As many of you know, my husband had a health crisis earlier this year, and the ongoing medical costs of his recovery have tanked our finances. Since full recovery from a pulmonary embolism and DVT can take up to one or two years, we had hoped that relocating might preserve what security we have left. So we spent the last several months researching ways to significantly reduce our cost of living. In King County where we live, that means housing costs. The median home sells for over $800,000, according to recent stories in The Seattle Times. Bidding wars and cash-only purchases are commonplace, even at these prices, and the high demand paired with low supply (in part because Seattle homeowners refuse to approve taller buildings downtown, which would provide more housing and relieve some of the pressure) ensure these exorbitant prices will keep climbing.
Wages just haven’t kept up. Teachers, nurses, paramedics, lab techs, library staff, and employees at nonprofits find ourselves spending more and more of our income on housing. From New York to New Jersey, Vermont to Washington state, more of us are finding that landlords set their rents at aspirational rates, driven more by what the highest paid tech developers earn than what the market can actually bear. Nationwide, workers would have to earn $20.40 an hour to afford a 1-bedroom rental. And that’s not even accounting for the student loan burdens most working adults under 40 are struggling under. The old adage that only 30% of our income should go to housing is a pipe dream for most of us.
Because my husband’s doctors have advised him to change as little as possible in order to facilitate his recovery, we looked at everything we could find that would allow him to keep his job. Within a two-hour commute (one way), we found micro apartments, RVs, rooms for rent, and tiny houses. None of these are great options. But just for today, let’s focus on tiny houses.
Often touted as a solution to the affordable housing crisis, tiny houses are cozy, customizable, and cute. Portland and Seattle homeowners who don’t want a high-rise in their neighborhood (which they think is about aesthetics but in reality is about shutting out people who can afford a $250,000 condo but not an $800,000 house) are willing to consider tiny houses. We’ve had our heart set on a tiny house for years, and we wondered if we could make it happen sooner.
It turns out we couldn’t. Not yet. But in the research process, we learned a ton. We even went so far as to approach a tiny house builder, talk over design options with them (right down to where we’d want our washer/dryer), and get a formal quote. I also reached out to nearly two dozen RV and mobile home parks in my region, talked with banks, and corresponded with local government offices.
So in the interest of saving all you other dreamers some time and legwork, here are my top 10 takeaways if you want to live legally in a tiny house (it’s not an exhaustive list by a long shot, as you’ll see).
1. Decide on RVIA-Certification or a Permanent Foundation
In a lot of jurisdictions, this is pretty much it. Those are your options. Yes, it’s changing. Cities like Los Angeles, Portland, and San Jose (to name only a few) have legalized tiny houses on wheels in backyards. But even those city governments require certain specs for your house, including dimension limitations, hookups, and other parking spot details. So it’s crucial to know what those requirements are before you buy (or build) so that your house meets the local codes. It’s easy to find stories of tiny home owners who ended up evicted from their own house and, years later, still haven’t been able to move back in.
So outside tiny house-friendly locales, you’ve usually got two options: get your house built by an RVIA-certified builder or place it on a foundation. Both create problems of their own. If it’s RVIA-certified, then it’s legally an RV and you can only park it (and live in it) where it’s legal to park and live in an RV. This means realistically, you’re likely to end up living in long-term RV or mobile home parks, not all of which accept tiny homes.
This may also make some of your friends and relatives squirm because of the social stigma. From all the research I did, it seems RV and mobile home parks are pretty much like any other communal living setup. Some are nightmares. Others are fantastic. Do your research.
I won’t go into the foundation option much. Presumably, if you’re looking into tiny houses on wheels, you want to make a one-time purchase on a home that you can pack up and take with you whenever you have to relocate. A foundation also significantly bumps up the total costs with a land purchase, site prep, permits, foundation, etc., which removes the affordability from this housing option. So, for many of us, affixing it to a permanent foundation isn’t realistic.
Which means we’re back to RV living. It’s not exactly what all those fun TV shows and YouTube channels depict on tiny living, is it? But it’s the reality in many locations if we want to be legal. So why not just get an RV?
One major advantage of a tiny home over most RVs is that it’s built for full-time living, which means it’s built to last. With the kind of upkeep most people are familiar with (siding, windows, roof), it can last just as long as a stick-built home. Most RVs can’t. Many RV manufacturers and RV loans even state in their paperwork: “not for full-time living.” If you’re a great DIYer, this may not matter. Some people can modify the shit out of anything. And that’s awesome. But for my husband and me, with our physical limitations and lack of technical knowledge, it matters a ton. So a tiny house it is. Which involves additional costs.
2. Restrictions vary by state, county, and city
This is the problem we have with everything in the U.S. From our idiotic teacher certification process (you can get certified in California, then move to Washington where you must invest the time and money to get certified all over again) to our vaccine distribution and unemployment programs, the American mania for “states’ rights” essentially means that there is no builder who knows everything about every state (and county and city). So it falls to you. You will have to research your state’s policy on tiny houses (basically, have they approved Appendix Q? Google it). You will have to talk with your zoning and permitting departments in your county and city. You will have to figure out if your tiny house, even with an RVIA certification, will be legal wherever you want to place it.
In Washington state, the legislature passed Appendix Q with amendments. Amendments. Yay. More complexity. It went into effect in February 2021, but local jurisdictions can do whatever they want with that. Even Labor and Industries decided to jump on it, and they now require costly inspections of all tiny houses (even if the builder is RVIA-certified and already passed inspections from the bank that’s financing your build).
Even RV parks can have their own regulations. I spoke with one RV park that had never even heard of tiny houses and had no idea whether they could host one in their jurisdiction. Several others refuse to rent to tiny houses because they feel it isn’t an RV, regardless of certifications and codes and permits. Following up with people who don’t answer your emails, wading through state and county codes, and trying to ensure that your house will tick off all the boxes on all the different lists is exhausting and time-consuming. Be ready for it.
3. Speaking of Financing…
Most tiny house financing you can cobble together are personal loans. These aren’t reasonable for many of us because they tend to have short repayment periods (five to seven years) and much higher interest rates than a mortgage. Although I’ve heard rumors that RV loan servicers do approve tiny homes, not one that I contacted said they did. So far, to my knowledge, only one bank offers financing that is essentially a tiny house mortgage: Liberty Bank of Utah. With good credit and a 20% down payment, you may be able to get a 15 or even 23-year term. Which is fantastic. They do only work with builders who have gone through a two-month inspection and approval process with them. This can give you peace of mind that you are getting a quality product backed by a bank that expects your house to last at least to the end of your term. But if you have your heart set on a builder that hasn’t yet been approved, you might need to tack on a few months to your build timeline estimate.
All in all, financing is out there. But you do need that 20% down payment. And on top of that, you’re likely to be charged origination fees. Again, when we’re talking the relatively low cost of a tiny house, these additional fees can feel exorbitant. For example, in one case, our down payment was going to be $17,000. The origination fee: $3,000. That’s roughly 20% of our down payment. We were okay with that. But these additional fees do start to add up.
So let’s say you decide to get your tiny house RVIA-certified. You understand this means you’ll never be able to legally park it on your own property and use it as a full-time home, but you’re willing to live in RV parks to make it happen. Cool. But now your home is legally a vehicle and will be taxed as such. Which seems totally fine, right? I mean, I’m all for supporting my local schools, public transit, and firefighters.
Well, but hold on a minute. Your tiny house builder may not charge you taxes, which means it won’t be rolled into the loan. Which means sometimes you will be paying those taxes out of pocket. Once your home arrives, your state will come knocking. Better yet, you should beat them to it and stop by your Department of Licensing to avoid getting slapped with any additional fees for paying late. Depending on the state and the cost of your tiny home, taxes can vary anywhere from $7,000 to $17,000 for vehicle registration, licensing, and other fees. Since tiny homes typically cost between $60,000 and $150,000, your state’s vehicle taxes and fees might end up being half your down payment. For us, this was going to be another $8,000.
5. About Those Inspections I Mentioned
Let’s circle back for a second. In Washington state, L&I requires those who purchase out-of-state tiny houses to submit to and pay for inspections. I honestly have no idea what these cost. We didn’t get that far because our costs already had gone too high, and we had to take a step back. One way around this? If you purchase an RVIA-certified tiny house from an RV dealer in Washington state, they’ve already submitted to and covered the L&I inspections and should be able provide the approval label. For example, Clear Creek RV Center in my region has partnered with Mint Tiny House Company (a builder in Canada) to sell their tiny houses straight off the RV lot, which streamlines this process (if not the price). I see other tiny house builders experimenting with this, so who knows? Over the next 5 to 10 years, it may become the norm.
6. Shipping Costs
The tiny house builder we were looking at was in Ohio. We live in Washington state. So shipping was going to be roughly $7,000. Unlike taxes, this figure would have been added to the total amount of our loan. But depending on how far you live from your builder and how expensive your house is to transport (larger, heavier homes just eat through gas faster), this can bump up the 20% down payment requirement. If you opt to pay out of pocket, that’s great. Just be sure to budget for several thousand.
7. The Cost of a Parking Spot
At first, I figured this would just be a monthly figure that would replace our rent (along with our house mortgage payment). Oh, the innocence. Most long-term RV parks and resorts operate just like apartment complexes. They have clubhouses, on-site management, trails, community events, and sometimes even pools. Lot rent can vary wildly, from $500 a month to $1,000 a month depending on the park’s location and amenities.
They also require background checks and applications, with the usual fees ($30 to $60) as well as deposits and sometimes even first and last months’ lot rent. I don’t begrudge them that. They are still landlords, and like all landlords, they’re responsible for screening tenants. However, this does mean the legal tiny house lifestyle is not as freewheeling as all those TV shows depict. Some of the long-term RV parks I spoke with required a year-long lease. Which if you’re hoping to move around a lot, again an RV is probably going to just be better all around.
Unfortunately, this also means the personal preferences and prejudices of landlords come into play. Just like any other rental application. So if you’re low income, if you’re BIPOC, if you’re a single woman, if you’re LGBTQ+, or if you have a visible disability or one that impacts your earnings, you can end up facing the same discrimination you’d face in any other area of the housing market and find yourself locked out of safer, friendlier RV communities. It doesn’t mean you shouldn’t try. I found an awesome RV resort owned by a local tribe. Other RV parks were enthusiastic about welcoming tiny house dwellers. All I’m saying is that going tiny isn’t a silver bullet for the many other problems that plague the housing industry.
8. Tiny House Insurance
This has to be considered, even though it’s not a big chunk of change. Some places state the average annual cost for home insurance is around $850 on a tiny house. I didn’t get a quote for our build because it never got off the ground, but if you’re looking, here are a few places to start.
9. Utilities, Including Mail Services
All the RV parks I looked at included water, sewer, and trash in their lot rent. Electricity was metered, however, and you’d end up with a bill each month for that. Tiny houses, with their standard appliances and outlets, are built wired for use as a standard full-time home. Which means you’ll likely have one of the higher electric bills in the park. Still it’s likely to be less than your 700 square-foot apartment.
One thing I didn’t even think about at first was getting mail in a tiny house. Hello. Some parks charge a small deposit for the mail key or cubby. Other parks provide your very own mailbox included in your lot rent. Yay! But sometimes there isn’t a good option, and you have to rely on a mail service.
Costs vary, but it seems one thing most full-time RVers can agree on is that Escapees Mail Service is a good option (many also love Good Sam’s Mail Service). For an additional fee, they can even provide you with an official permanent address for your driver’s license, voting, and other legal needs (yes, your RV lot doesn’t usually “count” as a legal permanent residence). For our needs, we were looking at about $355 for the first year (which would lower after that).
10. Relocation Costs
Once you have a tiny house on wheels, cheap moves will no longer be possible. Unless you are a pro with an enormous truck (or a very, very small tiny house), most tiny house builders recommend you call up a professional transport service. Fortunately, there are many RV transport companies nationally and locally who will haul your tiny house wherever you’d like them to. Unfortunately, they can cost what you paid to originally get your house shipped. It just depends on how far you’re going. But if it’s another part of the country, it’s probably best to budget out $5,000 to $7,000 at least. More if it’s coast-to-coast.
And because tiny houses are built for full-time living (not full-time travel), you’ll also have to unpack a lot of your house and transport furnishings and belongings that aren’t built-in. So it’s honestly in addition to whatever that move would cost without the tiny house. This is one of the big drawbacks of a tiny house, one that pushes some people to opt for an RV. An RV may not last as long, but it will be possible to move frequently without the same hassle or expense.
At the end of the day, our $17,000 down payment had ballooned into something we couldn’t afford. We had to tack on:
- $3,000 origination fee
- $8,000 taxes
- $90 applications and background checks for two adults
- $355 initial payment to start our mail service
- $500 deposit for a parking spot
- $7,000 shipping
- $850 insurance
- $??? for inspections
All told, the whole project would cost at least $20,000 more than we had anticipated. Which was a little more than our initial 20% down payment for the house itself. We simply can’t afford that right now.
Do we still plan to live tiny someday? We think so, but we’re less sure now. It’s still attractive. And locking in a housing rate as well, in a region where real estate is producing a new Gold Rush, would have given us greater housing and financial security. Those are all wonderful things.
But when purchasing a condo or a stick-built home, it’s rare that you have to save up 40% of the sticker price in order to afford the whole deal. It’s asking a lot. Especially for an option that is supposedly a solution to the housing shortage.
I had hoped a tiny house might be a compromise, somewhere in between an $800,000 mortgage we can’t afford and rent that’s perpetually on the rise in our area. For now, it just isn’t.