Possible Blue Ocean? Affordable "tiny" housing park

[MJ DeMarco]

If you read Blue Ocean, (recommended read in the bookstore) I was thinking that this might be a "possible" Blue Ocean...

Cross a mobile home park with an gated HOA community and the TINY HOUSE trend...

So this would be a bit more upscale, featuring tiny homes (< 1000 square ft) and with an HOA to help assist managing "rift raft" and other things associated with mobile home parks.

There's a growing trend among young people who recognize that a big house and a big mortgage simply isn't worth it anymore. As a result, we've seen big growth in the Tiny House trend as more and more people seek travel and experiences, other than being house broke.

Could a "tiny house" park be a possible Blue Ocean? Obviously the dirt is in the details and the branding so it doesn't cross into the realm of a trailer park.

Thoughts?

 

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[4x4ord]

Here are examples of 600, 800 and 1000 sf houses that I've built. There is a lot more room in them than what you'd think

 

[WJK]

I've looked at this. There are terrible problems with this market segment. I wrote a blog on it. READ MORE
They don't have a HUD sticker, so they can't be occupied year around or put into most mobile home parks. And they can't be put into an RV park either year around.
Most cities' & counties' Building & Safety regs won't allow them to put onto lots. They are too small. If allowed, they would have to go onto a permanent foundation.
Almost all these units are NOT built by approved RV builders, so they can't be insured under almost all national companies. That makes them unable to be financed by an FDIC bank or traditional credit unions.
So, you most probably have a unit that was constructed by an unapproved builder, that has no place to go on a permanent basis and cannot be insured nor financed.
And they aren't that moveable either. They are a lot heavier and less aerodynamic than traditional RVs
Not my kind of investment!

 

[Paleo]

My girlfriend had a very similar idea last year. A real estate agent told us about a small mobile home park for sale in our town and we went to look at it.
It was in the oldest part of town on the last remaining run down street; the nearby streets were all being rehabbed or rebuilt and were coming up a lot in value. The park was 8 spaces, 3 of which had ramshackle trailers with people living in them- the other trailers were collapsing or just heaps of rubble.
"All this!" for only $450k.
She said we should clear it off and build tiny houses we could rent out long term or Airbnb. Her concept was to have a little community with a manager and activities like concerts by a firepit and art and film showings, etc.
I liked the concept but after a little figuring concluded that with all the costs, time and possible complications involved it didn't make sense to do it with such a small number of units. In the right locale with 100 or 200 units I think it could definitely work though. I realized from watching a few episodes of the "Tiny House" TV show how much buyers were willing to pay per sq/ft and it's WAY higher than a normal sized house.

 

[minivanman]

You can take the tiny house out of the trailer park but you can't take the trailer park out of the tiny house

 

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[MJ DeMarco]

Have a community area where folks could congregate, like a park, on the property as well. People in tiny homes like to spend their time outside and with other people.

Yes, this is what I'm talking about. Not trailers, not movable homes, site built, deeded, tiny homes set within a community structure, playgrounds, tennis, community garden, etc.

Think of it as the "We Work" of housing.

 

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[Denim Chicken]

I thought about this before. I feel like the problem that tiny houses solve is affordable rent and because of that, it will inevitably attract certain types of tenants. And there's only so much management you can do without discrimination. The thing about managing a community or group is that when you have 1 bad neighbor, rather than the bad neighbor leaving, it causes the good people to go.

If rent was truly affordable say $1000/mo for a house here in CA or even $1500... what's to stop criminals, dealers and drug users from applying and taking up housing versus the ideal, young college graduate who wants a nice small place that's affordable? Because I see that already in mobile homes communities around here even the upscale ones.

The only way I feel that it would work, is if it was a commune or some sort of restricted community based on certain criteria to keep out bad tenants and criminals that can afford to pay that price point as well.

Also, as someone who looked into tiny housing before there are a lot of bureaucratic and government laws that seem hell bent on not wanting any tiny houses around. I'm not sure what the reasoning is but you would think that in places where rents are extremely high (i.e. socal), everyone would be open to more smaller but private spaces such as mobile/rv/tiny home set ups and yet it seems impossible to get that even started at all due to city regulations.

Ideally speaking, I would love it if this was possible as it would open up a lot more housing that's affordable, sustainable and efficient for a lot of people in crowded areas where housing is at a premium.

 

[MJ DeMarco]

I'm gonna go on record and say that the next economic downturn will push these concepts into a mainstream normality. We've been in a 10 year bull market with economic expansion and still, this concept has grown and evolved. Imagine how it will look if we entered a 10 year economic recession.

 

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[minivanman]

A tiny house doesn't seem very affordable to me. If I was broke looking for a place, I could buy a cheap travel trailer for $2500 or a cheap tiny house for $25,000. I'm thinkin I'd go for the travel trailer.

They are only mobile if you want them to be, they don't have to be. The parks that I've seen are in the middle of no where and this is Texas..... if you've been in the country in Texas you know they do what they want. Laws are for city folk. Code enforcement officer? LMAO They don't even know how to spell that, let alone have one.

Ok, I can't come back to this conversation because it's making me want to buy in to a regular trailer park like in the other thread and I'm trying to resist the urge

 

[Andy Black]

I can see a gated community for tech startup founders. With communal beanbags, free fruit, fuseball tables, free copies of “The Lean Startup”, and weekly pizza and kum-bye-ya meetings.

Exceedingly expensive. Only for those with initial seed money.

I actually think it would work.

 

[4x4ord]

I actually think this is a very viable idea. I work for a home builder that is currently doing versions of this for different investors, except we are doing stick built tiny houses on foundations, not mobile ones. This solves the jurisdictional issues, because they are built like a regular house, just 400 to 1000sf.

We are currently doing one project in which the owner of a trailer park gave up his managed trailer park status. So, he still owns the land, but when the trailer owners leases are up, the trailers get moved out. In their places, we are building small entry level houses that are designed to fit on the lot the trailer came off of and we also use the existing utilities. In one example, we built a 1200sf house on the owners lot for sub $120k. He had a full price offer one week after completions for $260k. Not only is the owner turn a nice profit on lots that would otherwise be tough to sell, he's changing a run down trailer park into a nice entry level community.

Another we completed was a tiny house community of floor plans that were all 400-1000sf. This was a planned community with lots of sidewalks, a small playground and lots of open space. The city council and county commissioners had originally fought this "high density" project. But once they saw the result they fell in love with it. Many of them commented on how it felt like a 1950's neighborhood where houses were reasonable sized and you still knew your neighbor.

Lastly, we did another tiny home community in which all of the front doors of the houses opened into one shared communal area with sidewalks, flower gardens, picnic tables, etc. These houses were modern design with shed roofs, modern light fixtures, granite countertops, luxury vinyl plank flooring, and upgraded appliances. These nicely upgraded houses are attracting renters that are teachers, nurses, professors and other professionals who don't want a large home.

I think the tiny home movement is going to continue just because of the shortage of affordable housing for both renters and buyers. I believe that we'll see tiny houses become more modular to increase efficiencies and reduce cost, but still site built. Even very progressive jurisdictions are very set in their ways when it comes to building codes and out of the box ideas on new construction.

If you have any questions about my experience with these projects, don't hesitate to shoot me a PM.

 

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[MJ DeMarco]

Thanks, MJ for bringing this subject up. Affording housing is a huge issue.

You bet, just really think it's a great opportunity, not just for the affordable housing challenge, but getting people to reclaim some of their time. Younger people definitely would take a 3 day work week and 900 square feet over a 6 day work week and 3,000 square feet. If entrepreneurship wasn't my life, I know I would.

 

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[Kak]

I missed this thread!

I was actually thinking of the same thing. The financing numbers work really well.

The mini homes themselves look more like car loans. 6 years 0% type stuff around here. So a 30k mini home is going to cost you $500 per month and assuming you have a piece of nice land and the utilities to the mini homes figured out... You could easily get a grand or more in my area for them monthly. They just get paid off a ton faster than homes.

Also, if you look at it like a multi family perspective... there is no way you can get new construction for 30k per door.

You could literally buy new ones as you rent out the last ones you bought. Just keep buying them until the property is filled with them and it looks like a little tiny home community. Build a cheap pool. Build a leasing office. It is like building an apartment complex incrementally.

I actually might go look at some unrestricted land for this very reason... Enough space for 20 or 30 of them just so see what’s up.

@SteveO @JScott am I missing anything here? I feel like the numbers work pretty well.

I understand I will need utility work, land, insurance, staff... and I will probably run in the red while putting them up. But once they are rented, I think it will profit nicely and then 5 years hits and things get a lot more fun.

 

[CROJosh]

Test site going up in Tempe next spring. ~$200/sqft? Interesing idea.

With rents on rise, city makes room for 'tiny homes' on land it owns

The developer: Tempe Micro Estates | Newtown Community Development Corporation Tempe Micro Estates | Community Land Trust | Home Ownership |

 

[MJ DeMarco]

I liked the concept but after a little figuring concluded that with all the costs, time and possible complications involved it didn't make sense to do it with such a small number of units. In the right locale with 100 or 200 units I think it could definitely work though. I realized from watching a few episodes of the "Tiny House" TV show how much buyers were willing to pay per sq/ft and it's WAY higher than a normal sized house.

They're not paying for the house, they're paying for their freedom. The biggest NUT of life will always be your shelter. With this knocked out, life is much different.

That's really the angle here, but also making it so folks don't feel like they're living in a trailer park (and all the associated stigmas.)

Most cities' & counties' Building & Safety regs won't allow them to put onto lots.

Almost all these units are NOT built by approved RV builders, so they can't be insured under almost all national companies. That makes them unable to be financed by an FDIC bank or traditional credit unions.
So, you most probably have a unit that was constructed by an unapproved builder, that has no place to go on a permanent basis and cannot be insured nor financed.

Actually all these "obstacles" make the opportunity much that more attractive to me.

The difficulty is the opportunity. It would be hard for any municipality to deny the opportunity for people to have affordable housing, especially in high-rent/mortgage places like CALI.

 

[CareCPA]

I live in an area in Alaska which doesn't have Building and Safety, but we do have State housing laws.
The laws on mobile home parks have caused me to no longer rent my spaces to mobile home owners. I only have 2 space renters left. I have bought mobile homes as people have moved. Under the new rules, I can't get rid of people who own their homes. I have to prove that they committed a crime (which takes a conviction) and that particular crime adversely affects their neighbors. Or that they don't pay their space rent. No matter how stupid they act, no matter how many rules they break, I'm stuck with them.
So, now I have 40 rentals. I can evict renters with a 30-day notice when they act stupid. Since I provide housing, I am subject to the federal Fair Housing Laws. And that's a whole another set of rules and laws.
Most Building and Safety laws nationwide don't allow a mobile home park owner to allow Tiny Houses into mobile home parks. They must have a HUD sticker, which means they were built by an approved factory. They are built to at least minimum standards. Tiny Houses regularly don't meet those standards since they are individually planned and built.
For campgrounds and RV parks, per most Building and Safety laws, RVs can only stay in one spot for less than a year. I have seen people in some those parks move from space to space to comply with the rules. At times I have seen them actually swap rigs to comply.
Cabins are permanent structures and they come under different rules & laws than Tiny Houses, which are on wheels.
The federal Fair Housing laws apply to everything -- at times those laws spill over into unconventional housing. Many local governments also have rules on Tiny Houses, RVs, live-aboard boats, and residential camps.
The rules vary, and they are totally technical.

Ah, I see exactly where the misunderstanding is. You are discussing tiny homes in the sense of a small house built on a trailer, able to be pulled and moved with a truck.

I was thinking of something more like this: Welcome To "Bestie Row": Lifelong Friends Build Row Of Tiny Houses In The Middle Of Nowhere.
In my mind, build the houses and rent them out. since they would most likely be on one parcel of land for zoning purposes (getting around the square foot minimums that most places have for a primary dwelling).

This is probably different than what @MJ DeMarco was initially discussing, but most people my age who are going to want to live in a tiny home aren't going to have a truck to pull it (which would cost just as much as the home), and aren't going to want to worry about finding a truck to pull it every time they move. My impression is the vast majority of people who live in a tiny home don't move it all that often. Otherwise, they would just get a camper or RV.

Have a community area where folks could congregate, like a park, on the property as well. People in tiny homes like to spend their time outside and with other people.

 

[Get Right]

It's a thing. The Katrina cottage movement was the largest development/plan. It took big government money and wasn't really successful. The main problem is the people said they wanted to live in them but when it came to move date they preferred the typical suburban home. They just didn't sell. Link

I love the idea and I wish it would work. Unfortunately in my career I have come to realize that people like to talk change but don't like change. Governments, banks, insurance and individuals alike.

 

[MJ DeMarco]

I visited a mobile home park today in a not-so good area, it was 55+ and I was actually quite stunned how nice it was. Everyone was very nice, the park was landscaped and manicured, and it had a certain welcoming "homey" feel to it.

This also could be another area of focus, the population (boomers) are getting older and many of them will need to retire on half of what they are used to earning. I'm guessing when you add in the 55+ requirement, it probably keeps a lot of the tweekers and low-rent types out... so that might be a micro-niche in this realm.

 

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[WJK]

Very interesting, I didn’t consider the RV/depreciation angle. However I do think as municipalities see the cashflow, codes will change - and if you can insure it and borrow money for it like a house, do you think it becomes a different animal?

Maybe, but probably not. They fall outside of all the established systems -- RVs, mobile homes, houses, etc. They don't fit anywhere.
I own a mobile home park and 40 of the mobile homes are my rental units. Did you read all the negative comments about mobile homes and MH parks? I have built a good, safe, private community here -- but, I still have people around me who make terrible comments about "trailer trash." Tiny homes are fighting the same stigma and a well known RV resale history -- over the long haul. I don't see how tiny houses are going to rise above that bias.

 

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[CareCPA]

Some questions, since I'm a little ignorant of this area of RE development:

And they can't be put into an RV park either year around.

Why not? If you own the RV park, don't you get to say when people can live there?

Most cities' & counties' Building & Safety regs won't allow them to put onto lots. They are too small. If allowed, they would have to go onto a permanent foundation.

How do campgrounds with tiny cabins get around this? Is this a local zoning issue? If so, that would vary by city.

That makes them unable to be financed by an FDIC bank or traditional credit unions.

If they aren't technically houses, then couldn't you self-finance and not run afoul of the lending laws?

I'm picturing a campground. but instead of tent and cabins, you have tiny houses.

 

[Luke12321]

I wonder if a Tiny Home retirement village would be desirable. People have been retiring to MHP to live in trailers in FL for decades. They have "The Villages" in FL, essentially all retirees. 110k population. Tons of golf courses, tennis, even doctors, within the community. But they are living in full size homes, not mobiles.

I think after the crash, people who are looking to retire may be interested in selling current home, "cashing out", per say...buying a cheaper tiny home with very little upkeep. The savings from sell of current home (if they had it paid off or equity) compared to cost of Tiny Home would be appealing as it would help stretch retirement funds, free up cash.

 

[Blackadder]

Cross a mobile home park with an gated HOA community and the TINY HOUSE trend...

You will have less people problems with a 55+ older community.

Eagle Homes on Olive | Northwest AR - Home is doing this in northwest arkansas, its a 55+ tiny house community being built on a little abandoned trailer park (my area is actively trying to get rid of unsightly trailer parks) I if your are sub 55 the will sell you a home (added revenue) but you have to park it elsewhere.

 

[WJK]

Ah, I see exactly where the misunderstanding is. You are discussing tiny homes in the sense of a small house built on a trailer, able to be pulled and moved with a truck.

I was thinking of something more like this: Welcome To "Bestie Row": Lifelong Friends Build Row Of Tiny Houses In The Middle Of Nowhere.
In my mind, build the houses and rent them out. since they would most likely be on one parcel of land for zoning purposes (getting around the square foot minimums that most places have for a primary dwelling).

This is probably different than what @MJ DeMarco was initially discussing, but most people my age who are going to want to live in a tiny home aren't going to have a truck to pull it (which would cost just as much as the home), and aren't going to want to worry about finding a truck to pull it every time they move. My impression is the vast majority of people who live in a tiny home don't move it all that often. Otherwise, they would just get a camper or RV.

Have a community area where folks could congregate, like a park, on the property as well. People in tiny homes like to spend their time outside and with other people.

As long as it is allowed under the building codes, and they meet minimum standards, it could work. The building codes would have to bent or changed just for that class of homes. Things like the separation between cooking areas and the bathroom would be a problem. Another problem could be ceiling heights, percentages of windows, size of windows in sleeping areas for fire safety and such. Also, most codes have a minimum square footage size. If you can jump through the hoops -- OK.

That doesn't solve some of the insurance issues, financing issues, and depreciation issues.

Also, there are some other issues like sewers, water and community management. How would you control who lives in the other units around you? Even out here in rural Alaska, we have to deal with engineered septic systems. I own a small community water system for my mobile home park, which is subject to State laws and EPA standards.

 

[WJK]

Thanks, MJ for bringing this subject up. Affording housing is a huge issue. I'm not sure how the younger people are going to work this all out. Things have gotta change because things have gotta change. I know as a society that we have to find some new answers.

 

[Rob Tennant]

Nice idea MJ. I build luxury semi custom single family homes for a living and have been watching this tiny house trend grow over the past few years. I actually had my guys build one out of mostly scraps from the big houses-built it on a trailer and sold it for $6k. I got that idea after brainstorming one day while looking at dumpster after dumpster of lumber and materials being wasted. I thought about sheds, dog houses, bird houses, and landed on the tiny house idea after seeing them sell well on ebay and other channels. I have a ton of ideas in the home building industry. Lots of room for improvement.

I'm noticing a trend of young people waking up to the exorbitant costs of big houses, extravagant weddings, expensive wedding rings, huge expensive suv's, college, etc etc. Lots of opportunity here IMO.

 

[Sauce]

According to Wikipedia a " tiny houses (less than 400 square feet (37 m2)), with some as small as 80 square feet (7.4 m2)."

I don't think the tiny house thing is a long term viable option, especially for older people.

Take a look at the picture of this loft. Imagine, when you are in your 70s, do you want to be crawling in and out of this loft to go to the bathroom in the middle of the night? Would you be ok having to climb over your partner have to duck down in order to climb down the stairs, not to mention there is a lack of a railing. Also, consider if you broke a bone (hip, arm, etc). How easy is it going to be to get in and out of the loft at that point?

Now consider the bathroom. There is no storage, the tub is so tiny that it is almost unuseable, no counter space, and this is my personal favorite space saver the toilet sink combo. No thank you.

A lot of these are essentially home built, gypsy vans. You could get an amazing builder, and you could get one from a hack. Plus at the price for most of these you are better off buying an RV.



Here is what I can get behind. Well thought out stick built small homes. According to wikipedia a small house movement "is a return to houses of less than 1,000 square feet (93 m2). Frequently, the distinction is made between small (between 400 square feet (37 m2) and 1,000 square feet (93 m2)."

In this amount of space, you can easily have 1 bedroom, 1 full size bathroom, and a kitchen. When you reach 1,000 SF you can have 2 good size bedrooms and 2 full bathrooms with a nice kitchen.

I have a few thoughts on the 55+ community aspect as well. There is one in NM that was built in the 1970s. Amazing community (in 1970), indoor pool, walking trails, etc. As time has gone on, and the residents have started to pass on, it has fallen in to disrepair and looks old and dated. I think this is an inherent problem with these types of communities. I would be interested to hear from the folks in AZ about what a well managed 55+ community in AZ is like @Red @MJ DeMarco

 

[4x4ord]

It seems to me the biggest benefit of a tiny home, besides the significant reduction in costs, was the portability.

Isn't that the actual trend? Vagabond around in your tiny home and enjoy all the adventures of life on the road, especially with younger folks?

I think the original appeal to Tiny homes was the concept of portability, but I think the reality is that trailer built "tiny homes" are heavy to tow, awkward on the road and tough to find an appealing place that allows extended stay and hook up to sewer, power and water.

There appears to be two camps; people that want just to lose their house payment and live a low impact, low cost lifestyle. Then there is people that want mobility along with losing the house payment. I believe the people that want mobility are buying airstreams and RV's and the people in the low cost camp are buying/ building permanent houses with cash.

The other piece to this Tiny house movement is with investors. 400 - 1000sf houses are super appealing to renters. Here n the PNW they are renting like crazy for close to the same rates as much larger houses

 

[QDF]

I wasn't referring to a tiny house community as advertised today (basically SHEDS with lofts) but small houses, < 1000 square feet. I'm going for the feel/look of a house, not a tent!

This sounds a lot like some retirement communities/senior living near me. They call them "cottages" and have both independent living and a nursing home that all their residents are guaranteed spots at when necessary.

Older people move here from all over to live there, and they bring in some serious money.

I have family that lives there. The cottages are less than 1000 sq ft, they start at around $100k, and you're required to pay a maintenance fee of at least $1,000 a month while you're living there too. Yet they still have a long waiting list.

I've always thought there were plenty of areas this can be done differently and improved upon though - applied to different, younger age groups, eliminated the maintenance fee with people doing maintenance themselves, etc. I've looked into this a lot the past several years, particularly building multiple smaller houses like this myself in different areas of the country I like and then traveling between them.

There's no doubt that there's a serious trend moving toward smaller, more affordable living.

 

[Red]

There's even a marketplace for tiny houses now: Hutcamp -

One quick click tells you how that venture went, haha. Spoiler alert: it didn't.

I'm gonna go on record and say that the next economic downturn will push these concepts into a mainstream normality.

I hope so (the concept acceptance part, not the recession part). More & more of my clients want small (not tiny) homes. And they don't exist, at least, not the way they want or in the areas they want/need. The builders here in the valley have continued to churn out these huge homes & I get it, you want to make the most money for your time.... but it's just so.... overdone.

I still haven't given up on developing a subdivision of small homes with huge attached garages. I also would jump into the tiny-ish-small home subdivision development. There's so much land in N central Phoenix that would make a great space. But it will take an investor with a vision who is out to help folks out vs making the biggest return on their money. And right now that's just not happening.

 

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[WJK]

They're not paying for the house, they're paying for their freedom. The biggest NUT of life will always be your shelter. With this knocked out, life is much different.

That's really the angle here, but also making it so folks don't feel like they're living in a trailer park (and all the associated stigmas.)

Actually all these "obstacles" make the opportunity much that more attractive to me.

The difficulty is the opportunity. It would be hard for any municipality to deny the opportunity for people to have affordable housing, especially in high-rent/mortgage places like CALI.

EXCEPT --
1. Because of the lack of insurance, it's more of risk. There are several cases of Tiny Homes being stolen. Somebody just hooked on and drove off with them. It's a dead loss for the owner.
2. Without available financing, these are cash transactions
3. The depreciation issue is the elephant in the room. IF they depreciate like RVs, they only have a 20 life -- 100% to 0 in 20 years. That means that the savings is short term without building up housing equity over the owner's lifetime. Tiny Homes appear to be on the same level as owning a car.
4. One's quality of life depends on one's neighbors and the community management. What if the dope dealers in the neighborhood buy up the Tiny Homes on your block?
It sounds sexy, but I have some major questions about the whole idea.