The demand for tiny home rentals is actually increasing. It could be due to the impact of tough economic times. But this has shown for a promising market for anyone considering building a tiny home on their property and renting it out as a helpful means of income.
The decision to become a landlord should not be one that is stepped into lightly. There are several things to consider about building a tiny home on your property and allowing someone to live there in exchange for money. It is much more than just putting the home up and communicating that it is open for business.
Here are some things to consider about building a tiny home rental in your yard
Be prepared with a large amount of cash for the purchase or to make sizable cash down payment
Banks have cracked down on the qualifying regulations for many loans, especially those that include more creative means than the traditional standard everyday mortgage. Right now, banks most often want to stick with the most traditional of loans that feel safe and familiar to them. It is not unlikely to expect a little bit of pushback or a lender that will not offer a loan for the purposes of what you are seeking to borrow money.
Currently, lenders that do offer loans for tiny home structures will require a much higher credit score as compared to other types of loans and about a 20% down payment. But the good counterpart to this is that building a tiny home costs significantly less than a traditional home.
Make sure that your local zoning laws allow for a tiny home rental on your property
One of the biggest mistakes that optimistic landlords make is forgetting to check in to the local zoning laws to see if it is legal and permissible to build a tiny rental dwelling on their property. You don’t want to get deep into the building process only to have someone from the local zoning commission come and check out what you’re doing and tell you to tear it down. Or put a hold on your project until you get the proper permission.
You want to make sure that you know your exact property is good to go for having a tiny home on the lot and also that it is within local zoning laws to turn it into a rental. The building and zoning laws for every home can be different. They can differ from neighborhood to neighborhood even.
One neighborhood could have very large yards with plenty of space for a tiny home and allow for one to be built, but they could regulate the use of it and not allow it to be a rentable space. Whereas a neighborhood a mile down the road may not have that same restriction of not being able to rent a tiny home.
You also want to make sure you check into any HOA restrictions within your housing development if you have one. Just because the local zoning laws allow you to build a tiny rentable structure will not mean that your homeowner’s association will think it is a great idea.
Consider making your tiny home a vacation rental
Vacation rentals are in high demand in several locations all across the world. And tiny homes are in high demand as well. It may seem like most people would only want to rent a traditional house, but some people are simply looking for an alternative to a hotel room and a tiny home can be the same size as a standard hotel room. A tiny home comes with many more amenities for a better price with better privacy.
Opting to have a vacation rental instead of a traditional rental will allow you to set stricter parameters for the rental as well as have the ability to take a break from having a stranger living in your backyard from time to time should you so choose. This is something to consider when you open up your backyard.
Everyone has their own way of living and some things can feel less thoughtful in living styles. When someone is in your backyard you will have to be more tolerant of their different living styles. Having vacationers means you only have to put up with these different living styles on a temporary basis.
Make sure to be as detailed with rental agreement expectations as possible
Don’t ever leave it to common sense expectation that someone is going to naturally be responsible. Make sure to dot every I and cross every T possible in your rental agreement contract whether it be for a vacation or long-term rental.
You want to include as many details as possible. One detail that tiny home landlords can overlook is the use of outdoor space for example. Since you are now sharing a portion of your yard with a stranger you want to make sure that you clearly communicate what portion of the yard is there for them to use and what portion of the yard remains for the sole and private use of you, the homeowner.
When it comes to any rental property type there is a myriad of things to learn if you have never been a landlord before. One great thing you can do to make sure you do as much research into what it is like to be a landlord as possible is to contact a local property manager for advice.
For more information on tiny homes in the Puget Sound area please stop by and see us in North Snohomish County, or you can contact us anytime over the phone or with an email.