Who said homes have to be big - or rooted in one place?
Whether you’re hoping to wake up in a treehouse or in a home on wheels, tiny houses are fast becoming a hot topic in the real estate market.
It just makes sense - the smaller the home, the more you save. And with prices skyrocketing across Aussie, more and more buyers are looking at different downsizing and off-grid living options.
Tiny homes in Australia have a lot to offer - not only do they save a big chunk of your expenses, they’re also made to be eco-friendly!
This does raise the question: are tiny homes the investment of the future?
In this blog, we explore everything you need to know about tiny house living: from how it works, to the overall costs and investment potential.
What Is A Tiny House?
Although a ‘tiny house’ does cover a pretty broad concept, there are generally two accepted legal definitions of the term, the International Residency Code defined it as a dwelling with a floor area of 37 m2 or less, not including any lofts or second storeys.
The Australian Tiny House Association, on the other hand, called them “moveable dwellings up to 50 m2 that are suitable for residential use, with self-contained amenities and services and the option to be grid-connected.”
What Are The Different Types Of Tiny Homes?
Tiny homes can typically be grouped into 2 categories::
- Houses on wheels (usually trailers)
- Skids (immovable homes that sit on a platform or foundation)
The structures themselves may come in different types:
- Shipping containers
- Recreational vehicles
- Earthships (Off-the-grid builds that draw all their resources from nature)
- Yurts (A portable round tent that is generally covered by felt)
How Do Tiny Houses Work?
Water to tiny homes could be reticulated from the mains water, water tank, dam or other regulated water supply just like a normal house.
It’s important to have a portable water source and also have regular access to good drinking quality.
Off-grid options like rainwater harvesting systems and tubewells could also be sufficient depending on your location.
According to the Australian Tiny House Association, tiny homes should have regular access to a source of electricity.
This could be from a mains power supply, solar power, wind power or any other source which can be used in a domestic environment.
Battery powered radios are highly recommended to stay connected during emergency situations, like bush fires, that could disrupt the electricity supply.
Interior design and space
Tiny homes gear you up for an innovative way of living - so here’s a few tips to keep in mind when it comes to..
Here’s 5 design tips by Homes to Love that help make the best use of limited space in tiny homes:
- Well placed windows and tall ceilings will make an interior space feel much bigger than it seems.
- Retractable or pull-out beds are great space savers and serve as additional lounge space during the day.
- When it comes to storage, it's important to think creatively and make the most of the available space, especially in pantries. Installing storage that spans the depth of a wall can significantly increase the functionality of a small area. You can also consider utilizing cheap storage units in Sydney to provide additional space for your storage needs.
- Detachable or demountable decks can almost double the floor space of a house, creating extra work or entertainment areas.
- Functionality is everything when it comes to tiny homes and less is always more. Organize spaces with clear pathways that lead from one key point or workstation of your home to the next with ease.
Why Do People Buy Tiny Houses?
Tiny home owners say this alternative to traditional housing provides them with solutions to several modern-day issues and the hurdles that come with standard living.
Anyone can be a tiny home owner and there are plenty of solo occupiers, couples and even families with kids who have made the switch from traditional housing for a variety of reasons.
Who Typically Buys Tiny Homes?
Recent research tells us that a majority of tiny home buyers and investors can roughly be categorised like this:
They are middle-aged and looking for a complete change of pace mainly for financial or lifestyle reasons
They are young adults looking for affordable independence and adventure.
Let’s take a look at what they’re talking about.
A quick look around showed us that tiny homes in Australia are much more affordable than standard homes.
Financial Independence Australia stated that the median price for tiny homes is $85,000 while the median price for standard houses has hit the $1 million mark.
Tiny homes also help reduce overall debt and prevent buyers from taking out a mortgage.
Because of their small size, tiny houses use much less operational energy to heat, cool and provide, than standard homes.
Many times homes have an energy rating of 7 or more stars. Because of the use of lighter construction materials, tiny homes have less embodied energy.
A standard house, on the other hand, has embodied energy that amounts to 15 years of operational energy.
This means that tiny homes not only cut costs but reduce your carbon footprint!
Whether you want to move your home across the city or transform your bedroom into a work space in a snap, tiny homes allow you the flexibility to live adaptably.
As more Australians have found their finances tightening over the last few years, having flexible living options is becoming increasingly appealing.
Tiny home owners can find navigating rough financial patches a little easier with cost efficient living, or even move to locations with better employment and community benefits.
Sustainable, Off Grid Home Living
Off grid tiny homes in Australia give buyers the freedom to live life on their own terms, sustainably.
With the mobility that tiny homes offer, owners can also adopt a stack of self-sufficient features and sustainable options, especially when it comes to the essentials.
Here are a few:
- Composting toilets: they reduce around 45,000 litres annually per household
- Solar packages or in-built insulation: keeps the house warmer than a traditional home
- Propane gas canisters: for cooking and heating needs
To those who’ve been tenants most or all of their lives, having their very own retreat away from the commercial bustle is nothing short of gold, and well worth any extra effort.
Whether it’s to make financial sense of their housing budgets or just to lead a more peaceful, simple life, tiny home owners would agree that there’s something to be said for the minimalist lifestyle.
Owners say that standard homes (and all the ‘stuff’ that we tend to collect) were a maintenance nightmare that sometimes even took a toll on personal relationships.
How To Build A Tiny House?
As tiny as they are, building these dwellings isn’t as cut and dry as you would hope and you could run into a lot of the same issues as traditional houses. Let’s take you through the key steps:
1. Choose A Land For Your House
Finding a place to park your tiny home can be a bit tricky.
Most tiny home owners make use of land that already has an existing dwelling on the property, usually belonging to a friend, family member or if you’re lucky, a kind soul.
Tiny homes can also be parked on the land where your primary residence sits.
You could also approach landowners and offer to pay a fee in exchange for parking your home on their property and sharing water and electricity.
Although these options still do come with a few rules and regulations that need to be met, they are tried and proven. It would also save you a heap of time chasing after a permit to park in a public area.
2. Can I Build A Tiny House On My Land?
Real estate.au states that generally any house on wheels should be registered as a caravan, which means that the Development Authority’s permission isn’t required.
However, you may have a hard time listing the caravan as your primary dwelling. Living in a caravan, towing, travelling, and maintaining it as a permanent point of residence can also be quite challenging.
Australian laws have many rules based on the permanency of the structure and how many days you can stay in such a home.
But you may be able to get exemptions from the council and find your way around this roadblock.
According to The Australian Tiny House Association Founder, Darren Hughes, there might even be a simpler solution which is to “..get your neighbours to approve of your tiny house. As long as the neighbours don’t complain, there’s very little that councils can do about it.”
3. Pick A Tiny House Size
A general tiny house measures 15 to 18 m2 and can be connected to a trailer.
While you could change up the size and shape a bit, a tiny house should not exceed the maximum dimensions for it to be legally towed on Australian roads.
To be legally valid, a tiny home should not be more than 2.5 metres in width, 4.5 metres in height, 8 metres in length and not weigh more than 4.5 tonnes.
4. Decide On An Existing Or DIY Layout
Tiny houses can either be bought as a model or as a ‘flatpack’ style house that needs to be assembled. In this instance, the layout is already pre-designed for you and is an ‘existing layout’.
If you want to design your own layout, or DIY, remember to factor in how much stuff you have and the number of residents in the house. You will want to optimise storage space and find creative solutions for your interiors.
5. Search for A Good Quality Trailer Or Skids
Make sure that the trailer is designed to have a 4-tonne home permanently bolted to it for the next few decades. It should also fit the tiny house specifications and dimensions.
6. Connect The Essentials
If the home is being built on vacant land and you want to connect to a main, you’ll have to apply to your local council for access.
Have a quick look around at the various access points and advantages of your location while in the planning stage to save time later. This is the point of the process where you will need to decide on off-grid options if any and how you want to hook it up.
Once you’ve decided on your sources, call a certified electrician or plumber to connect your home to power and water from the mains or get a stable off-grid connection running.
7. Start Building
Even if you want to do most of the building, it’s always best to get a builder to check that the home is structurally sound when it’s time to put the roof on.
Anchoring the home is the most important part so make sure the base is level and the foundations are secure. Do not underestimate the need to secure your tiny house. Make sure not to skip steps like water proofing and insulation.
Start putting up the floor and wall frames. If you’re confident you can do the rest yourself, go right ahead, or call in a qualified tradie.
How Much Does A Tiny House Cost?
The main factor in determining the cost of a tiny house may depend on the stage or phase of the build at which they're purchased. As designs and materials continue to develop, the cost will also vary.
Here’s a look at some of the numbers for existing designs:
This includes the trailer, frame, windows and doors, cladding and roof
Prices may range from $10,000 to $30,000
This includes everything in the Lockup stage, along with inner linings for the interiors and completed electrical and plumbing work
The starting price for a lockable shell is around $43,500 but even the cheapest design could end up costing almost $100,000 after any other essential add-ons are included.
This includes everything in the Lockup stage, along with inner linings for the interiors and completed electrical and plumbing work
For existing tiny home designs, the general range may be from $70,000 to $150,000, depending on the complexity of the base model and any add-on features included.
Extra features such as air conditioning could be added for $2,650, external storage for $3,500 and a water tank for $1,600.
Customised designs may be a bit pricey as they require architectural advice and expertise. Prices start from $35,000 upwards.
Tiny house companies can also charge based on the size of the build, with a recent article on tiny houses in NSW stating that buyers should expect to pay around $3,000 to $5,000 per square metre of the tiny house.
Can I Get A Home Loan For A Tiny House?
If you’re wondering how to finance your tiny house, here are 3 types of loan options you can look at.
1. Caravan Loan
You cannot take a home loan as the dwelling is classed as a caravan. You can, however, take a caravan loan.
Interest rates may be around 4.45% to 14%. The mortgage amount will depend on how much you borrow and the loan term.
2. Specialist Finance
Tiny house companies and finance companies usually work together to make it easier for buyers to get loans. This means that the tiny house company will usually guide you through the process.
For example, Aussie Tiny Houses offers competitive rates with payment terms of up to 7 years with funding from $2,000 to $70,000.
The exact amount depends on the buyer's criteria such as their credit rating. If you took a loan of $50,000 for 7 years, you may pay around $225 a week.
3. Unsecured Personal Loan
Although you don't need any collateral to get this loan, you might end up paying high interest rates to make up for the lack of security you're offering the bank.
Interest rates can be anywhere from 5.49% to 8.99%. The loan amount and the interest rate depend on your credit rating and current earnings.
Are Tiny Houses A Good Investment?
A few things you might want to consider before signing on the dotted line:
Tiny homes generally don't appreciate in value but there are a few exceptions where they appreciate because of their look and feel, or the interior decoration.
However, buyers can actually benefit from the home not appreciating in value as they can claim tax depreciation if the place is regularly rented out.
If you want to live in a tiny house while owning a property that grows in value on the side, you could always consider rentvesting. Here are a few property investment strategies that might help your wallet.
Upfront and Ongoing Expenses
Overall, tiny homes cost less than a quarter of the price of standard homes and cost less in maintenance. Solar features may reduce energy costs to zero.
Tiny homes may have high rental yields.
If you rent out a $80,000 tiny home 30 times a year for a rental rate of $150, your gross rental yield will be 5.6%.
In comparison, renting out a standard $500,000 home for $390 a week, will give you a yield of only 4.1%.
According to Realestate.com.au, the rental rates for tiny homes can go up to an average of $200 per night and even $400 for popular homes!
If you’re renting out the property, make sure to invest a strategic location. Ideally, one that is somewhat close to city hotspots but still offers the privacy and isolation renters are looking for.
This widens your target market of tenants. Certain tenants may not want to go completely off-grid and may want easy access to at least a few essentials. Picking a location that’s close to hotspots or local developments may also mean that you can increase your rental rate.
So there you have it. If you’re tired of living in a standard house, a tiny home may not only work for your wallet and lifestyle - it’s also a great way to make a more environmentally conscious living choice!
Good things really can come in tiny packages!
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