BiggerPockets Real Estate Podcast - 986: Are Tiny Homes a Good Investment? How a $50,000 Home Pencils Out

Episode Date: July 10, 2024

Are tiny homes a good investment? For just $50,000, you can get a brand new tiny home investment—not even fifteen percent of the average single-family home price in the United States. Even better? These tiny investment properties can bring in over $15,000 per year in rent, making your payoff period minuscule compared to a standard real estate investment. To learn more, we brought Steven Harrell, tiny home builder and investor, on the show to walk through all the numbers and how investors can cash in big on these tiny homes. Steven has seen the tiny home industry shift from off-the-grid, fringe mini homes in the woods to now a mainstream necessity as more Americans struggle to pay the sky-high cost of rent or a mortgage on standard homes. With affordability at a forty-year low, Americans need cheaper housing options, and tiny homes might be the perfect answer. We discuss the costs of tiny homes, how much they rent for, finding and buying land to put them on, insurance, financing, and how beginners can get started on this investment at a very attractive price point. Want tiny houses with big profits? This episode is for you!  In This Episode We Cover How much does a tiny home actually cost to build, and how much it’ll rent for  Tiny home appreciation and whether these small investments are for cash flow only How to find and buy the land for your next tiny home, plus what you MUST look for The average insurance cost for a tiny home (it’ll surprise you) Why the average tiny home tenant might not be who you think it is Exactly what Steven would do now to get started investing in tiny homes  And So Much More! Links from the Show Join BiggerPockets for FREE Property Manager Finder Find Investor-Friendly Lenders See Dave at BPCON2024 in Cancun! Yes, Tiny Homes Could Be the Most Cost-Effective Way to Cash Flow Right Now—Here’s Why: Grab Henry’s Newest Book, “Real Estate Deal Maker” (00:00) Intro (01:27) Foreclosed On & Finding “Tiny Homes” (05:39) Average Cost and Size  (08:12) Do They Appreciate?  (10:02) How to Invest in Tiny Homes (15:35) It’s THAT Cheap!? (18:17) Insurance for Tiny Homes  (20:18) Tiny Home Tenants  (22:22) How to Get Started  (26:28) Would We Buy Tiny Homes? Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-986 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Rent is super expensive right now. Housing is at its lowest affordability point in 40 years. And one estimate showed that about half of Americans have struggled to pay their mortgage or rent at some point in the last year. This points to a bigger issue in the housing market that you're probably aware of if you listen to this podcast. But it's that supply of affordable and reasonably priced housing is just not available. But today, we're talking about one potential. solution to this issue that investors should absolutely take note of its tiny homes. Hey, everyone, it's Dave Meyer. Welcome to the Bigger Pockets Real Estate podcast. And I'm Henry Washington. And today we're talking to Stephen Harrow all about why he thinks tiny homes are a strong

investment in this current market. Stephen is going to break down costs and tradeoffs between traditional stick-built homes versus tiny homes. We'll also talk about some of the myths around tiny homes and living in tiny homes and what investors should know before pursuing tiny homes as an investment. I love the idea of tiny homes. I think it's such a cool way for people to get into investing at a really affordable price point and be able to provide affordable housing during a time where that is really hard for tenants to come by. So let's jump into our conversation with Steve. Stephen, welcome to the podcast. Thanks for joining us. Thank you for having me. I really appreciate us. An honor to be here with you guys.

Yeah, we're super excited for the conversation. I don't think we've ever had someone, or I've never interviewed someone on the show, talking about Tiny Homes, but I'm super interested in them. So I'm glad you're here. Tell us a little bit about why you got into Tiny Home investing in the first place. Yeah, my story's kind of funny. I was living in Denver back in 08. Me too.

Were you really? Okay. You look familiar. Yeah, I saw you at that part. Yeah, yeah. No, but I was living there in 08, and I was ready to come back home to my family here in North Carolina. and I had a loft there. It's kind of a funny story, and I was just ready.

I was done with it. So I just left, let the thing foreclose, long story short. And so, of course, I had bad credit. Well, I came back to North Carolina wanting to own a home. And at the time, like, tiny houses were not even really a thing. But I came across a website called Tiny House Blog, which the owner of that, Kent Groswold, ended up being my mentor years later. And so I would go there every day on the website and just click refresh, refresh,

waiting for him to feature, like, another tiny house. And so finally I said, look, I think this could be a thing. And I launched Tiny House listings, which is the marketplace for tiny houses. So it was kind of a bummer that I had bad credit. I had a foreclosure. But it ended up being like one of the best things ever because it led me to the whole tiny house thing. Can I ask you about the foreclosure for a second? So like what happened there?

Because obviously we know it happened in 08. Things crashed. But like, did you buy something with an adjustable rate mortgage or like what led to the foreclosure there? It was just having a tough time selling. And I was just had kind of washed my hands clean of it. And it was actually for sale for almost a year. And I was also closing down another business at a time. So I kind of like quit paying payments.

Like not a good thing. But so it all kind of just went spiraling down at the time. Okay. Well, I'm sorry to hear about that, but it sounds like it worked out. And just a good reminder for everyone who thinks that days on market going up to like 17 days now is a long time. Just reminder of what things were actually like during the last correction. So it sounds like you sort of started a business around tiny homes, but did you actually buy a tiny home to start off with? I kind of built one, like out in the woods.

I bought this piece of property outside of Wilmington for like $2,000, and I was just playing around. And I built one out there. And at the same time, I was starting to shoot a lot of content from my YouTube channel. And I kind of walk people along that journey. And, you know, at the time, it was all, you know, tiny house people were mostly DIY folks, right? There were people who were just fringe, right? Like, I could give you a funny story real quick if I may. Please.

Yeah, first tiny house event that I ever held was back in 2010. And we're sitting around the fire, 3 o'clock in the morning, and this dude just appears out of the woods. And he looked like, Jesus. And I'm like, where did you come from? And he's like, I've been living in the woods for a year. And I'm like, whoa, like, what? Like, what is this all about? Anyways, that was the type of people that were kind of involved with tiny houses in the beginning.

Right. It was kind of fringe people. But then as time went on, it became more and more mainstream. Okay, very cool. And do you think it's becoming more mainstream because of market dynamics and how affordability across the housing market has declined over recent years? Absolutely. Tiny houses used to be more of a conscious decision that people were making.

It was more so like, I want to go green. I want to have less of a carbon footprint. I want to downsize my belongings. But a lot of it has to do now that you're starting to see more and more middle class people entering the tiny house fold. simply because of market conditions, like you said. They just can't afford it. Owning a regular house is becoming more and more difficult for most people.

So that's why you're starting to see more people enter the fray. Yeah, it seems like with this whole tiny home movement, like five years, six years ago, there was tons of TV shows around it. And it really was more about, you know, living off the land and reducing my impact on society. And costs were low, but I didn't think that they were like substantially lower in terms of like per square. foot. But now I think affordability has really played into it. And a lot of companies have kind of jumped onto this. Like, can I produce a tiny home at an affordable price? And so, like, you said you built your first tiny home. How did that transition of, like, building your first one

turn into you kind of becoming a spokesperson for this tiny home movement? I just thought that it was, I just think it's a really cool lifestyle. And I really wanted to share that. with other people. If you talk to a lot of people who actually live in a tiny house, they had that aha moment. And I just kind of, and I had that same thing. Like I said, when I went to tiny house blog and noticed that tiny houses were a thing. And I just was so excited about it. And I was able to actually build a tiny house for myself. And I wanted to share that with other people. Because in the beginning, I kind of saw it as a way to escape the rat race for regular folks. And, and I think now that's, I'm not saying you're going to escape the rat race by buying and

living in a tiny house in 2024, but it will absolutely help you get ahead financially, in my opinion. Let's talk about that. It does seem like it's more affordable now, and it can help you get ahead because you're cutting some of your costs. But can we like talk about this or maybe compare it to like a single family home? So in terms of a tiny home, like how do costs compare in terms of cost to build or buy and cost to insure it, taxes? Like what's the what's the comparison? A tiny house on average represents about 14% of the selling price of the average house in the United States. Now, of course, that doesn't include the dirt that comes with it. But still, if you look at that big of a difference, the sticker price is tiny versus, you know,

you're looking at about 60,500 versus about 430,000-ish. So it's a big difference. Stephen, before we go into more of that, because I want to follow up, like, how tiny are we talking here? Like, what does tiny mean? It's a relative term. It depends on the size of your family. We've always said 500 square feet or smaller, but I mean, like I said, if you have a family of 10, you know, you're still living tiny.

So the general consensus is about 500 square feet. I think that's fair because I think once you get over 500 or you get 600, they start to call it microhomes between that like 600 and 1,000 square feet. So okay, okay. Yeah, and you know, their original idea also was to have your house mobile. A lot of mobile home manufacturers are calling tiny homes, tiny homes just because it's a buzzbar, right? Or they're, you know, they're building micro communities of houses on foundation. on them tiny houses just to kind of get that that market right that clickbait that uh those keywords but um the original idea was to be mobile because if you think about it most people lived in the same place generations ago and they worked the same job their whole life that does not happen anymore so in my opinion mobile tiny houses are a great way to go because it matches people's lifestyle these days they can take their home with them so i think one of the hangups people may have with tiny homes is probably around like value so let's say i pay and buy a tiny home

And, you know, maybe I'm all in for 60, 70 grand, right? One of the best benefits of, you know, stick built real estate is the appreciation over time. Now that, you know, tiny homes have been a thing for more than a few years. Like, how does appreciation compare? Are people's properties appreciating or are they kind of staying stagnant? Are they having trouble selling them if they want out? Like, what are some of the logistics around that? Yeah, you guys, and I'm sure your audience knows as well that like the, an actual home doesn't

appreciate it. It's the land, right? because, I mean, like, you know, sticks and mortar, right? There's no way that's going to go up in value. It's not gold. And tiny homes, they tend to hold their value better than, let's say, a mobile home or, you know, some sort of other, like an RV because they're built so well. You know, once you get above the trailer, you're built just like a regular house.

It's a stick built home. But the whole idea is, you know, most people are moving into a tiny house aren't necessarily thinking about appreciation. They're thinking about cost savings and experiences and downsizing lives for the most part. But if you can save on your monthly expenses, which you most certainly will, and you can live in the tiny house for a certain amount of time, most likely you're going to save money. So in my opinion, appreciation is secondary. Yeah. I mean, time definitely heals all wounds. But I'm sure there's also a subset of people who are like, I'm cutting costs and I'm going tiny. And then they get in one. And they're like, get me out of here. Right. Because in theory, it sounds great until, you know, you're actually living it. And it might not be. for everybody. So I guess my question was more around. If you're in that camp, like, are you able to,

you know, is your property actually, can you get out or are people losing money in those situations? But I understand what you're saying in terms of cost. All right. So tiny homes could be an excellent option if you're trying to cut costs. But what about if you're an investor? What kind of ROI can you make from this strategy? And what should you know before you invest? We'll get into all of that after a quick break. For decades, real estate has been a cornerstone of the world's largest portfolios, but it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy, all the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise flagship fund. Now you can invest

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and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can increase the likelihood of claims. And traditional insurance companies aren't always built to handle these claims quickly or smoothly. That's why more real estate investors

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Now is the perfect time to review your rates and coverage. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. Welcome back, investors. We are here with Stephen Harrell talking about why you should consider investing in tiny homes. Let's jump back into it. Stephen, can I ask you, you know, I totally understand some people and live in this. I am curious about this sort of from an investment standpoint.

Like, could I buy tiny homes and lease them out? And so let's just start there. Is that a model you've seen before? Are you talking about like on a small scale like in your yard? Are you talking about like the owning a community? My first, my first instinct was I own a couple of properties now that allow for accessory dwelling units. And I look at tiny homes. I'm like, hey, there's a lot of prefab models that are pretty cool.

I get one on a trailer, you know, meet code, put it on a pad or whatever, and then rent it out to someone who wants a 500 square foot house. Right. So the biggest challenge has always been zoning and building restrictions, right? And there's a lot of people who just can't figure that out. They can't figure out how to get past all that. So that's why you're starting to see a much arise in tiny house communities. You're starting to see investors who are coming in and handling that all four people, right? So you kind of look at the kind of like a mobile home concept, right? You either have the park-owned homes or the tenant-owned homes. Either way, if you're an investor and you want to start a community, you can own the dirt

or you can own the homes and the dirt. But, yeah, the zoning and the building restrictions have always been the biggest hurdle. But I think generally speaking, at least in one of the markets I invest in, they're making it a lot easier zoning. Like a lot of municipalities, this is a pretty big trend, and they call it up-zoning, generally, where they're increasing density and allowing a little bit more flexibility in in terms of how homeowners or investors can add additional units to their property. Does that happen?

Like, do people use tiny homes as an ADU? It depends on the zoning and restriction laws for the area. For example, Wilmington recently passed that law where you can have ADUs in basically any backyard. And the reason is there's not enough affordable housing here. There's not enough housing in general to handle all the influx of people. But you can't put a tiny house on wheels in the property because they're considered RVs. Now, you can do modular, which my company is about to start getting into. doing modular. But, you know, it's still, there's so many restrictions when it comes to living

on wheels because there's so many restrictions on the books from decades past, you make a phone call to a zoning person. And when it comes across their desk, they're like, I don't want to deal with that. And they'll pass the buck. And eventually, maybe someone will put that on the desk of the decision maker and address that. But when you look at Tiny House's the traditional version one on a wheel, it's much more difficult to get them, like you said, as an ADU. So ask differently, how do you see or how have you seen investors leverage tiny homes? I can tell you how I do it. I look for a land that there's very minimal building or zoning restrictions and hopefully some sort of

infrastructure already in place, specifically you use RV communities. And that way you can go ahead and bring your tiny homes in and go ahead and start making some money. And hopefully there is some opportunity to a. expand and increase the value of that. And by whether that's chopping down some woods, adding more spots, increasing rents, whatever that happens to be. So in my opinion, that's kind of where things are headed. Like I said before, because you know, as you can solve that problem for people who want

to live in a tiny house, but just can't connect the dots. Okay. So to clarify, what you're doing is you're looking for land that has, preferably has access to utilities. So the major, so you're looking to access to electrical and I would assume hopefully sewer. Yeah, exactly. Yeah, like, and you got to think there's a lot of RV park owners who are baby boomers. They're about to offload those assets. And so, you know, sometimes you can get owner financing and minimal down. But if there's some sort of infrastructure in place and you can live in those parks full time, like that's a gym. There's a lot of people looking for those right now. So then you'll bring in or build tiny homes and are you building them and then selling them individually to people? Or are you just leasing the land and people bringing their own tiny homes in? Or like, how? How are you monetizing once you get the land? Doing a hybrid approach.

Now, since I'm a person that builds tiny homes, like the one park I have going in Florida, Virginia now, I only allow tiny homes that my company's built. The reason that is one of the main things is so we can control quality, but we can also increase our bottom line. We can sell more tiny homes. But if you're someone like the person listening in your audience who's thinking, how can I invest in tiny homes, but I don't build tiny homes, you can buy that community and allow people to bring their own tiny homes in, right?

And just start renting that dirt out. And, you know, the great thing about tiny house communities is you can buy land outside the city that's more affordable, right? Because if you look at the demographic of people moving into tiny houses, they're retired or they have some sort of expendable income, right? Or they work online. If you look at a mobile home community, typically the demographic is it needs to be close to industry. There needs to be people who can go to work and do their job. So you can have a higher rent for cheaper land. So it works out really well in your favor. Okay. And in that scenario, are you able to be able to do? to say, I only want people with tiny homes to come in here and not necessarily a mobile home? Absolutely. Yeah. Like, for example, one community I just bought when I was mentioning in Virginia used to be an RV park. So we have people rolling up in their truck thinking that it's still an RV park, right? Because it was for many decades. And we have to turn them away, unfortunately, because it's only long-term residents who are allowed to live there in the tiny homes that we build. And are these tiny homes on an actual foundation? Are they permanent structures? No. They're on

else because in that area there's no zoning or building restrictions. And Stephen, can you give us a general sense of what it costs to build a tiny home? I'm sure it runs the gamut. But like, what's an average size, dimensions, and cost of a tiny home? Well, so there's, you know, there's beginner, mid and luxury tiny houses. We kind of focus on the mid models. And ours costs anywhere between 35 to 55,000 to build, depending on which model we build. That's it?

Yeah. What? Is that a good deal? No, no, it's way too expensive. So, you know, it's, uh, all right. So 35 to 60 grand a pop to build, which seems quite affordable in the grand scheme of things. What are these rent out for? Uh, so the, we're getting about 1,400 a month rent now.

Ooh. Okay. $1,400 a month in rent. I'm going to do this math pretty quickly, 1400 times 12. That's $16,800 in revenue per year. That's, depends. And at worst, it's going to take you four years to pay that back instead of at best. It's two years.

Is that right? Well, you have to think there's other costs. Like, I had to buy the community. Oh, okay, okay, okay. All right, I got too excited. Sorry. Yeah. And that also includes electricity and water and trash pickup and internet.

Okay. So that's all expenses included. It's all expenses. So basically, you just, when you show up to the community, because I don't have anyone there managing the place full time. So when you show up, you have a door lock on your tiny house and you just let yourself in, basically. And where do I sign to buy one of these right now? Go to tinyhouselistings.billed.

Shameless plug. That's pretty cool, man. So like logistically, this seems so feasible for people, right? Like we talk a lot about a lot of different strategies for people who are struggling to get into this market. You're talking about not just buying a unit, but building a brand new unit for something that's super, affordable. Can you finance these types of deals? Like, are you getting bank loans or you have to do cash for all this? You could get financing. We use a company. I don't know if they want us to mention their name, but since we build so many tiny homes, if you buy a tiny house from us and we're

certified, you can actually get financing for them. Now, if you go out and say, hey, I want the money to build my own, you might have a little, you'll run into some difficulties. But if you go through an accredited tiny house builder, you'll be able to finance them for sure. They do investment tiny homes. And is this financing more like car financing or is it more like traditional 30-year fixed rate mortgage financing? 23-year loan. So if you do the math on a 23-year loan for 35,000, it's pretty low cost of entry. For sure. And that's for a purchase loan, right? Or is that a construction loan? That's for a purchase loan. Okay. And now I have a very stupid question. Do you get car insurance or home insurance for a tiny home on wheels?

There's no such thing as stupid questions here, Dave. Oh, you must not listen to this show enough, Stephen. There are plenty of stupid questions. You must be new here. So tiny houses are personal property. So you just get a personal property loan. There's a handful of companies that are riding insurance policies, a lot of insurance policies for tiny homes.

Yeah, I was curious about that because RV insurance is obviously pretty different than homeowners insurance. And I would imagine this is getting popular enough that they're just coming up with their own tiny home specific policies. But I'm curious just because insurance. are just getting so expensive right now for regular homes. Are you seeing similar inflation and insurance costs for tiny homes? So I have seen starting out at 300 all the way up to $900 per year.

In my opinion, $900 for a $70,000 tiny home is, I think it's quite expensive. Me personally, you might not agree. Yeah, that's high. But I think 300 is feasible. Yeah, 900 is higher than I was thinking you was going to say because like you get single family insurance for $1,200 in a lot of places. Yeah, the only thing I can think of that the insurance companies are seeing like, hey, what if you just someone hitched one of these things up and took off, right? So, you know. Someone stole my house. You can't really steal a single family house. You can steal a tiny house. That'd be a bad day when you come home from work in your house. I have one more stupid question as well. This is just, you know, asking for myself. Like, so these things, they're on wheels, but they're hooked up to like city sewer. So we're not talking composting toilets here. Like, it's.

legit plumbing situation. This is straight up. So if you look at the hookups to these tiny homes, they're basically just like an RV. So there's a water hose. There's a huge electric 50-amp outlet or inlet, I guess you could say. And then there's septic, like PVC that just go straight into the ground. Okay. All right.

I just got to make sure. You know, that's important, important stuff there. And so let's talk a little bit about, so if you're renting these, like, what's the, who are the typical tenants that you're renting to in these tiny homes? home communities. Like, what's that demographic made of? Demographics are obviously all over the place, but the biggest single demographic we're seeing are women 55 and older single. Okay. And is the, you know, I understand single family renter dynamics. Like, I typically know how long it's going to take me to rent a place out

when it's vacant. Like, are you having challenges renting these places? Is it easy to find the tenants? How are you finding the tenants? Like, what's that like? What's that experience like? The coolest thing, you think about a single family residence, for the most part, your audience is someone usually, for the most part, in that area, right? But we're marketing to people nationwide. No one so far that's lived in our community in Virginia is from Virginia, right? It's all people coming in. So you're casting a much wider net, right? Because, you know, people are like, hey, I can come here and rent for a year and then take off and go somewhere else, right? So, and then just explore that area, see what it has to offer and then I'm out of there.

That was my next question. How long are your leases typically? Yeah, one year, one year lease. So that's whether you buy a tiny house from us or if you just rent the tiny house, it's one year. Steven, I'm not sure if you have a frame of reference if you've ever, like, you know, rented single families or or multifamily houses. But do you have the same, do you have pretty good tenant retention or any data on how long people tend to stay? Honestly, I'm somewhat new into this as far as getting into the communities. But, you know, if you look at the credit history of the people and the criminal background history, which we run on all of our tenants, they tend to be excellent. you know, with people with really low debt to income ratio. So there's kind of indicator what kind of tenants you're going to have.

It doesn't necessarily indicate how long they're going to be there, but it indicates, well, it's a different question, a different answer than the question you gave me, but you're going to have high-quality tenants. Yeah, that's great. Well, we'll have to have you back to report back on the retention because it sounds like you're still seeing what actually happens. Yes, episode 1,000.

We're getting there. We're almost there, man. Yeah. All right, we've got to take one last quick break, but we've got Stephen's advice for investors right after this. For decades, real estate has been a cornerstone of the world's largest portfolios, but it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy,

all the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise flagship fund. Now you can invest in a $1.1 billion portfolio, of real estate, starting with as little as $10. The portfolio features 4,700, a single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought after industrial facilities, thanks to the e-commerce wave.

The flagship fund is one of the largest of its kind. It's well diversified, and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com slash BP Market to explore the fund's full portfolio, check out historical returns, and start investing in just minutes. carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund. This and other information can be found in the fund's perspectives at fundrise.com slash flagship.

This is a paid advertisement. Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action, the footsteps, the late-night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking.

You're on vacation, spending money like it's a sport, while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications.

It can manage reservations and keep things running smoothly so you don't have to check your phone between beach days. That means less stress and more time enjoying your trip. You can relax, knowing guests are taken care of, and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help,

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So, Stephen, if people want to get started, you know, how do you find land that is zoned in a way that allows this kind of development, this kind of business? That's a really good question. It's just like if you're trying like to acquire a regular property, you've got to cast a pretty wide net, right? You've got to have multiple sources. It's no different with these. So, you know, I love, there's a couple websites. I love landwatch.com, landsearch.com. You can kind of filter it down a little bit. Definitely want to do some searches to find counties in particular states that don't have building or zoning restrictions, right? And chat GPT is your best friend for that because it'll just spit it out for you.

If you find areas that don't have building or zoning restrictions, definitely put the word out there to realtors, letting them know that you're in the process. There's a lot of Facebook RV park, mobile home parks for sale, right? A lot of groups in there. And if you get in there, you'll notice there's a lot of people looking for these assets because, you know, when you start running the numbers and looking at it, you realize it's a, in my opinion, it's hard to have a better return on your money than these once you get them up and running. Yeah, I know what I'm doing after this recording. It's doing exactly what you just said. I've got a couple deals on my desk. I'll send them y'all's way. Oh, yeah. Do it, please. Come on.

It seems to me before Henry. Yeah. Look, I. I have a mobile home park too that I'm sitting you're thinking, I've got some vacancies. I wonder can we slowly start converting and putting tiny homes in there? Where is your mobile home park out? It's in Laurel, Mississippi. Oh, nice. Okay. And Stephen, do you have any advice for people who want to get into this? Any like tips or maybe challenges, hurdles that they might want to keep an eye out for? Yeah, definitely. Do your research before you get involved, before you just start buying tiny homes or whatnot. The last thing you want to do is buy tiny homes, put it on land that you later find out you're not allowed to have on there, right? Then you're stuck with that tiny home. You're stuck with that debt or you're stuck with that cash out of pocket. You definitely want to do your research.

But once you find out that it's a go, I would say pull the trigger and go for it. Start small and, you know, work your way up and add more tiny homes to your inventory or to your fleet or whatever you want to call it. I'm going to flip that question and ask it a little more personally. Can you share maybe like a mistake or an oversight you've made in this investing niche that maybe people can learn from and watch out for? Absolutely. I bought a mobile hunt park myself last year in Eastern, North Carolina. And I went through so much work. I was told by the local zoning board that I would be able to rezone it into a tiny house park. because in that mobile home community like many, they want to see a HUD label. They want to see a HUD home on, but for anything that goes into that community,

come to find out after all this work, after all this marketing, thinking that I was going to fill it up and turn into a successful townhouse community, the zoning board would not budge. They wouldn't give me the go ahead. So now I'm having to sell that to a mobile home park investor and just cut my losses. Oh, so you actually purchased the park on their word that they were going to give you what you needed and then it did not work out like that. That's right.

Yeah, and they even had it in writing that they would work with. me, but I didn't have it in writing that they were for sure going to do it. So it ended up, you know, blowing up in my face. So is the lesson learned there you need to get the approvals before you get the purchase? Like how would you, how would you have avoided that situation in the future? Honestly, trying to find a piece of land that where the local powers that be, their hands are tied. They can't do anything. They can't prevent you from doing it. Or if you see there's so sort of history that they're really, really willing to work with you. And there's some sort of guarantee, right? Because otherwise you have to do either a plan B or a plan

which is maybe less advantageous for you, or you're going to have to offload that asset and maybe lose money or definitely lose time. Thank you for that vulnerability. I appreciate it. Yeah, man, for sure. Well, Stephen, thank you so much for joining us. This has been fascinating. Every once in a while we hear about a strategy where Henry and I race off the recording and

try and beat each other to doing the strategy, and this might be one of that. I'm excited to see which one goes first. Oh, Henry's going to win. He always wins. But I like to talk a big game. He actually does stuff. But thank you so much. We really appreciate it.

And for anyone who wants to connect with Stephen, learn more about him, we'll put his contact information in the show notes below. Stephen, thanks again. Thank you so much for having me. It was a pleasure. Thank you, brother. Okay. I am sold on this as an investing strategy.

Those numbers were crazy. But I got to know, Henry, would you ever live in a tiny house? No. I can't. No, no qualifications. No context. Just. No.

No. Look, I could live in like 12 to 1,500 square feet with my wife and two kids, no sweat. But I think that's about my limit. I have a rule on living in a certain space. I just like if someone toots on one side of the house, I can't smell it on the other. Like if I can, if I can smell a to from anywhere in the house, the house is too small. You need somewhere to escape to. You can't.

It can't just be all one space. That is my hard and fast rule about housing. It's so funny. I went to, I was, I've always actually been really curious about the idea of tiny homes. I went to one of these festivals in Denver where they showcase different models. And they're super cool. I'm just so messy. I don't think I could do it.

I'm not like an organized enough person. Like everything would just like spill on top of each other. But my wife, like she would love it. She would be so perfect and content living in it. So it really is for someone. But I, you and I usually share. preferences with these types of things. I just wanted to make sure we're on the same page. Once I get under a thousand square feet, I'm automatically a hoarder. That's just like...

Exactly. Exactly. I can't compress my amount of stuff by that much. All right, well, that was a lot of fun. Great conversation with Stephen. Thank you all so much for listening. We'll see you for another episode of the Bigger Pockets Real Estate podcast very soon. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform, our new episodes come out Monday, Wednesday, and Friday. On the host and executive producer of the show, Dave Meyer, the show is produced by Ian K,

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