The Supreme Guide to Tiny Houses as a Vacation Rental (Everything You Need to Consider)

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.

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!

What is a tiny house vacation rental?

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.

What is the ideal tiny house size?

The ideal tiny house measurement is 400 square feet. 

However, this can:

• They can be customized according to the owner’s needs, ranging from 100-400 sq ft.
• You can build even bigger tiny homes if you’re building them on a foundation.
• Typically, most tiny houses are around 200 square feet. That’s because most people don’t normally like towing 24 or 26-foot trailers.

Is it legal to rent out your tiny houses? (based on rules and regulations in the USA)

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.

If you want to know more about which regions/states allow tiny houses, Tiny Society will help you a lot!

Some regions are more tiny home-friendly than the other ones. Let’s talk more about this. 

What locations are more attractive for tiny house rentals?

• Beaches - tourists love visiting beaches and prefer spending their time there. It’s easy to attract visitors by setting up your rental house nearby! 
• A nice woodsy location also works.
• Staying near roads is also an essential factor. Make sure your tiny house isn’t set up somewhere way off into the mountains where no one wants to drive to.
• You could also find a good central place, close to towns and grocery stores.

If you’re looking for more options, there are so many places in California, Utah, North Carolina, etc., that offer great tiny house rentals; check here and here.

Here’s an article about great getaway spots. 

Why rent out your tiny house?

Here are some benefits of renting out your tiny house:

• Great investment.
• Lower mortgages.
• Easier to maintain.
• Can be moved around.
• Easier to install amenities.
• Serve as great vacation rentals.
• Easy to enlist as rentals on websites such as Airbnb.

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! 

Many homeowners are turning their tiny homes into vacation rentals. They are listing them on websites such as Airbnb.com. 

Pros and cons of a tiny house vacation rental business

Some of the pros you should be aware of before listing your tiny home as a vacation rental:

• The main advantage of a tiny house is that there are a lot of options available: RVs, Boxabls, camper vans, etc. 

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. 

• You can make a DIY tiny home rental. This will save you from blowing your savings on one purchase.

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 technically set up your tiny house anywhere. They are transportable.

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. 

• You can let your creativity flow! If you are feeling very inventive and resourceful, you could: 

1. Restore an old train carriage.
2. Repurpose an old school bus.
3. Build a tropical-themed tiny house.
4. Build a bohemian-styled hideaway.
5. Build a tiny rustic cottage in the woods.
6. Build a garden shed-themed rental.
7. Build a minimalistic cabin by the beach.
8. Build a Star Wars-themed rental
9. Or, if you have the budget, even make a Lego-themed rental!

Get creative with it! Having a themed tiny home rental will help you attract more customers. 

Sadly, there might be some cons as well:

• There could be some unforeseen financial downsides. If your house gets examined by investors, there’s a chance that its price can be drastically undervalued. 

This could happen if the tiny house you own doesn’t come with the land it’s built upon. 

• Financing options might be unavailable sometimes. The investment and banking world isn't as up to date as the real estate or vacation rental industries.

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. 

• Maintenance could cause delays. Some of the necessary maintenance can sometimes take a long time. This could cause you to lose potential customers because of the delay.

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.

Is renting out tiny houses worth it?

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).

What's the cost to start out a tiny house vacation rental business?

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. 

The materials for each tiny house will most likely cost between $2,000 and $20,000, or more. The cost is generally determined by the size of the small house as well as its amenities and comforts.

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. 

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.

What are the estimated earnings of your rented tiny houses?

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:

• Cost per night: The cost per night ranges from $40 to several hundred dollars. 

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.

• Occupancy rate: In a perfect/ideal scenario, your tiny home would be occupied 90 percent of the time. But this isn't the case for many Airbnb sites. 

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.

What kind of insurance do I need for tiny house vacation rentals?

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. 

How to analyze my specific market for competitor prices?

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:

• Examine your competitor’s sales tactics.
• Figure out how your competitors promote and market their business. 
• Figure their rates out.

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.

Can I Airbnb my tiny houses?

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.

Costs to consider for listing rentals on Airbnbs

There are some things to be aware of when it comes to the cost of a tiny house rental business on Airbnb:

• The cost of reserving a property: When you reserve something, Airbnb charges a 6% to 12% service fee. 
• The cost of renter service fee: Airbnb deducts a 3% service fee from the entire rental cost. 
• Cost of security deposit: Airbnb requires a security deposit of 6% to 12% of the total rent cost. 
• Cost of amenities: There’s one thing that many people overlook when they’re converting their house into a rental real estate - all of the additional items that you will need to purchase for the renters. 

Take an example of a shopping list from a tiny house owner who transformed their property into a vacation spot: 

• A total of six bedsheets, two spares for each bed.
• About four comforters, one for each bed.
• Eight towels and some extra blankets for the renters.
• A biodegradable shampoo, some dish wash, hand and body soaps.
• New cleaning supplies.
• Emergency lights. 
• Sawdust blocks for a woodstove.
• Cooking essentials (food that doesn’t go bad).
• Matches along with cooking pans.
• Paper towels.
• A DVD player for the guests.
• Extension cords and extra chargers.
• A broom.

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.  

What is the target market for tiny home vacation rentals?

• Couples as renters
• Families 
• People who want someplace to spend the night 
• A group of friends
• Adventurers 
• Wanderers
• International travelers
• Themed-rental enthusiasts (should your tiny home be thematic)

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. 

How to advertise your tiny house vacation rental?

The easiest way to advertise your rental is to use social media platforms:

• Show people a nice video experience and offer good amenities.
• Come up with catchy captions.
• Offer great amenities and deals.

Word-of-mouth marketing is just as important, though. 

Digital marketing for your rental 

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.

How to cash in on word-of-mouth marketing?

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.

Can a tiny house vacation rental business successfully survive over time? 

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. 

• Offer good amenities: every client has the power to leave a review; make sure that the review they leave is good. 
• Choose a theme for your rental and push it forward. It could be about anything: a minimal cozy home, a fairytale home, a pretty cabin somewhere in the woods, etc. 

If you’re determined to provide the best, you will get excellent feedback. This will help your business thrive over time!

Conclusion 

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.

For more information on how to set up a tiny home rental business, visit Tinyhouse.com: a one-stop for all your tiny home-related needs!

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