In my last post I talked a little bit about my personal budget. Since then I’ve been trying to figure out where I’m going to get the money for each step of this process. I have had to figure out:

  • The Trailer – How will I pay for the physical trailer that the Tiny House shell will be built on?
  • The Shell – Banks do not lend money for Tiny Houses, especially in the form of a traditional mortgage.
  • The Interior Build – This will all be done as I can afford it, but how long will it take to save the money to pay for everything I need/want?
  • The Land – Since my parents are not on board, where will I put my Tiny House? Once I find the land, how will I pay for it?

I’m going to try and address these one by one, with some extra emphasis on land since that’s what I’ve been focused on the last few days.

The Trailer

I decided to take a fairly unique approach to financing my trailer. Rather than lump this in with a personal loan, I qualified for a new credit card with 0% interest for 12 months. Since I am working two jobs right now (and I intend to continue working both jobs until I’m done financing my build), I feel I can pay this off well before the 12-month timeframe. I will put the entire trailer cost on one credit card.

The Shell

I will have to get a personal loan for the financing of my shell build. I had been planning to save all the money for this before beginning this process, but fate stepped in and I was able to get a great deal with my builder if we started sooner. While the loan will cost me some interest, I intend to get a secured loan by putting my car title up for collateral. This will give me a lower interest rate and save me money. In addition, the money I save by not paying rent for an extra 12-18 months while saving will actually be far less than the money I spend in interest.

The Interior Build

I’m not at this stage yet, but my plan will be to recycle, reuse, and refurbish as much as possible. For example, one piece of land I’m looking at has a modular home on it that is in rough condition. However, I would be able to save some kitchen cabinets, wood siding, decking, cinder blocks, etc. Reusing these materials would save me a lot in the long run. I also plan to use craigslist and local auctions to find interesting pieces, which will be cheaper than I can buy them at the big box stores. I will use the cash I make from my waitressing job to pay for things I find online, at auctions, or at flea markets. I am particularly excited about reusing items that might otherwise be tossed or used for kindling; this is part of the whole Tiny House movement for me. Waste not, want not!

Which brings us to…

The Land

Also known as: the bane of my existence over the last couple of weeks. I am struggling to find what will be the best fit for me. For example…

Should I buy a fresh piece of land with nothing on it? I would be free to put the utilities and my Tiny House anywhere I want on the property. I can look at the blank canvas of grass and mud and figure out what kind of neighbor I want to be, what direction my Tiny House should face, and how many cherry trees to plant. I’d only be hindered by my imagination (and, of course, my property lines).

Should I buy land with a modular or trailer home already on it? This would save me the hassle and expense of putting in new utilities. I don’t know exactly how much it would cost to dig out sewage from the street to my Tiny House, but I can tell you I don’t want to spend it! Having a modular or trailer home already on the property, especially one I could harvest materials from (then subsequently destroy), makes sense because I’d save on all those expenses. It’s also likely that there would already be a clear, level space for my Tiny House to rest, and maybe even a driveway.

Should I buy land with a larger house on it, rent it out, and put my Tiny House somewhere else on the property? This option is a stretch for me, but it does exist. This would make financial sense because I’d then have an income property, but it could also help me navigate the shark-filled waters that are “zoning issues”. As I’ve mentioned, each borough typically has their own zoning laws that govern home size, land use, and mobile homes. One piece of land I’ve fallen in love with does not allow mobile homes or any home under 700 square feet. But I could get around this if there was a house on the property already and I would just be “storing” my Tiny House there (wink, wink).

I always figured that once I found land, I’d apply for the mortgage and follow the normal procedure. One of the rudest awakenings for me in this process has been that most banks will not lend on a mortgage lower than $50,000. Since I don’t intend to spend nearly that much on a piece of land, I’m forced to figure out another option.

This is where I am today. Looking for another option. Suggestions are welcome!

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4 thoughts on “Financing My (Tiny) Dream

  1. Would like to suggest you do a lot more research on property in the area where you plan to live after you have your tiny home. From your description, it might be classified as an RV or a trailer. Unless you plan to park it back in the woods somewhere, totally off-grid, where it will not be found, you’re going to have to come up with some way it will meet state, county, local codes for habitability. Some states require a minimum amount of land for a mobile home (trailer), maybe you will have to have utilities in place before you can live in it (electric, gas, septic or hookup to sewer – which can run into the thousands for new hookups). Even if it meets state, county and municipal codes, much land is tied up in community/subdivision which have their own rules and regulations.

    Get specifics – it does no good to fall in love with a piece of land and then, after you’ve put money up front, find it cannot be used for your purposes. Don’t just take the realtor’s word for it. Go to the appropriate governmental offices and find out first hand. Determine how close you can find suitable land where you can meet the code requirements and then determine if that is close enough to commute to work.

    I am in Texas. There is a minimum of so much acreage to install a septic, at least in some areas. The septic and leach field are going to cost $10,000-and up depending on what and where. Buying rural property requires more money down for a mortgage if you can get financing at all. You want electricity brought in, you pay for the electric company to put service to a pole, then an electrician to install from the pole to the home. You pay to hook up to the water line, and then install your own pipes from the main into the home. Do you need an inspection of utilities before you move in? You want to insure your home? Like mortgages, it’s not the same as a regular house for insurance. Keeping the home on the wheels? If it is classed as an RV or a trailer, you might be paying for tags each year. Planning to buy property with an existing house, rent the house, and just park the tiny home there, wink wink, might work for a while, but you could get a notice to move it or get a fine, depending on codes. If you hooked it up to the septic/sewer, you’ll get that notice a lot sooner.

    I wish you good luck and hope you find what you want.

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  2. I would give Lending Club a try. Independent investors may loan you up to what you need. Can get up to 2 loans @ max $35k each depending on your credit score.
    I like your plan on the existing mobile home plot. Most of the work is done. Already zoned for what you need. Sounds like a win-win!! Be careful with scavenging – you may get bug infestations. Lots of work to refinish cabinets and insides are usually bare wood. Smells and stains don’t go away. Better to find clean(er) on CL, garage sales and local auctions.
    If you get information from State/County/City offices, get it in writing. And, don’t forget there may be the option of a variance. You can get approval to bypass some laws if city council grants your variance request.

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