won't consider a tiny home on wheels the same as they would a traditional home and they won't give you a traditional home mortgage. That's because of a lot of reasons. But one of the main reasons is that tiny homes like mine, which are self-built don't meet typical building codes and don't have any building classifications whatsoever. Now in the last 10 to 15 years, some of the major tiny home manufacturers have been able to classify their tiny homes as RVs, which has opened the door to some financing options such as an RV loan. But it also means that those tiny homes are typically more expensive because after all classifications cost money. So besides an RV loan or paying with a ton of cash, what other options are there for buying a tiny home? Well, today in this episode, we're going to give you real life examples from real tiny homeowners who have found creative ways to finance their tiny home dream. And this is going to break down one of the most challenging aspects of going tiny. So let's get started. First, we're going to hear from a tiny home owner who did have enough cash for a down payment for a tiny home, but not enough to buy the tiny home outright. Hi, I'm Kathy. And this is my tiny house that I lived in for five years. I don't think that the banking industry has really fully caught up with the tiny homes and where we're at in the market right now. When I started thinking about tiny houses, there were a lot of things going on in my life at that time. My dad who was in his early eighties had just gotten diagnosed with dementia. And I knew that I was likely going to have to pay for his end of life care. I was living in North Carolina and I wanted to move to Washington state and I wanted a situation where I didn't commit to a permanent location. So I could sort of get the lay of the land for Washington state. Tiny house was a perfect option. So when I sold my house in North Carolina, I already had $30,000 cash. You know, the pricing that I paid in 2018 are not going to be comparable to today's prices because that was pre COVID and supply chain disruption. Now gas prices are crazy. But what I did was I had the $30,000 cash and then I actually got a personal loan with the $30,000 plus the loan. I was completely paid off within 12 months. So I was completely debt free for the entire five years that I lived in the house. And that's what allowed me to help my family. But what if you're younger and you don't have established credit or a high paying job, can you qualify for a personal loan? Well, next up we're going to hear from a young couple who did just that. But before we get into that, let's talk about how you can start saving for your tiny home now. So whether you're trying to save for a tiny home or pay off your debt, or maybe you're just trying to achieve a little bit more financial freedom, the tools that you use can really make a difference. And that's why today's episode is sponsored by Revolut. And if you sign up using my link below, you can get $20 off as a new user. One thing I genuinely like about Revolut is how easy it is to get started. And another thing I especially like are the little features that help make saving almost automatic. You can schedule reoccurring transfers into your savings account, or you can even round up on your everyday purchases so that your spare change gets saved for you. Once you turn those items on, you're basically saving in the background without having to think about it. And if your travels ever take you out of the U S Revolut also makes that a lot easier. You can exchange, hold and spend in more than 25 currencies and there are no foreign exchange fees during market hours. And their app is super simple and user-friendly. So it's easy to see why over 70 million people worldwide already use Revolut to manage their money. So if you're working towards a financial goal of your own, perhaps to buy a tiny home, let's say, make sure you check out the link in the description because you'll earn a $20 bonus when you use my link. But right now let's get back to learning more about creative financing solutions for tiny homes. Hi everyone. I'm Destiny. And I'm Brie. And this is our tiny house that we call Matchbox. I wanted to own something before I turned 30, but I knew I couldn't afford like a $500,000 house, nor did I want one. And so we were just like, yeah, let's like really look into the tiny house movement. And here we are. We really started going in on researching tiny homes. What do we need to get one? Uh, how do we park it? How do we move it? What, just what do we need to even get into this? Yeah. That's when the research started and it was very like a very short period of time. So super stressful, very stressful. Um, we were on the phone with like so many builders. And the one thing that we learned is that everything kind of works at one time. You need to find, you know, the finances to pay for it. You need to find the builder and you need to find the place to park it all at one time. Yeah. And so that was really difficult. Yeah. Because the people who are building it are asking where are you going to park it because of certifications. And then the people will go, we want to park it. They're like, well, we need pictures of the house. So it's kind of like, it's definitely, you can't work with the builder if you don't have the finances down. And the finance people are like, well, where are you trying to go? It was just like a whole circle and nobody really talked about that part of like the tiny house movement. So it was definitely a challenge. I think honestly, you know, the YouTube pages and like the Instagram accounts were the beginning, like a stepping stone for us to even look into the movement. Um, but I want to say like the resources, it was our time. It was like us calling people and, you know, asking questions and talking to people who are in tiny houses and asking them, you know, how did you do this? How did, how much did this cost? Like what are other things we're going to have to pay for? Like, you know, along the line. So I have talked to so many people in tiny houses. Like it's insane. Also, um, Facebook groups were very helpful because we, we found, um, like tiny people selling their tiny homes, people looking for people to park on their property. Um, all types of things on Facebook. Facebook groups are very helpful. Yeah. Just doing outreach honestly to real life people. Yeah. I honestly cried so much when it came to the financial part because you know, I saw so many videos about people like applying for different loans. I heard of a sofa loans or light stream and they're, you know, they were approved for like 50,000 or a hundred thousand and that's what they used to buy the house. I applied and it was like $5,000 that we got approved for with both of us on the loan. And so it just, you know, it, I was like, how are people doing this? You know? So we ended up going through a light stream. We got a $45,000 loan. Um, and yeah, that's honestly the max that we could get. Yeah. I mean, well, that's what we asked for because we were afraid that if we asked more of ping it twice and then we wouldn't get it the second time just because we had tried the other ones before and we had gotten such a low number. Um, but yeah, that was what both of us on it. We got 45,000 from light stream. And it's a personal loan. Personal loan. The interest rate for personal loans better. It's a little lower. Um, and then it's a fixed, at least our loan is a fixed interest rate. So it won't, it won't go up throughout the loan. Yeah. That was really important. Especially just how you have me is right now. We paid a total of 90,000 for our house, but because we have to take out loans, we're going to end up paying a hundred thousand. We're still young. We're still in like entry level jobs that aren't paying a lot of money even though everything else is going up. We have other debt. Like we're not only paying $2,000 a month. Like that's what we were able to budget because we were likely going to be paying that for an apartment. So we had to make it work. It's possible, but I just want to be realistic that it's not like this glamorous life that we're just like vacationing every other day because that's not, that's not happening. It's going to hurt upfront. It's going to be a lot of money maybe for the first four or five years, but at least it'll be ours. We can do what we want with it. And we're also not stuck in the one place. We can move it in a couple of years if we want to a different city and explore that. Now we're investing and we feel like adults. The next couple in our lineup skipped the bank entirely with a private financing strategy. As a young couple, you know, you'd start thinking about buying a house, raising a family, affordability. Ultimately we just love the tiny house industry because there's just so many types of tiny homes. There's a lot of options, a lot of different ways that you can use a tiny home. So we've had a tiny house here for about a year. I'm full-time in real estate and, um, you know, I'm very comfortable with just design and remodeling. And so I just knew I think a better experience for us would to be leveraging that skillset, um, just finding an older tiny house and really just making it our own and remodeling it. And so, uh, the next question is like, where do you buy it? Where do you find an old tiny house? Um, and you'll be surprised. People sell everything on Facebook marketplace. It is so crazy where you can buy anything on Facebook marketplace. And so, um, that was like the first place I went was just to look on Facebook marketplace. And lo and behold, there was a couple who bought the tiny house. They had plans for it. Um, and uh reached out to just see if I could buy it from them. And uh, we worked out some terms and was able to buy the tiny house, get it moved here. And then, uh, remodeled it. The tiny house costs, um, $65,000. That was the purchase price. A lot of times you don't hear people talking about this. They kind of just say a number, but you're always thinking like, okay, how did you finance? Did you just pay cash for that? Did you get a loan? And so there are opportunities where the previous owner can finance the home. You can buy something owner finance. And so instead of going to the bank and trying to get qualified for a loan, um, or paying a large sum cash purchase price was $65,000. But then we had a small down payment and just worked out monthly payments to the owner to pay that down, which was $900 a month. Of course you don't have to get a private loan from the person who's selling the tiny home you want to buy. You can get a private loan from anyone who has an extra bit of cash, but keep in mind that private loans usually mean that they're short term and have a higher interest rate. So some tiny home builders have caught on that financing is one of the biggest hurdles when it comes to buying a tiny home and they've started their own financing programs for buyers that want to buy their tiny homes. Hi, my name is Shelby and this is my tiny house in the Redwoods. We did not build the house. We are definitely not contractors. And so when I found Shea's design, I was in love with it. That was the design that I wanted to go with. You don't have to crawl into your, into your loft. And it just, it seemed like it made a lot more sense for two people to actually live in it and feel like a home and not just a little cramped house. During that time we were trying to find the right builder and we actually came across Tiny Topanga who actually collaborates with Shea's tiny homes in New Zealand and they are able to design all of our homes here in North America. And so when I found out about them, I immediately got into contact with them. And from there we started the process of designing and building the house. So the cost of the home, the base price was $110,000. We did go a little over budget on the washer and dryer. So that way that it fit perfectly in here. And then we did take out a loan for it. Thankfully, our builders were able to finance us. We did pay 55,000 down ourselves from the money that we had from the house that we sold. And so with interest and all that, it came closer to 115,000. And it's paid off. That's the best part. Yeah. So builder financing can make it feel more like the same process of buying a traditional home, but the problem of where to park it still remains. At Village Farm Tiny Home Community in Texas, they've partnered with a tiny home manufacturer that offers builder financing on site. So you can buy your tiny home from the builder and park it right there at Village Farm. Welcome to Village Farm Tiny Home Community. This is one of our model homes that we have. This is the bungalow here. You have your galley style kitchen. You have residential appliances, all stainless steel. Every single one of our homes is 399 square feet, one bedroom, one bath. They all come with two AC units, mini splits, one in the common area and one in the bedroom area. Bedrooms are pretty spacious. They all fit queen size beds and you have plenty of space available. In this unit, in this case, you have a covered rear patio also. We normally require 10% down and we financed it 15 years. The good thing is there's no property taxes on these. So your payments including the lot lease as well within your budget and with the internal financing that we have, we qualify over 80% of our customers or you can do outside financing, but nobody beats our rates, our interest rates. So we normally do internal financing for all of our customers. One day, I hope there'll be more financing options for tiny homes, whether they be manufactured tiny homes, used tiny homes, or self-built tiny homes. But the fact is right now, in order to make your tiny home dream come true, you might have to think a little bit outside the box. And it just so happens that tiny homeowners are really good at just that. I hope today's episode with real life examples have given you some things to think about when it comes to tiny home financing. And yes, it might be challenging, but it can be doable. If there's one thing that these stories prove, it's that there's not one single way to become a tiny homeowner. In fact, the common thread is not that each of these individuals were wealthy. It's that they all had to come up with a creative financial strategy that fit their own personal goals and situation. And if you thought of a creative way that you could finance a tiny home, or maybe you've even done it yourself, I hope that you'll share your story in the comments so that we can all discuss and learn and possibly help others reach their tiny home goals.