If you’re wondering if tiny homes appreciate or depreciate in value over time, we’re here to tackle that question for you!
Roy Asks, “Do Tiny Houses Appreciate or Depreciate in Value?”
Could you do an article about whether tiny houses appreciate or depreciate in value. I would think that one built on wheels, so it could be moved, would depreciate like an RV or trailer. But one built on a permanent foundation would appreciate in value, like any regularly built home. Am I right or not? Thanks for the help.
So what do you think? Do tiny homes on trailers appreciate or depreciate? And why? Well, here’s what we think and why:
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The Pearl Tiny House on Wheels by MTL
Unfortunately, Most THOW’s ARE Going to Depreciate In Value
Roy’s got the right idea because if you have a tiny home on a trailer, like most other trailers or motorhomes, it’s going to depreciate in value over time because of normal wear and tear.
Unless, of course, your tiny home somehow happens to be so unique and valuable that there is high demand for it (and low or no supply), right? Like a collectible car or something, which is unlikely. You would also have to keep it in tip top condition over a long period of time.
The Damselfly THOW by Zyl Vardos
Now if your tiny home happens to be on a foundation on your own piece of land, your tiny house structure actually still depreciates over time just like ALL structures (because of wear and tear and so on) but the land that it sits on usually appreciates over the long-term because it’s land and there’s only so much of it, right?
Since homeowners usually keep their homes properly maintained (cleaning, painting, new roof, windows, etc.) this also helps maintain the value of the structure as well as overall long-term appreciation for the property. If you let the structure deteriorate over time by not properly maintaining it, you will only be left with the value of your land.
Land is What Appreciates in Value Over Time, NOT Structures and Dwellings
So it’s land that appreciates in value, NOT structures and dwellings. Even still, there is no guarantee that your land will appreciate even though it is highly likely especially over a long period of time.
Tiny Cabin on a Foundation in Asheville by Nanostead
ASKTHT: Your Tiny House Questions Answered! Do Tiny Homes Appreciate or Depreciate in Value?
You can listen to me tackle the question in our new ASKTHT Podcast which is coming soon below:
What Do You Think?
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I would tend to think they would depreciate, although not as fast as standard RVs. I know my 1200 sq ft home that I have lived in for over 30s has, even with proper maintenance and upgrading, even though the land value has gone up. Such is the way with our modern consumerism society , every thing depreciates ,unfortunately. But we all need a place to live, so is depreciation really an issue? So dont worry and enjoy where ever you live, ( and keep up proper maintenance ) still beats paying rent to someone and having nothing to show for it. If you are looking for investments , go to an investment broker . Now I do wonder why they call them brokers.
Well said, Paul – thank you.
Sorry but the land goes up and the home doesn’t is not true. The price to replace the TH goes up at least with inflation.
And the cost of land and home has only a fair indication of value.
Here in Florida they put $35k to build homes on $30k lots and sell them for $120-$300k all the time.
That said foundation THs are far above making money over THOWs which is 1 of many reasons not to do a THOWs like limited to 8′ wide usually.
If it makes money depends on what you put into it. Buy a $50k lot and put a $90k THOW on it and likely be hard to get your money back.
Or as I did, buy a mobile home on a private lot, $25k, replace the MH with 3 THs that cost about $4k each to build and I’ll sell it for $65k or so after living in it basically free for 28 yrs.
If you want to make money, location, location, location is the other big point.
Buy, build on the edge of the lower cost neighborhoods that is about to be re/developed and your TH/s can double, triple in price or more.
So don’t be afraid of building or contraction your own TH and save 75-90% by picking a simple design that is well insulated, at least
One doesn’t need a foundation, sitting on piers is fine, better in some cases though I prefer concrete in Florida.
Buying a lot with a dead home, MH on it saves a lot of costs by doing ‘repairs’.
Down in Key West because of historical codes you can’t replace even the most rotted place.
So we’d ‘repair half of it. A few months later, ‘repair’ the other half.
No, it is true that it’s the land that goes up in value… It’s just not a value that exists by itself but includes multiple factors that influence it…
Like you said, location, location, location… The value of the land is effected by how it is being used, what it is near, and what resources it allows the owner to have access to… These things just couldn’t work on their own without the land to tie it all together.
Placing a house on a foundation just ties the house to the land and thus you get a combined effect where all the factors that influence the value of the land will also influence the value of the house on it…
Though, it’s also because the value of a house on a foundation isn’t limited to just material costs and placing it on a property also means you’re including the cost of infrastructure and providing utilities. Along with the costs of developing a property… After all, a developed property will have more value than an undeveloped property and in the process of putting a house on a property you are developing it…
Thus it is a good idea to get a property where the infrastructure is already there and you can just tap right into it rather than starting from scratch…
One of the reasons there’s still a lot of undeveloped land is because it can cost more than the house to develop a property and establish all the infrastructure needed to properly support a modern house…
While a way around worrying about appreciation at all is alternative income sources like using a property for a rental… Then even a THOW can basically pay for itself…
One thing that I think is being missed in this discussion is that many homes increase in value because the cost to build is constantly increasing. I am currently remodeling my home and my contractor has said that had I not locked in the price that the same house just 1.5 years later would be an extra $80,000 to build because the cost to build in the area has increased due to a decrease in contractors, increased costs for permitting and the difficulty of building in a mountain region. I am sure it is also in part that houses on wheels do not really have a limitation on production but foundation houses can only be built once a lot/location is secured. Just a thought.
Good point, Thomas, thanks! That’s true… Cost to build usually keeps going up.
Thinking about all this why not sell out your expensive CA home for 400 to 700 thousand. Getting the equity then paying cash for usable nice land and buying two tiny homes. Live in one and rent out the other to someone close to your own age so that you would have a nice neighbor. Hopefully this income would pay real estate taxes and some other expenses. Only problem I see with this is having permission to have two or even one unit on the land that you own. Not so sure about state, federal and county regulations. Me just day dreaming about how to beat the tax and living expenses.
Options like using part of the property for rental income is a viable solution for those who can take advantage of it and don’t have any issues doing so…
The issue in California is that there isn’t yet a wide acceptance of Tiny Houses. So you will usually be limited to opting to add one as a ADU, which means the property needs a primary big house to qualify but you could opt to rent out the big house and live in the Tiny House to make that work, or vice versa…
Though, there are those trying to establish Tiny House villages and doing things like converting a previous RV Park into a land co-op where everyone can own their own lot and just pay a community rent that covers maintenance and shared resource upkeep…
There’s also some developing off-grid communities with small to tiny house options but those are usually in areas where prices can be especially high.
While it’s the local municipality that has the final say on what rules and regulations you have to follow for zoning and building codes.
Federal only controls the HUD building code for Manufactured/Mobile Houses. Otherwise, housing is a locally regulated… Thus rules can be different even county to county… So check locally…
Al existing structures tend to end up having a value based on current replacement cost. Land goes up due to a variety of increases. In California you may pay $100.000,00 for a permit alone to build, which is decided by bureaucrats. In other rural areas in other States, you may pay sip. Construction cost’s increase due to demand and supply. Thus, a tiny home may very well increase substantially along with other real estate, as long as it becomes a permanent legal structure.
Very good comments. Like the way it is stated that the property appreciates in value not the structure on it. Sage advice when looking into investing or purchasing a NEW or USED tinyhouse.
One advantage of the tiny home is that it does hold its value over a manufactured home. The materials are home quality, not factory production. How much depends on all the factors mentioned above. If it is mounted on a trailer then you also have the flexibility of moving it.