Christina-thanks for starting this discussion. I appreciate being able to hear everyone's thoughts on the subject.

Sophie-you are so right, a single-wide is never going to appreciate in value. But....living in a cheap trailer allowed us purchase and live on a beautiful piece of land which more than doubled in value during the five years we were there. We had to give away the trailer when we sold the land, but the profit was enough to make a down payment on a nice house. Our trailer was warm and safe and we threw some great bonfire parties.

I don't see eye-to-eye with you on a house being an expense rather than an investment, but I'll save that for another day.

In every case, a travel trailer is cheaper than a tiny house. Usually has better amenities too. It's legal as an over the road towable, and legal to park and hook up utilities. It's governed by regulations during it's build. It lacks the cool factor of some of the tiny houses. But cool comes at a cost. If the whole purpose of going tiny is to save money and create a multi purpose living space, I don't see the reason to reinvent something that has already been invented, and done better.

Columbus Custom Design,
We built our house in 2015. I would call it a 1-1/2 bedroom 1 bath, as the second bedroom is only large enough to be a child's bedroom. Compared to most of the houses in our semi-rural community, many would consider this a tiny home, but, of course, it is a site-built permanent structure, and according to our property tax statement, the real market value has increased substantially. It lives not like a tiny home, but rather like a beach or mountain cabin, with an open floor plan, tons of big windows, great storage, and only the minimum hallway. The rooms are just as large as in larger homes, there are just fewer of them. To be honest, the only time it feels small is when I looking to hang art on the walls — there are never enough walls!

We're in a very unfashionable small town outside of Portland, where we previously owned two homes. Small, two bedroom 1920s cottages are fairly common in town, but everyone out here seems to build huge.

As to whether this was a good investment, I would say yes, but largely because our timing was just right. Our mortgage lender certainly thought it was a worthy investment. We are close enough to town that our little house is perfect for those wanting to downsize and escape the city if we ever sold. We bought the property at a great price with all utilities, well, septic, and driveway in place, but so many things in a build cost as much for a small house as for a large one.

Intangibles like freedom from having/ taking care of possessions, a friend related to me. Yes, have a large workroom and village.

We bought solar panels and a well-to-do relative was practically horrified, saying: you'll never get your money back! ... I sheepishly said, "it's good for the environment."

What's a good investment.... tangent.

I don't think this is a big trend. I think it's the new thing on the block, and it's garnering attention -- but I don't think they're being built in great numbers. I have never seen one in person, and I'm only aware of one friend of mine who would like to own such a thing -- and she wants it for after her kids are grown.

I would build a tiny home under one condition only: If I owned a small bit of land at the beach or in the mountains, and it were a second home.

a reaction to the fact that so many young people are priced out of the housing market.

Young people aren't priced out of the housing market. My daughter and her new husband are 23 years old, and they just bought a house. Their biggest problem: Houses are moving so fast that they kept losing them. Thinking of her high school group of friends, about 50% of them are new homeowners -- they're all in the 23-24 year old range.

Looking at my young (thinking under 35) co-workers, those who are good with their money are buying houses; those who go out to eat three times a week and buy new clothes constantly are whining that they can't catch a break.

After living for a year on top of each other, in a glorified trailer,
with a composting toilet and a small stock tank for a "soaking tub" - I
am betting it all won't be so romantic.

Yeah, I enjoy watching the show on TV, and the worst I saw was a family with four kids who bought a house in the 1000 sf range. The worst thing: It has an outhouse instead of an indoor toilet! No way would I potty train a kid in an outhouse; not in the year 2017.

But, housing isn’t an investment in the first place. It is an expense.

Well, to be perfectly honest, it's both. Groceries are an expense; you buy them, and a week later they're gone. Housing is an expense, but you can live in the house, and even if you sell it for just what you paid, you're recouping those expenses.

Are you up for climbing a ladder to the sleeping area where you cannot stand up? And for how many years?

That would be the sticking point. One of our absolute-absolute "lines in the sand" is a first-floor master bedroom.

In every case, a travel trailer is cheaper than a tiny house ... It lacks the cool factor of some of the tiny houses.

Yep. Travel trailers are also easy to pick up used.

If the land it goes on is on a bluff overlooking the Pacific Ocean, then yes, good investment. If the land is located in a corn field in the Midwest, then maybe not a good investment.

I don't believe that most tiny home folks are buying the land underneath it. If you talk about owning property, it's an entirely different ball game.

Well if the OP ever turns up hopefully she can give some insight into her individual circumstances.

Please don't discuss "buying a home" and "investment" in same topic. You buy a home for living, not for making money.

I didn't buy my home as an investment, but I save money every day I live in it, thus putting money in my pocket for other things. And ultimately it will be something to hand down to my heirs and that's important to me.

Sophie hit it!!! As dad used to say...... "anyone who thinks they really made money on a house has a math problem." He tallied the costs to even grass seed and annuals.

That may sound extreme in these days of flipping. But. The first purpose of any home, an type, anywhere is shelter.

I have made money on houses I have owned, sometimes very good returns. To be fair, there were other investments available that probably would have earned me similar returns without all the hard work, risk and stress. As many homeowners found out, when the housing market turns sour, selling to just break even can be impossible. Real estate can be a good long term investment but it requires having sufficient resources to withstand a couple of years of falling prices.

The biggest advantage to investing in a home is that under current tax law profits made from selling your primary residence are not taxed if you live there for two years. The deductions of interest and property taxes on income taxes have been a big part of the investment appeal of housing. Tax policies have had a large impact on housing prices and with the proposed tax reforms looming, future home ownership may become comparatively more expensive than currently in high cost areas.

If we all had crystal balls..............know this:

"if you had invested just $100 in Amazon's IPO, that investment would
have been worth nearly $49,781.62 by close October 26, 2017, not
adjusted for reinvested dividends".

"If you invested $1,000 in Amazon at the IPO, it would now be worth $239,045
by John Cook on November 6, 2013 at 2:02 pm"

THAT WAS 2013, KIDDO'S !!!!

Yes, you can go ahead and cry. Me too.

Sophie hit it!!! As dad used to say...... "anyone who thinks they really
made money on a house has a math problem." He tallied the costs to even grass seed and annuals.

I paid 80K-something for my current house; I live in a booming area, and the house is worth about 150 today. Yes, I've replaced the roof, the water heater, and a few other things -- all of which were expensive. I've spent money on taxes, lawn maintenance, etc., so -- yes -- I've spent money over the initial cost. And I'll need to do a few things to it before we sell.

But I've also had the benefit of living in it for 20 years. I can sell the house for more than I paid, AND I've had the benefit of shelter -- what's that worth? No math problem.

That's my point. It's shelter : )

Factoring in 20 years of interest in that? Averaging monthly upkeep, repair, and replacement? Most people don’t. That’s also a hit to your pocketbook.

20 years of $1100 a month rent equals 264K. With no maintenance. Maybe $600 a year renters insurance? An additional 12K. So 278K total that you “throw away” on rent. No brainer to own, right?

So stretch a bit and buy a better house than you would rent because your “investing”, right? 250K house that you finance 200K will have a similar monthly payment before taxes and insurance. That’s 243K paid in 20 years on a 30 year note. Plus the 50K down. 293K. Add taxes and insurance. Make it easy and low and say that’s another $300 per month. That’s another 72,000. 365K total so far.

Then there is the maintenance and improvement bit. Not much at first, but accelerating over the years. You’ll have a roof, hvac, and other systems replacement in 20 years. Plus lawn care and everything else. But say it averages out to a low $500 a month. That’s 120K in 20 years. In 20 years, you still owe 90.5K on the home with a 30 year note. You’ve paid 485K over 20 years including your 50K down. And still owe 90K.

If your your home has appreciated at 3% a year, which would be average in a non violatile market. The house will sell for 450K. 200K “more” than you paid? Nope. You owe 90K. And you’ve paid in 485K. If you factor 27K of realtors fees in, you’re roughly at a 600K cost for 20 years. For a now 450K house. It cost you 150K for 20 years of shelter needs. Not bad, but certainly not a “profit”.

Sounds good still? After all, the renter’s expense was 278K and yours was 150K? What about the extra $700 per month that the renter had left over to invest? If he found something with even a modest 5% annual return, and put that $700 towards that every month, then he’d have an investment worth $287K. That wiped his rental expense clean and leaves him 9K to the positive. Not much. But not a 150K expense either. The renter is ahead 159K in 20 years.

The intangibles of owning vs renting isn’t factored in to cold math. Would I give up 159K to be able to plant a garden where I wanted? Or paint my dining room Passionate Plum? Or to not have to worry about a home being sold out from underneath me and have to find somewhere else to live? You bet.

But I’m not fooling myself that I am “making money” when I’m actually spending it. Factor in a 15 year mortgage, and yes, everything changes. But most people are moving to 5:1 and things like that because they won’t be there 20 years. Which skews the numbers even more towards renting vs buying.

Land is an investment. Houses are useful depreciating assets, like cars, except they last longer and can be refurbished. People get confused because when they buy a home, they buy both.



A tiny house with no land is a trailer. Maybe it makes sense, maybe it doesn’t. Definitely not an investment, much less a good one.

Not having to worry about landlords kicking you out at the drop of a hat for the rest of your life = priceless.

Despite tenancy acts it is still too easy to find loopholes to "reno-vict." As rent prices skyrocket that gets more and more tempting. (Not to comment on terrible renters, that's another topic.)

If a person owns the land, and building a tiny home (NOT on wheels!) allows them housing security I guess it could be worth the expense. Or if a person could add a tiny home to their property and rent it out for a rate that would pay for the expense+upkeep+hassle, that might be worth it too.

We built two years ago in what has become a hot market (even a bubble). Our house is now valued at about 40% more than we paid for it so if we were to sell, we'd make a tidy profit (even allowing for the price of grass seed ;) ) Problem is, of course that selling our house wouldn't get us a better house in our area so no real investment advantage there. We could buy a lesser house in our area, or an equivalent house in a lesser area, and pocket the difference, but essentially we'd be downgrading our lifestyle to realize a return. Might be worth it if we had debt, or kids to put through college, but we don't. So I don't see our house as an investment in any meaningful financial sense either. An investment in comfort, security and lifestyle, certainly, but my financial investments deliver me a better return over time.

Our housing purchases and home building have, in retrospect, been good investments, but strictly by accident. We bought our second house in Portland not as a wise investment, but because we fell in love with the cabin-in-the-woods-in-the-city surrounded by a half acre. My family was certain it was a bonehead move. Within four years, having done nothing but garden and add a miniature horse corral (complete with two miniature horses), it doubled in value and we sold it for more than even that. With the profit, we bought a four acre property with utilities, septic, well, and driveway already in place, a half hour from Portland. Again, my family was certain this was a huge mistake and went to great lengths making fun of the community and that we lived in a mobile home. Since we owned the property free and clear, we used it as collateral to secure financing for building our small house with almost no down payment (which my SIL insisted we wouldn't be able to do). Once we built, the same wise family members opined that such a small house would never gain value. The soaring Portland housing prices (young people and old alike are indeed priced out of the market and even rentals are exorbitant) have spread to our backwater community, and after two years, our house and property are now valued at double the post-build appraisal. In the end, following our hearts turned into an overall good financial move. If we had looked at any of it as an investment, we'd likely still be living in the very first house we purchased.

Im fascinated by the tiny house videos on YouTube.

Nearly all of the houses are not ergonomic in the slightest. And even if you have the agility, do you want to be stumbling down those stairs from the loft in the middle of the night when nature calls?

I don't see eye-to-eye with you on a house being an expense rather than an investment, but I'll save that for another day.

But Sophie is correct. It is an expense. There's the expense of mortgage payments, or if you paid cash, not having that money invested with better returns. Then add in the expenses of keeping up the house. When things go bad such as appliances, fixtures etc. Those are not expenses that renters have. Or general maintenance such as roof, windows, painting the exterior, lawn care, etc. Again not things that generally renters have to cover.

Please don't discuss "buying a home" and "investment" in same topic. You buy a home for living, not for making money.

Agreed. The only home I actually came out ahead on was our 1898 home we bought in 1993 and sold in 2011. Prices more than doubled in that time period. However, even with the stock market still down in 2011, I'm wondering how much better I would have done if I had instead invested that money in the market. Something to think about.

A home is as others have said shelter. And by owning it, it allows you to do as you please. You can paint the walls purple and black if you choose or put in red and green cabinets in a tuscan style. All things you can't do in a rental.

Tiny houses to me are a fantasy like "Let's retire and open a bed and breakfast or purchase a winery or open an art gallery". Fine for people who know exactly what they're getting into.

Many long time homeowners do not understand the hassle of renting these days..

Not knowing how much your landlord is going to raise your rent every 12 months, constant uncertainty if you're going to "have to move", coming up with security, down payments, costs moving electric, heat, cable setup is expensive.

NYC landlords need to see your income is 40 times your rent before they'll even consider you.

If you're in a roommate situation, be prepared for potential disasters.

Just because one is renting doesn't mean they're off scot- free from other expenses.

I'm sure it is different in other parts of the country.....

I paid 80K-something for my current house; I live in a booming area, and the house is worth about 150 today. Yes, I've replaced the roof, the water heater, and a few other things -- all of which were expensive. I've spent money on taxes, lawn maintenance, etc., so -- yes -- I've spent money over the initial cost. And I'll need to do a few things to it before we sell.

But I've also had the benefit of living in it for 20 years. I can sell the house for more than I paid, AND I've had the benefit of shelter -- what's that worth? No math problem.

If you had invested the $80,000 in Kimberly Clark stock in 1997, and reinvested the dividends, it would be worth $385,000 today.

If you had invested it in Amazon stock which had its IPO in 1997, it would be worth well over $39,000,000 today. Yes that's million.

If you had bought 80,000 worth of Google stock back in 1999, it would now be worth $1,482,000.

And if they had purchase $80,000 worth of Enron?

^^^ And that is why you don't put all your eggs in one basket but spread your risk out. My dad had stock in Lehman Brothers but he also had enough invested elsewhere that his loss in Lehman Brothers was just a blip on his roadmap.

We had Enron stock and Apple stock among other things. We panicked and sold everything in the tech wreck. Who knew that Apple would go on to be worth over $1000 for the stock we sold at $12 or that Enron was a big pile of steaming nothing.

There is no need to use specific stocks and I doubt anyone on this forum should be buying individual shares. Just use a Wilshire 5000 Dividend reinvested calculator. The Wilshire 5000 is considered the total market index.

Most people are going to buy a broad market mutual fund, and frankly, if you are doing some sort of stock picking thing then you probably make poor decisions all the way around so whichever house you choose is probably going to lose money.

You save for the 20% downpayment; you find a house in a good location that meets your budget. You finance the 80%. Here and there you add extra principle payments and cut short the life of the loan. You benefit when you file your taxes.

IMO, your home may be the biggest investment you will have. Approach retirement age and you should be mortgage free and can downsize and bank your profit (up to $500,000.00 if you are a couple) or spend the rest of your life in living “rent free”.

Owning vs renting depends of a lot of things…location is an important one. My daughter lives and owns her condo in Boston suburb. Her mortgage payment is around $1300.00 a month. She couldn’t rent anything similar for $1300.00 a month. If she were to put her place on the rental market, she would probably get around $3800.00 a month. 750 sq ft. Giving someone else $3800.00 a month for years and have nothing to show for it at the end? After rent is paid, there is nothing left to save.

Her condo has gone up 3 times in value…How would a young girl save $600,000.00 in ten years yet not take it out of her wallet?

IMO, your home may be the biggest investment you will have.

In a nutshell this is the problem. Houses are horrible investments. They are atrocious in every way imaginable, yet for most people they will be the biggest source of savings. This isn't a reason to go buy a house though, this is a reason to start saving money.

Here and there you add extra principle payments and cut short the life of the loan. You benefit when you file your taxes.

The value of extra payments is greatly reduced when interest rates are so low. Just throw the money you would have applied to the principal into a mutual fund, then when you need the money you have it in a mutual fund rather than in shingles.

Owning vs renting

The actual change in your net position of renting is just the rent paid (always negative). The actual change in net position of owning a home is just net house price increase - (net interest expenses + maintenance costs) -- (this can be positive or negative).

So the formula for rent vs. buy is incredibly simple. Change in net position of renting vs. change in net position of buying, choose the one that has the higher number.

Her condo has gone up 3 times in value…How would a young girl save $600,000.00 in ten years yet not take it out of her wallet?

If it has gone up 3 times in value, your daughter got incredibly lucky. The Case-Shiller Home Price Index for Boston doesn't show ten year numbers anything like what your daughter got. The HPI for Boston in September 2007 was 168.04 and the HPI for Boston in September 2017 was 203.98.

In case you are wondering, Boston as a whole has seen a 21.38% price increase in homes once adjusted for inflation. The Wilshire 5000 has shown an 83.44% return once adjusted for inflation.

That isn't to say that your daughter didn't get lucky but people getting lucky isn't a reason to invest. Some people go to Vegas and do really well, others not so much.

Like any other investment, the trick of making a profit on housing is buy low, sell high. The problem is that unless one is leaving that particular marketplace, selling high leaves little chance of reinvesting the profits into another low priced property. Healthy 20/20 hindsight makes it easy to pick out the winners and the losers in the market - whether that is real estate, stocks, collectibles (Beanie Babies, anyone?), career choices or spouses.

The most boring but profitable investment strategy is spreading your investments among a variety of asset classes like stocks, bonds, real estate, commodities and foreign currency. Putting too much money into a personal residence limits the amount available for other investments so makes it more difficult to have a balanced portfolio.

The best housing investments in my local area have been 50+year old 2 to 3 bedroom houses less than 1000 sq ft with a basement and garage. From the bottom of the market 5 or 6 years ago until now, those houses have tripled in price. However, those returns are based on buying at a very low price, when the market was flooded with similar houses and all were selling for dirt cheap.

Gee. Moderation in all things. Get a place to live. Try to love it and care for it and make sure it doesn't eat every dime of your income, alive.

PAY YOURSELF FIRST. I don't care it it's a single dollar, save it. Ten percent. Then figure out how to eat and pay the rest. No I am not kidding. Start with that part time car wash job and don't stop until you retire.

If you aren't 100% into the maximum on your employers 401k, you are already going behind.

Buy NO house until you can say you have no other consumer BS debt, at any interest rate.

Houses are just a part of it. The rest is not having junky car, vacation, ate it, wore it BS debt, and saving and investing. Tortoise will win over the hare every time. And time is your ally until time begins to run OUT. It will I assure you, run out..

Tiny houses will never be a good investment, whether or not houses are. As people have mentioned before it is land that is valuable and not houses. The value of tiny houses that are not attached to land are capped at some amount less than the cost of a brand new tiny house. In other words they are terrible investments because they can never be worth more than the price of a new one less wear and tear.

Were you in the market for a tiny house, why would you buy a used one, when a new one with new warranties isn't much more money?

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Having said that, modest living may allow for other investments that are good investments.

Real estate in a great location is always a worthwhile investment and will continue to be so even more. People move where jobs are and with growing population urban planning, walkability, ease of getting around becomes even more crucial. One of the most valuable things in life besides health, is time. Time can equal money but unlike money it cannot be stored in a bank and later retrieved. Once gone, it's gone, thus making it more valuable. Commute times in US Metro areas are in my opinion absolutely horrific. Hence, if you can invest in a property in a highly sought after location in a metro area, you will always make money.

Lots of interesting comments above. Thank you all!

Let's get back to the OP's question: are tiny houses a good investment?

If you have to climb a ladder to reach the bedroom...if you can't stand up in the bedroom...if you have to climb down a ladder to go to the bathroom in the middle of the night...

And you are over 30 years of age...

If you have more than two in the family...or even one in the family...

Hell no! Not only are tiny houses not a good investment...they are simply a very bad idea! Investment or simply living there--it's highly questionable to purchase and live in one for any extended period of time.

There are so many other more reasonable alternatives.

Thank you HGTV for another senseless trend...

HGTV did not start the tiny home trend. They just capitalized upon it and made the non-thinkers believe it to be safe for the masses.

Living in a tiny house/apartment is suffocating. Just ask millions of people who grew up in the former Communist Bloc (ex-USSR, Eastern Europe, Central Europe). Same goes for so many other countries in the world. It takes a toll on you (unless you're single). You get on each other's nerves. Your hobbies are controlled by having (or rather not having) available space. Storing your sports equipment in a tiny (I mean, non-existent) closet, anyone? We humans need space. I don't think this so called *trend* will last. America...the land of big cars, big houses, big box stores, big everything :). DH and I couldn't have dreamt of having the house of the size we have now here (in the US of A) like that in our old countries. We don't have rich uncles. Just worked hard. G-d bless America.

P.S. Our best friends (Israeli couple) moved to USA so that they can buy a house here. Sounds strange...But it's like the Bay Area there now, astronomical prices for the smallest units, which young couples can't even begin to approach. There are even regular government-backed lotteries being held, so that people can buy apartments at discounted prices. Anyone wants to guess if our friends bought a tiny house here?

Virgil Carter Fine Art, you reminded me of an episode of one of my most favorite BBC shows-"Keeping Up Appearances". The main character, Hyacinth Bucket (pronounced "Bouquet"), is a social climber of sorts, who buys the tiniest flat in a subdivided mansion. You can't really stand up straight there, among other things. Hilarity ensues!

/sings/ "The boo-kay residence, the lady of the house speaking..."

Best show *ever.* I'm truly laughing out loud just looking at that picture.

I remember that episode - really the funniest one ever! Love Mme. Boo-K!

That's the second best episode. The first is when they went on the QE2.

Hyacinth said that is wasn’t small, it was “bijou “ !

Totally agree cpartist.

However any scene where our Rose is chasing the vicar gets my vote for most horrifyingly entertaining.

Thank you all for your thoughts.

"In a nutshell this is the problem. Houses are horrible investments. They are atrocious in every way imaginable"

bry911…she got lucky? atrocious? You dare to say that? You have absolutely no idea about what you are talking. I said buy the location. Did you not read?

Research the “Big Dig” and you can find out just how her property tripled in price and how it will grow in value. Can you say “The T”?

Unless you know, first hand, how Boston suburbs (after Cambridge came off rent control) have escalated in value, your comments are..well let’s say, uninformed.

Yep, keep paying that rent.

bry911…she got lucky? atrocious? You dare to say that? You have absolutely no idea about what you are talking. I said buy the location.

The facts are right there in black and white. Boston same home sales have seen an increase of 21.38% above inflation in 10 years.

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You are pretending that there is predictable arbitrage in an open market. There simply isn't any dependable way that people can invest in property knowing what the property value will be in 10 years. This just doesn't happen without insider information.

The average Joe just can't get that kind of information and doesn't have the liquidity to take advantage of it. I have a former colleague who runs a real estate investment trust out of the Northern Ohio area. He can move around half a billion dollars into real estate deals on a few days notice, there is no way that most people can compete with that.

We know that the real estate market is semi-strong form efficient and it tends towards strong form efficient. Prices in the real estate market tend to adjust before things are announced to the public. All the things that are known are priced into the market.

Now this doesn't mean that people don't have houses that go up. It just means that you can't buy a house knowing it will go up more than average (which is not that great).

You believe that your daughter doing well shows that you can invest in a home and do well because she did. However, Boston went up 21%, if your daughter made a 150% return (adjusting for inflation) then that means that 3 other people lost money or maybe that seven other people saw no increase at all. That is the way statistics work.

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There are several reasons that your home shouldn't be considered an investment. Chief among them is that it can lead to really bad home decisions. Homes don't do as well as the stock market, need constant injections of capital and are completely illiquid. A home can be a very good financial decision but just because it is a smart move financially doesn't mean it is an investment.

I am 100% for home ownership, I have never said anything about people need to rent. But that doesn't make it an investment.

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As for me knowing what I am talking about, I once played a doctor in the school play, so pretty sure that makes me internet qualified to give people investment advice.

Getting lucky isn’t the same thing as making a smart investment. She could have just as easily lost everything.