Tiny houses are just like every other house in that they will depreciate over time.
Luckily, there are some steps you can take to help your tiny house retain its value!
We’ll tell you what these steps are!
How Fast do Tiny Houses Typically Depreciate?
Before we talk about what you can do to help your tiny house keep its value, we need to talk about how much a tiny house typically loses in value.
If you’ve read our post on tiny house depreciation, you know that this issue is relatively unexplored. The reason for this is that tiny homes are a new concept, so it’s not possible to look back through time to see just how much tiny homes have depreciated over the years. This being said, we do have a good idea of how quickly a typical home loses its value.
In fact, a rental property owner is allowed to depreciate their home to zero over a period of 27.5 years. This means the average traditional home will depreciate at a rate of about 3.64% a year. On the other hand, the travel trailer, which is the original home on wheels, has been said to depreciate much quicker. These homes rapidly depreciate over the first few years and often hit zero in 15 – 20 years.
These are just basic estimates; however and many homeowners, as well as travel trailer owners, retain much or even all of the value of their homes over time. If you doubt this, just look at the prices people get for their vintage Airstreams.
Since tiny homes are often a cross between a house and a travel trailer, we can use the tactics used by both homeowners and travel trailer owners to help the tiny house keep its value.
Here are some tips to help get you started:
1. Start With a Strong Base
The trailer that the tiny house sits on is one of the most important things to consider.
This is because the trailer essentially acts as the foundation for the entire house. Get a tiny house with a weak trailer, and you’re bound to run into problems in the future.
Strength of The Trailer
Additionally, the strength of the trailer will dictate how much your tiny house can weigh.
For this reason, it’s often better to buy a sturdier trailer than you think you’ll need, as this will give you flexibility in the future.
To do this, check the trailer’s GVWR. The higher this number is, the more your tiny house can weigh.
Trailer Axels & Construction
Also, take a look at how many axles the trailer has.
A trailer with more axles is going to be sturdier and more reliable. Blow a tire on a trailer with only two wheels, and your tiny home could be destroyed in an instant.
However, if you have six tires and one of them blows, you’ll probably be able to pull over safely.
Results & Depreciation
So how does all of this effect depreciation?
For starters, your tiny home won’t be worth much if it’s destroyed on the road. Besides this, having a stronger trailer will give you the option to make upgrades inside of the home.
The ability to do these upgrades will help you to keep your home updated, which will keep it from depreciating.
2. Keep Your Home Clean
Another thought to keep in mind is that a tiny home needs to be cleaned more often than a traditional home. This is especially true of the outside of the home.
Trailers can rust and corrode, and one of the ways to stop this from happening is to simply keep them clean. The reason for this is that salt and road chemicals can damage the paint on the trailer, which exposes it and allows it to rust.
Keeping the exterior clean will also give you the ability to inspect the outside for potential issues. For example, regularly cleaning the roof of your tiny home will allow you to inspect it for possible leaks. Roof leaks can quickly destroy tiny homes, so it’s important to prevent them and to fix them as soon as they begin.
If you doubt this advice, take a look at the travel trailers on RVtrader.com that have suffered water damage. You’ll notice that these trailers are selling for less than ten percent of their original value. In many cases, the roof is soft, the walls are weak, and even the floor is soft. A single roof leak has destroyed the travel trailer. Had the owner only cleaned the roof, he might have seen the leak before it had done any damage to the trailer.
Related Article: How Portable are Tiny Houses on Wheels? Here are the Facts
3. Make Immediate Repairs
As we just mentioned, a simple roof leak can quickly destroy your tiny home. However, a simple roof leak when fixed right away is just a simple roof leak. Repair it immediately, and it won’t take much time, cost much money, or cause any depreciation on your home.
This same rule holds true for any other repairs that need to be made as well. A leaky kitchen pipe can cause just as much damage as a leaky roof. Regularly inspect your plumbing, your electrical systems, and anything else that might take on damage and make repairs as soon as you find issues.
One of the downsides of constant traveling is that you’re more likely to develop issues with your home. This is because high winds and bumps in the road can potentially cause harm to a tiny house.
For this reason, my advice is to inspect your tiny home each time you move it. This will give you the chance to make sure nothing has become damaged while in transit, and you’ll be able to fix any leaky pipes or loose electrical connections before you turn your utilities back on at your new location.
4. Consider Buying Land
One of the main reasons that traditional homeowners do not always notice that their homes have depreciated is the fact that their land has appreciated. The combination of these two factors often makes it appear as though the home has appreciated in value rather than depreciated in value.
With a tiny home, you can take advantage of this situation as well. The way to do this is to buy some land to put your tiny home on. While your tiny home might depreciate over time, the land will most likely appreciate over time.
Our article about where you can put a tiny home helps guide you through the process of laws, rules and land!
In fact, according to Investopedia (see reference link below), your land will probably appreciate at a rate of 6.4% each year. This means that your tiny home could depreciate at the same rate, and you still wouldn’t lose any money.
But what if you bought your tiny home to travel with? The nice part about owning a tiny home is that you can still use it to travel with even if you own land. Think of your new land as a home base for your tiny home that you can travel to and from whenever you like.
5. Keep Your Title Safe
One of the quickest ways to reduce your home’s value is to lose the title that says you own it. I’ve seen many great deals on trailers, cars, and boats over the years, and the catch is almost always that the vehicle does not have a title. I never give the vehicle a second look because I know all the problems that can come with buying something that does not have a title, and I know many people feel the same way.
The problem with buying a vehicle without a title is that it can become difficult to claim ownership of it. In fact, another person could show up a year later with the title and claim that the vehicle actually belongs to them, and you could forfeit your ownership of it.
Also, it is difficult to get tags for a vehicle without a title. In some states, a bill of sale can be used, and in others, you’ll have to try to get a new title. Depending on the state and town that you’re in, you could end up wasting months or even years on this process.
So what should you do to keep your title safe?
My advice is to get a safety deposit box to store it in. The reason for this is that you don’t want to store it in your tiny home. Do so, and somebody could steal your home and change the title to their name. You’d then have to prove that it was stolen and that you own it, which could be difficult when the title is now in somebody else’s name.
Related Article: How Much do Tiny Houses on Wheels Cost? (5 Examples)
6. Increase the Home’s Off-grid Capabilities
Many people buy tiny homes so that they can do a lot of traveling in them. They like the fact that they can take their homes to unique places.
One way to make this easier for them is to increase the off-grid capabilities of your tiny home. This way, when you sell your home, you’ll get to appeal to travelers who want to go off-grid without losing any of the home’s modern conveniences.
There are a few steps you can take to make your tiny home more self-sufficient. Some of these steps might include:
- Adding a solar power system to your tiny home
- Increasing your home’s insulation
- Installing a wood stove
- Adding a rainwater catchment system to the home
Solar Power Systems
To increase your solar power capabilities, you’ll need solar panels, batteries, and an inverter.
From a resale point of view, you’ll want to focus heavily on the number of solar panels you put on your tiny home.
Doing so will give you the ability to list the home with a solar power watt count.
Even if your home’s battery bank and inverter are much worse than another tiny home’s system, the ability to say you have 2,500 watts of solar over somebody else’s 1,500 watts will make your listing stand out better.
Tiny home buyers often consider the insulation properties of their potential homes. Increase your home’s insulation R-values, and you’ll reduce its depreciation values.
A wood stove gives tiny homeowners the ability to go off-grid in the winter and can save a homeowner a lot of money over time. Tiny home buyers know this, and they’re usually willing to pay more money for a tiny home that features a wood stove.
A rainwater catchment system can make a tiny home completely self-sufficient. These systems do not cost much to install or to maintain, but they can add value to a tiny home and reduce its rate of depreciation significantly.
7. Make the Home Compatible with the Grid
One other thought to keep in mind is that not everybody wants a tiny home so that they can go off-the-grid. Many people buy tiny homes that are built with only off-grid traveling in mind, and they are often shocked to find that they have a tough time selling them afterward.
Keep the value of your home high by making it appeal to both off-grid lovers as well as people who want to take advantage of everything the grid has to offer. Do this by installing a water and sewer system that can be connected to the grid.
You can still use a composting toilet, but make sure that the new owner has everything they need to quickly and easily install a traditional toilet if they want to. An off-grid water system can also be used, but make sure you have piped in place so that people can hook up to a standard water source, and your home will appeal to a much broader market.
On top of all of this, you’ll want to add an electrical system that can be run from the grid as well. Go with a 50-amp system, and you’ll appeal to people who may want to add in traditional appliances like washers and dryers.
In most places, you will need a permit for a tiny house – for more information check out our article!
This will also give you some flexibility as you’ll be able to upgrade your appliances and change your plumbing situation if your lifestyle ever changes.
8. Keep Your Kitchen and Bathroom Updated
Bathrooms and kitchens tend to be what wins real estate listings. In fact, these are the areas where people tend to spend most of their money when updating or renovating a home.
Keep your bathrooms and kitchens updated so that when it comes time to sell your tiny home, you’ll win people over with your listings. Updates don’t always have to be expensive, and they shouldn’t be heavy.
Instead, go with updates like backsplashes and new and improved fixtures. These items won’t weigh your tiny home down, and they could even improve the efficiencies of your bathroom and kitchen. This can also be used as a selling point when you list your home up as most tiny home buyers are looking to have a small footprint.
9. Maintain and Improve Your Ceiling
Tiny homes often have a lot of built-ins, and you don’t always get to see much of the floor. However, the ceilings are almost always highly visible. They also take up much of a tiny home’s space, so it makes sense that you’d want them to look good.
The most obvious way to do this is by keeping them leak-free. If a leak does occur, make sure you completely remove any damage that it causes. A water stain on the ceiling will raise many questions and will greatly affect the perceived value of your home.
On top of this, you’ll want your ceiling to stand out and look better than other tiny homes on the market. Some people do this by adding unique textures or paints to their ceiling. Unfortunately, this can be a turn-off to some buyers, and it can reduce the number of interested parties in buying your home.
A better way to make your ceiling stand out is to add skylights and ceiling fans. These options appeal to everyone, and they also improve the airflow and ventilation of your tiny home. This improves the tiny home’s air quality and reduces the chances that you’ll fall victim to mold and mildew issues. A moldy tiny home will depreciate very quickly, so it’s important that you avoid this issue at all costs.
10. Add Storage
One area that tends to be lacking with tiny homes is the availability of storage. Fortunately, it is often something that can be added at a low cost.
There are ways to add storage to your tiny home. One step is to add a storage shed to your property.
If you own the property your tiny home is on, placing a shed next to it will give you a lot of hassle-free extra room. The downside to this is that it could raise your property taxes.
Another option for landowners might be to add a cargo trailer to the property. This trailer can act as a storage shed and can even be moved. Also, it won’t face the same tax issues of a traditional shed.
Lastly, storage can be added to the actual home. This is often done at the tongue or at the rear of the tiny house.
Regardless of what you choose, the extra storage will raise the value of your home and help you sell it for more money.
Tiny homes are very flexible, and they have the potential to either depreciate or appreciate quite quickly.
Keep on top of them and improve them whenever possible, and you’re much more likely to have a home that earns you money rather than loses your money when you go to sell it.
The Truth About Real Estate Prices – Investopedia