My next “BIG HONKIN Money Goal” is to own property – but specifically property that will make me money, because as someone who has always made a low-to medium income, I have to get creative when it comes to wealth building.
So I’m hoping to buy in 2020 , most likely a duplex to “house hack,” meaning I would live in one unit and rent out the other to cover the mortgage and free up the money I’m currently using for housing… putting that money to investing or to save up for another duplex to expand my real estate portfolio.
While looking at affordable housing options so I can own and rent properties sooner, I’ve looked at my fair share of home types and researched nontraditional housing outside the brick-and-mortar framework. .
Here are my thoughts on the pros and cons of different types of homes and if I’d like to eventually own them as rental or personal properties.
Campers/ Travel Trailers/ Buses
I’ve adored vintage campers since college (see my old Pinterest boards) and have heavily considered buying and decorating a camper or travel trailer to use as an AirBnB. I actually almost bought one recently.
The opportunity cost can be quite low, with campers costing only a couple thousand dollars on the low end, and their portability means you could position them close to a popular venue or area. For instance, the short term rental market in my area is huge on university game day weekends.
Older camper models such as the iconic Airstreams are really coming back in style, but are more costly due to the trend. But if you find one cheap in good condition, it could be a great investment.
Make certain that the wiring, plumbing, and roof are in good condition and watch for water damage… which can be extremely costly. I looked at a camper recently that was in immaculate condition…except for a wet spot behind one of the kitchen cabinets, even though it hadn’t rained in over a week. I was still considering it, but it was bought by another person.
Honorable mention goes out to old buses, which are definitely a lot of work but can be deceptively roomy. I’ve seen some fantastic bus conversions, and who wouldn’t want to spend a weekend in an adorable bus conversion?
Would BG buy?
Possibly yes! But not right now for me.
If you’re not putting it on your own land and are able to handle the electricity, gray and blackwater dumping, etc., most of your profits are going to go to a rental space at an rv park. That might be worth it for short term events, but as a renter I currently had to realize there was no feasible way to afford this option until I get my own lot of land.
Sorry folks, I don’t care if she’s the prettiest double-wide in the trailer park, manufactured homes simply don’t hold their value. They depreciate extremely rapidly and they can also become liabilities as many of them are simply not built to last as a long term investment.
Check your local statutes, as some communities will only allow mobile homes below a certain age to be placed inside the city limits. Areas zoned for mobile homes often suffer from low property values and blighted properties due to other restrictions. You should also be hyper vigilant of damage from inclement weather.
Would BG buy?
Don’t do it. I wouldn’t. Even if it’s priced competitively, a mobile home isn’t a solid foundation (pun intended) for future investments. There’s also the risk that it may develop costly issues before you’re able to break even on it as they tend to simply degrade.
Like the previous example, these can be easy and inexpensive to purchase. Costs are generally as low as $2-4k for a used container to $10-12k for a new or used-only-once one. Shipping container homes have seen a lot of recent press with Netflix shows. These showcase everything from shipping container offices to three story mansions using six-10 containers stacked in various configurations.
However, the problems with shipping containers begin when you realize that these homes:
- A: have not been around for long enough to be known how they fare long term, and
- B: have the shortest anticipated lifespan of any of the examples in this article.
If you buy a used container, it’s probably already 10-15 years old, and the shipping company is retiring it because it has depreciated to the point that it cannot be used for tax purposes.
Rust is the natural enemy of metal and when exposed to wet, salty sea air aboard ships for months and exposed dockyards for years, used shipping containers are often rust-filled and no longer structurally sound.
Shipping containers are generally expected to last, at most, 20-30 years. Even if you add in insulation or wood paneling, the “style” of using shipping containers is often to leave the metal exposed so you can tell what the home is made of, which continues to be exposed to the elements of either the interior (cleaning nightmare) or exterior (more harsh conditions) of your home.
Sure a shipping container home could save you some money in building, but well constructed stick-built home can last for a century or longer (I’ve lived in some!) Metal rusts, decays, and you may be rebuilding in a couple decades instead of having a home that has appreciated in value.
Would BG buy?
It’s a novel idea, but in practice the short term savings likely wouldn’t net me a good long term investment. They also haven’t been around long enough to see how they’re fare as real estate and I don’t like the odds.
If you’re dead-set on a shipping container home, make sure you’ve had a tetanus shot recently!
Full disclosure: I love tiny houses. I stayed in one recently that was right next to a model that had been on Tiny House Nation. As someone who is obsessed with organization, I love to see the creative ways that designers use every bit of the space available.
Tiny houses benefit from conventional construction methods and materials. Theoretically, that means that they should last just as long as a regular house if properly maintained. Depending on the model, some are even portable, and one that I stayed in was able to be pulled with a Ford F150.
Be wary of upcharges on tiny houses. Just because it’s small and cute doesn’t mean that it should cost triple per square foot of any other home. Some of these tiny homes are priced at upwards of $100k, which is insane.
Also be mindful of strange design choices – I keep seeing tiny houses with weird sitting areas up top that seem absolutely precarious. I’m also not going to willingly climb a ladder several times a day. That gets hella old.
Would BG buy?
I may buy one of these one day at the right price to use as an office, AirBnB or short term rental, but I’d never willingly move into one long term.
Multifamily Homes (Duplexes, Triplexes, etc)
One of the easiest ways to house-hack and build wealth quickly is to buy a multifamily home and live in it while renting it out. You should aim to have your mortgage and basic maintenance costs covered by your tenant’s rent. This frees up the 25-30% of your income you’re likely currently using on housing for other investments or real estate endeavors.
Keep an eye out for nontraditional properties; there might be multiple residences on a single lot. Older homes also tend to have a lot of empty space and can be converted into a duplex if you’re willing to renovate and have the skills or budget to do the work.
However, sharing such a close space means that all of you are going to have to tolerate each other’s noises, odors, pets, and children. So screen tenants really, really well, and ideally plan to spend only a few years in the property while saving up for another, so you can then rent out both sides.
Would BG buy?
I’m a huge fan of this idea, despite its drawbacks. There’s also a definite advantage to living on-site and being able to monitor your rental property, especially as a newbie landlord.
House hacking has the potential to be both strenuous and rewarding. There are still a lot of pitfalls and perils in the real estate sector that I haven’t experienced yet.
The most important bit of advice that I can give you is to be thorough and do your research. A house is one of the biggest investments that many people make, and it’s worth doing your due diligence, and not rushing, no matter the type of property.
What kind of alternative homes or real estate would you consider buying or living in?
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