6 Reasons Buying A Tiny Home Could Be A Mistake

tinyhouse
Tiny House Trend

Buying a tiny home could be a mistake

When it comes to a tiny home, less may not always be more. It’s a trend that’s sweeping home improvement channels. Like, really tiny homes. And while they can be cute the price per square foot isn’t.

They are considered a mobile home with running water and plumbing, appliances, and everything you’d need in a place to live. The truth is, for investment purposes, it’s wildly impractical.

Translation? The trend probably won’t last long. It also means your return on investment is next to none. Here are five reasons why buying a tiny home may not be in your best interest.

1. It’s a fad

Just like platform sneakers and leisure suits were once popular but are now widely ridiculed, the tiny home trend is one that may be hot now but is likely to cool off before long. The key word is fad.  This is a totally unproven market, buoyed by the intense interest in reality TV.

Although there can be compelling reasons to want to simplify your life by reducing your financial obligations via less expensive housing options it is just hard to say how this trend will pay off in the long run.  The artificial interest caused by the TV trend and the uncertainty in a newer, unproven market make tiny homes a risky investment.  You can find a small home that falls into “Real Estate” investment that meets your communities standards to what constitutes as a home.  Even if you do not live in a “tiny home” you can draw inspiration from that minimal lifestyle and apply it to a home of any size.

2. Buyers are few

If you think the demand for a home that backs up to a major highway is slim, then you’ll be amazed at how few people are actually willing to pull the trigger on a tiny home.  Real estate sales are dependent on supply and demand.  A tiny home is not recommended because it only fits a small demographic of buyers in the market. The more restraints the property offers the market, the more niche it becomes. The more niche the home, the less buyers available for the home.  In other words: The supply may be great, but the demand is really, really small. (Pun Intended).   That’s not to say if you love it and plan to stay put for the long haul, you shouldn’t go for it. Just be prepared, because you might end up facing a really long on-the-market period when it’s time to sell.

3. It’s less marketable

The vast majority of tiny homes can accommodate one to two residents tops.  Basically this means many buyers who entertain or host overnight guests are simply uninterested in even considering a tiny home for their primary home or even vacation property.  Tiny homes are simply less marketable.  The average consumer needs more space, bedrooms, and bathrooms than a tiny home can offer. An average home allows buyers to grow into it and keep it long term. A tiny home offers restraints to changes in the lifestyle of the buyer.  A tiny home on a piece of property that offers space for an additional, larger home to be built later could be the exception here, giving the new owner a place to reside while a dream home is under construction (and a cozy place to host guests in the future!).

4. It’s too darn small

Sure, the concept of downsizing sounds nice, but let’s be honest: Most people have too many personal belongings to squeeze into a tiny home. You may have just graduated college or moved out of your parents basement but think of your future space you will need.  Most Americans like collecting a lot of ‘stuff’ and have a tough time finding storage space for all of it in a small, regular house that has a garage and basement.

In a tiny house you have just enough room for yourself but no options for expansion, storage, hobbies, nothing. Need to fix your car? You’re doing it in the snow or pay retail for someone else to do it. Have a cat or a dog? Where does the cat box go? Dogs don’t like being confined. Where do you put your lawn mower? Your rake and shovel? Going to have a baby? Your small house is now too small.

5. It’s not less expensive

Downsizing is supposed to help you and be less expensive. But that’s not necessarily the case with a tiny home.  There is no storage space, so you’ll need to rent a storage unit, which means paying for it, and then you have to go back and forth to it every time you need anything larger than a toothpick.  Want to have a party? Rent a venue. The list goes on. You can buy a plain old ‘non-tiny’ house for the same money and get much more utility from it.

Finally, most lenders have a minimum square footage they will lend on, so you’ll pay cash for your tiny home and so will your potential buyer, which eliminates most of the few remaining prospects you’ll have.

6. Place to put it

This increase in popularity of tiny houses, and particularly the rapid increase in the number of both amateur and professional builders, has led to concerns regarding safety among tiny house professionals. In 2013, an Alliance of tiny house builders was formed to promote ethical business practices and offer guidelines for construction of tiny houses on wheels.

Planning and Zoning

This effort was carried on in 2015 by the American Tiny House Association. In 2015, the nonprofit American Tiny House Association was formed to promote the tiny house as a viable, formally acceptable dwelling option and to work with local government agencies to discuss zoning and coding regulations that can reduce the obstacles to tiny living.

One of the biggest obstacles to growth of the tiny house movement is the difficulty in finding a place to live in one.  Zoning regulations typically specify minimum square footage for new construction on a foundation, and for tiny houses on wheels, parking on one’s own land may be prohibited by local regulations against “camping.”  In addition, RV parks do not always welcome tiny houses. DIYers may be turned away, as many RV parks require RVs be manufactured by a member of the Recreational Vehicle Industry Association “(RVIA)”.

Is it an RV?

Tiny houses on wheels are considered RVs and not suitable for permanent residence, according to the RVIA. From RVBusiness, “The RVIA will continue to shy away from allowing members who produce products that are referred to as ‘tiny houses’ or ‘tiny homes’. (However, the RVIA does allow “tiny home” builders to join as long as their units are built to park model RV standards.)”

In 2014, the first “tiny house friendly town” was declared in Spur, Texas; however, it was later clarified that a tiny house may not be on wheels but must be secured to a foundation.

In July 2016, Washington County, Utah revised their zoning regulations to accommodate some types of tiny houses.

Making An Offer Someone Can’t Refuse

keys-to-homeThe real estate market has it’s ups and downs.  When you are finding yourself in a “sellers” market you may be experiencing multiple bid offers and losing out to other buyers.  We have put together 8 tips to making any offer someone can’t refuse to accept.

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8 Red Flags On A Seller Disclosure

seller-disclosure

8 Red Flags On A Seller Disclosure

Buying a home is a little like falling in love. When you first start dating, you’re smitten. Which also means you’re more likely to overlook some critical flaws that might otherwise slowly crack away at your relationship down the road, potentially leading to heartbreak. Such is the case when buying a home.

1. Notes or lack of details about the roof

It’s not a hard and fast rule that you should dig deeper into what a seller or inspector means when they say “small roof leak” or “a few roof tiles missing.”  You may want to have a professional roofer come take a look before buying.

2.  Any structure-related items

So if you’re faced with exterior wall cracks, sagging rooflines, or significant cracks in the foundation, and your inspector points them out or the seller mentions them in the seller disclosure form, seek guidance from your real estate agent and seriously think of having an industry specialist take a look at the potential problem.

3.  The dreaded “no representation” or “unknown”

It’s not necessarily a sign to run away from a home, but if a seller marks an item such as the basement or windows on the seller disclosure statement as “no representation”.  Then you’ll most definitely want an inspector to look more closely at that area.

What does it mean? Sellers can opt to put “no representation” on an area of the home in their statement to avoid disclosing the conditions or characteristics of an area of the property, even if they know of issues. It’s sneaky, but it can protect the seller from potential litigation from the buyer down the road.

4.  Mentions of previous flood damage

Flood damage can wreak havoc on a home’s foundation and cause mold issues, among other things. That’s why when you see a seller disclose that the home has had flood damage, no matter how small, the advises is to be wary.  If your inspection comes back with dampness or strong odor you may want to call in a mold specialist.

5.  Any liens on the property

Issues regarding liens when a legal right to the property is held by a creditor or some other party aside from the seller should pop up during the title search. Be extra leery if a seller discloses one in their statement.

Be sure to consult your title company, real estate attorney, and the agent representing the other side to get clarity around the issue and time frames it could take to clear the title. In our experience, liens can be removed, but it typically takes twice as long as anticipated, and a buyer should be prepared for delays

6.  Any easements or land-use restrictions

If you buy a home planning to build an addition or make major renovations, you may discover after the sale closes that existing easements on the property forbid adding permanent structures in the exact spot you were hoping to make your new master suite.  Easements and land restrictions can affect the value of a property.

A buyer should get a title report giving a detailed description of the easement. In addition, a survey would be prudent to identify landmarks, how it affects the property, and if it is of no harm or affects the future marketability or value of the property.

7.  Failure to get proper permits for additions or improvements

Heed this warning, friends: Failure to get permits is a huge red flag!

Without permits, a buyer has no idea if the work was completed by inexperienced and unqualified homeowners or a true craftsman. In these scenarios, we recommend a thorough home inspection by a licensed home inspector of the work completed. In addition, a thorough review of seller’s disclosures to understand with clarity the scope of work completed.

8.  Lead paint or asbestos

Don’t automatically rule out buying a home if a seller discloses that the home has (or had) asbestos or lead-based paint.

It is better to be cautious and do your homework before correcting, removing, or remodeling these types of homes, though. Talk to your local home inspector about evaluating and testing the property.  Review your local health department requirements. Once you know the safe measurements in your area, you can do the proper testing for these items. Don’t forget to learn how to properly dispose of these items safely. By knowing the costs and health regulations, you can factor in the cost of removal or remediation and factor that into your offers.

Home Scouting

Home Scouting is the best Real Estate Search engine available, and was rated #1 in the country by its users.  As a listener of the Doug Haldeman Show, we are giving you FREE access to the Home Scouting Report to give you an unfair advantage against other homebuyers!

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Strong Housing Data

Doug-Show-CardStrong Housing Data

CoreLogic

We have some strong housing data coming from CoreLogic this week. CoreLogic is the largest aggregator of real-estate data in the country,and they just released their Home Price Index for May, showing that home prices appreciated 1.3% from April and 5.9% year over year.  Additionally, CoreLogic forecasts that home prices will appreciate 0.8% in June and 5.3% next year.  The forecast by CoreLogic is a bit conservative and we believe appreciation will be even stronger.  This month’s report moderated slightly from last month’s 6.1%, but was still another strong housing report showing sustainable appreciation.  Below you will find a state by state breakdown from CoreLogic, showing the current and forecasted appreciation rates.

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Real Estate Tips For Seniors

moving day
Real Estate Tips For Seniors

Real Estate Tips

Real Estate can be a tricky process.  As we get older moving doesn’t sound as fun as when we bought our first house.  Now you have accumulated “stuff”, let the purging begin!  What makes the move as a senior citizen even more challenging is how to handle the buying of your next home and selling of your current one.

Here are the benefits of Buying or Moving First before Selling:

1.    You are in control of when you move into your new home.

2.    This is a less stressful situation as you have the opportunity to get settled in your new home before you have to vacate your existing home for the new owner.

3.    Moving out first allows you to stage your home to appeal to potential buyers, so it is likely to sell faster and for more money.

4.    REALTORS® and buyers will have easy access to view your home without disruption to you.

Of course, not everyone is in the position to take the risk of buying or committing to a retirement community prior to selling.

The drawbacks of Selling First before Buying or Moving:

1.    The main benefit to selling first is that you are in a strong negotiating position.  You know how much money you have received from your sale, so you won’t have that unknown.

2.    Another benefit is that you will avoid the situation where you may be carrying the cost of two homes while you are waiting for your home to sell or for the transaction to close.

3.    A drawback is that you will have the uncertainty of what home you will be moving to and how the timing will work.  Typical time for possession would be approximately 60 days.  In most markets, this would allow you enough time to find another home you will be happy in.

4.    You may also have the added expense of temporary accommodation and having to store your belongings until you can move into your new home.

A third option is to buy your new home Subject to the Sale of your existing home:

1.    This is a common practice that helps resolve some of the drawbacks above, but it puts you in a weaker position for negotiating purchase price.

2.    A Subject to the Sale of contract would include a time clause, which allows the seller to continue marketing their home for sale.  If a buyer comes along who is ready, willing and able to purchase the home, you would have about 48 hours to remove your Subject to the Sale of condition or let the home go to a subsequent buyer, which can be very disappointing.

3.    Consult with your bank or Mortgage Broker regarding finance options such as a Line of Credit or Bridge Financing, so you can make a decision at that time whether to take on extra financing or let the home go.

As you can see, there is not one right answer; it all depends on your personal situation and comfort level.  Talk to your real estate and financial advisors to help determine what strategy would be best for you.

Resources:

From <http://www.seniorlivingmag.com/articles/2016/02/real-estate-tips-for-seniors-buy/move-first-or-sell-first>

First Time Home Seller

Sold-signMost first time home sellers have no idea where or how to start the home selling process.

It’s very important that first time home sellers understand what the home sale process entails, what costs are associated with selling a home, and many other very important aspects of the home selling process.

Decide What Your Next Move Is

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How To Negotiate and Work With Family and Friends

merle schneider show cardTips to manage threats to your family business:

  • Clearly define the goals of the company and make sure everyone is on the same page.
  • Outline each family employee’s role and responsibilities and hold them accountable.
  • Keep an open line of communication at all times.
  • Address all concerns quickly and in a non-emotional manner.
  • Create a fair promotion and salary system that is based on individual merit and ability.
  • Take a management course to learn how to separate your emotions from the management process.
  • Provide opportunities for advancement in your business for non-family employees.
  • Be prepared and create a succession plan to ensure your business lives on after you are gone.

 

Contact Information:

Merle Schneider
Co Owner Broker/ Vice President of Operations/ New Construction Consultant
Office: (636) 946-5553 ext. 237
Cell: (314) 422-8040
Fax: 1 (866) 730-5961
Email Me
MerleSchneider.com

Audio Segment 2: Merle Schneider

Audio Segment 3: Merle Schneider

Should I Sell My Home During The Holidays?

holiday homeShould I sell my home during the holidays? This is a question on the minds of many home owners. There is no clear cut and dry answer as everyone’s personal circumstances are different. Selling a home during the holidays however, was once something that very few people did. The argument was that there were less buyers during the busy holiday season, so sellers might as well wait until there were more people available to look at the house. But times have changed, and in many cases it can be just as effective, to list your home during the holiday season. Although there can be some drawbacks, you may be facing less competition and have an easier time making a sale.

If you decide to make the leap, understanding these winter home selling tips will become important.

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1031 Tax Deferred Exchange with Greg Schowe

Greg Schowe show cardGreg Schowe  with United Country Real Estate- Commercial  joins Doug and Tammie in the studio to help shed some light on the 1031 Tax Deferred Exchange opportunity for investors.

The payment of income or capital gain tax on the sale of property can be voluntary thanks to Section 1031 of the Internal Revenue Code which is one of the most underutilized sections of the tax code.  Maybe for the laymen better understood as a 1031 Rollover.  Basically the gain is rolled over to a new property. There are an unlimited number of times an individual can successfully rollover gain and postpone tax. The ultimate goal is to make this tax disappear by one of two ways:

1. Sellers may successfully rollover gain and ultimately move into one of their investment properties and declare it to be their primary residence. Provided they are married and have held the property for five years, reside in the property for a minimum of two years, they can exempt $500,000.00 in taxes upon the ultimate sale.

2. Capital gains taxes are eliminated upon the death of the property owner. Heirs receive a step up in basis on the date of death.

Below are some simple points to master to have a clear understanding of the rules pertaining to 1031 exchanges.

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