If you’re thinking about buying a vacation home to generate income, consider building a tiny house.
In this post, we will tell you everything you need to know about turning your tiny house into a vacation rental.
You will learn all about the pros and cons, the costs, and the legality of tiny home rentals. Moreover, we will even share tips on how you can promote your rental business and increase your income.
Let’s dig right in!
Tiny homes can be an excellent investment as a vacation rental.
They are small and easy to maintain.
Your rental expenses and your eco-footprint can both be minimized with a tiny home investment.
A tiny house that is up for rent as a vacation is a vacation rental. It gives you an excellent opportunity to make money with a relatively low investment.
Should you have a tiny/mobile home, you can easily put it up for rent on a website. That way, you can make a sizeable income off it without having to put in much effort.
It’s a great source of some passive income.
The ideal tiny house measurement is 400 square feet.
However, this can:
Yes! However, you can only rent it if you legally own/rent the land to put it on.
Moreover, make sure your land permits tiny houses, i.e., site-built, modular, or mobile.
Tiny houses on wheels are classified as temporary structures by several zoning codes. In some regions, the same goes for short-term rentals. Some rural locations have no zoning restrictions and allow extended RV camping.
If you break the law by renting out structures without the proper permits, you risk receiving a code violation. This could jeopardize your rental plans.
Some regions are more tiny home-friendly than the other ones. Let’s talk more about this.
Here’s an article about great getaway spots.
Here are some benefits of renting out your tiny house:
They’re trendy and make for a great investment. Smaller homes imply lower mortgage payments. If you rent them out, you will be making absolute profit.
People who purchase large homes also have to deal with larger mortgages.
It's very easy to list up tiny homes for holiday rentals. This makes it a perfect option for first-time vacation rental owners.
Managing a tiny home vacation rental is easier than managing a larger property. You can make your tiny homes thematic as well. The space gives you a whole lot of room for creativity!
Some of the pros you should be aware of before listing your tiny home as a vacation rental:
In order to keep the location interesting, many owners choose a movable small house. It’s a smart idea.
Before you get started in this market, you should consider what kind of home you want to use as a rental.
The majority of small homes start as do-it-yourself projects. You don't need to be an expert; all you need is a little imagination.
There are numerous methods to create and repair your vacation rental. This will help conserve resources; it will also lead to recycling and reusing materials.
Around 55 percent of average tiny house owners have more savings than an average American.
What’s more fun than building a tiny house over the weekends with your family?
You can also advertise that your guests can take the tiny home with them; this will give them an option to choose from various locations to set it up.
Get creative with it! Having a themed tiny home rental will help you attract more customers.
Sadly, there might be some cons as well:
This could happen if the tiny house you own doesn’t come with the land it’s built upon.
Your bank may not consider a houseboat, treehouse, or old school bus completely liveable. This could make financing difficult.
However, you could demonstrate your projected business strategy to assist you in obtaining a loan.
Take, for example, the bathroom: in a typical vacation rental, some standard plumbing would be installed. You would need to pay a monthly utility bill, and it might occasionally need maintenance.
Tiny houses, however, rarely have regular plumbing. You'll need compost toilets, foot pedal sinks, and a water supply. This can be a real pain sometimes.
Renting out tiny houses is absolutely worth it. You can charge from around $40 to $200 per night.
People are willing to pay a good amount for a stay in a tiny house just to find out what the hype is all about.
People are increasingly interested in living in tiny homes; now is the time to make money on it by renting your tiny home(s).
The cost of construction is one of the major expenses. If you buy a prefabricated home, that could be marginally cheaper.
Construction workers generally charge an hourly wage of at least $12 to $15 per hour. The construction foreman/manager will require a salary of $45,000 to $100,000.
If you want to start off big with multiple rentals, you'll also need to recruit a receptionist, an administrator, a marketing manager, and an accountant. Consider using a property management accounting software to help manage your finances.
The hourly wage for a receptionist and administrator will be between $10 and $15. Since marketing specialists and accountants are highly-paid, their wages would depend on their expertise.
To start a big tiny house business, you'll need an office. Depending on the size and location of it, the starting cost would likely be between $700 and $1,500 per month.
The average cost of utilities and high-speed Internet will range from $150 to $250 per month.
Add a couple hundred dollars to your monthly budget for insurance.
You can roughly make AT LEAST $400 a month with a minimum price tag of $40/night and an occupancy rate of around 30% (worst case scenario).
Here are some of the things you should know:
This is determined by your tiny house's location, the number of tiny house rentals in your region, and the size and quality of your rental.
The typical occupancy rate for Airbnb units in large cities ranges from around 60 to 80 percent. This percentage might be as low as 30 to 40 percent in places that are likely considered small communities.
Keep in mind that your occupancy rate is influenced by the season and the uniqueness of your overall property.
For a tiny house vacation rental, you’ll need RV insurance as well as mobile home insurance. Both of these insurances will protect your personal items and belongings inside the house.
Consider an event of damage or loss due to vandalism or theft. Properties listed on Airbnb are protected for up to $1,000,000.
You should check with your insurance provider to see if you are personally responsible for any injuries sustained by guests while they are staying on your property.
Your tiny house insurance may already cover bodily injury to the people on the premises in specific cases.
You can also form a limited liability corporation to operate as the legal host of your tiny home.
This basically implies that if a tenant of your property sues, you cannot be held personally accountable.
Go on Airbnb or other rental sites and do a quick search for tiny home rentals. Filter by the size, location, and price of the tiny home you are renting out. This will give you a list of all the rentals that are DIRECTLY competing with you.
Once you have that, you can:
Check out this article. It will tell you about the best tiny house rentals of 2022. You can use this to get a sense of what people are looking for and tailor your tiny home according to that.
You can undoubtedly enlist your tiny houses on Airbnb.
Airbnb is the most popular rental website. Anyone can put their house up for listing there.
You can rent your tiny house to prospective renters for a short or an extended period. There are currently hundreds of tiny houses that are listed on Airbnb.
There are some things to be aware of when it comes to the cost of a tiny house rental business on Airbnb:
Take an example of a shopping list from a tiny house owner who transformed their property into a vacation spot:
You have to be very thoughtful when it comes to renting out your property.
Getting all the necessary things to make your client feel comfortable is important. That way, they will leave a good review for you and help you get even more clients!
Play the long game.
Always make sure your marketing strategy is aimed at the right demographics. It’s the best way you can get your occupancy rate for your house to reach its highest.
Technically anyone with a large budget and a desire for an upmarket tiny house is an ideal client.
The easiest way to advertise your rental is to use social media platforms:
Word-of-mouth marketing is just as important, though.
Make outstanding videos of your tiny house and show people what you have to offer. Most people are likely unfamiliar with how tiny houses look.
People who rent a tiny house want to get the whole experience; they want to brag about it to their friends and family.
If you have a couple staying over at your rental, offer them free wine. If it’s a small family, you can always offer them a variety of snacks - everyone loves snacks.
Treat your guests as if they’re your friends and you’ll always get positive feedback - word-of-mouth marketing is just as important as digital marketing.
YES! Between 2019 and 2020, demand for tiny rentals increased by over 85%. If you’re good at advertising and marketing your business, it will thrive over time. The quality you offer to your clients is the fundamental determinant here.
People are growing more conscious of their environmental footprint. They are also becoming financially intelligent. This will only lead to a greater market for tiny living.
If anything, the Sims Tiny Living expansion pack is an indication of how tiny homes are breaking into pop culture.
The overall wellness you can create for your customers determines whether or not your rental business will survive.
In order to make sure your business stands out, try and capture a unique experience.
If you’re determined to provide the best, you will get excellent feedback. This will help your business thrive over time!
Putting up your tiny house for a rental is one of the smartest financial decisions you can make for your tiny home.
You're generating a monthly revenue when you buy a tiny house and transform it into a rental property. This can yield a nice return on investment — depending on the rental property’s location, of course.
Jump in, learn as you go, make modifications, and enjoy the ride if you're enthusiastic about becoming a tiny house landlord.
We're sure it'll be a good time.
Find answers — straight from the author — for the most common questions about this article.