114. Tiny Home Living: A Financial and Lifestyle Revolution | Ethan Waldman, Tiny Home Expert

welcome to the Work Wealth and Travel Podcast. I am so looking forward to diving into everything, tiny homes with you today. But before we jump into all of that, why don't we start with you telling us a little bit more about your story and how you got started in this space. Awesome. Yeah. Well, first of all, thank you so much for having me.

uses. I would say way back in: 2011

And I had moved to Vermont, which is a beautiful place full of like all the activities that I love to do, like mountain biking and skiing and hiking and all this stuff. And so I heard about tiny houses online, like you hear about most things, but. It was still super early days in the, the tiny house movement.

There was maybe one or two bloggers just kind of sharing their process, but as soon as I saw it, I was like, this is it. This is my chance to you know, reduce my living expenses significantly by just building a house entirely on my own and just being able to, to own it outright. And so that was kind of how I got started.

 That's so interesting. So I guess I have so many questions about Tiny Homes. I don't even know where to begin, but I guess I will start with I want to maybe downsize, I wanna live a simpler life. I think it's very easy, and I'm sure you can attest to this, to get caught up in consumerism in today's day and age.

And it sounds like tiny homes can maybe mitigate that a little bit. So if I'm starting to think, you know, I. Maybe this is a lifestyle for me. Mm-hmm. What the heck is the next step? Do most people build their homes? Do you buy a tiny home? Where do you even start? What does that look like? Yeah. I mean, I would say that the first step would be to kind of drill down and figure out like what type of tiny home might be right for you.

You know, t Tiny homes. Generally describe a small building under 400 square feet or so, and they can be built on a trailer so that they can be moved or they can be built permanently on a foundation. Sometimes tiny homes are used as an umbrella term to also describe things like school bus conversions, or they're called schoolies, kind of in the, in the movement.

Or , van conversions, van life vans. I find that, that most people who are interested in tiny houses are interested in tiny houses, like the actual little stick framed little mini houses, like what I did. And so, you know, the reasons. You wanna think about that is that you really wanna figure out how mobile you wanna be in your house.

So like, if you wanna travel around in your tiny house and you wanna bring the house with you, a tiny house on wheels, like mine is not a good choice. They are on trailers so they can be moved. But we're talking about needing a truck that can tow 10,000 or more pounds. You know, you're towing something that's really big and heavy.

You're towing your entire house with you. So if, if you're planning to move all the time, like a, a House on Wheels isn't necessarily the best option. And so once you figure out, I want a house that could be moved, but just not one that I'm gonna move all the time. You're, you're thinking about a tiny house on wheels, then you can kind of think about, well, do you own some land?

In which case it might. Be better to just forego the wheels entirely and build it, you know, like a small cabin right on the ground. Or if you, you know, don't own land. Building on wheels is great because you can then rent land and then you don't have to buy the the land first. You can, you can park it in someone's backyard, you can park it on somebody's farm.

If you are somebody who travels for a living, I know lots of travel nurses, people in the military, people who do you know, travel for work where they're staying in one place for a few months, then it might be worth moving your tiny house. And do most people build their own tiny house because they have a vision of what they want it to look like?

Just like, I guess a normal house? Or is there a pretty big market if you are looking to buy? Yeah, not anymore. I would say that early on, building it yourself was like a big part of the tiny house movement. Mm-hmm. And that was mostly because there just weren't companies that were doing it and that, that limited who could live in a tiny house because not, you know, not everybody can build their own home.

So now there are, Hundreds, probably of companies building tiny houses that you can just go to them and, and either buy kind of a ready made model or, or do something. Custom Customization is still like a big part of tiny houses. You know, most people who have a tiny house built for them are, are customizing things and making it kind of personal to what they want.

So let's talk. Money. Sure. I love talking money and finance on this show, so I know, and I'm also very interested in the type of people, if, if there is a specific group of people who are more mm-hmm. Inclined to purchasing a tiny home, whether that be for finances or for environmental or another reason.

But on the money front, I'm curious, what do you, are you able to share the cost? Did you build your own home? What did that look like? Sure. How does the cost compare to, you know, the average home in a Western country, which I think, you know, a nice home can be easily over a million these days for .

Not even something amazing or spectacular, so. I'm kind of interested in the demographic of people along with the finances. Sure. Well as I'm sure you, you and your listeners are aware, the prices of things have gone up a lot in the last couple of years. When I built my tiny house, it cost about $30,000 to do.

And that was materials and I did end up hiring. Labor. I, I hired somebody to help me and kind of teach me as we went along. And there were certain parts of the build, like the roof and the cabinets that I didn't do myself, but for the most part $30,000 covered all my materials

and then, you know, a lot of my hours too, which are, you know, obviously unpaid these days. If you are gonna build your own tiny house, you're probably looking at about 30 to $40,000 in materials. And then, you know, whatever time you put into it or, or need to hire out, if you're looking at buying a tiny home, something that's already built.

Probably the cheapest you could get in for is around maybe 50 to $60,000, but that would be for really bare bones, you know, very small, very basic, tiny home in the, like, a hundred thousand dollars to, you know, one 20 ish. You can have an amazing tiny home for, for that much. And , that number.

Is is certainly shocking to some when they say, well, it's such a tiny home. And, and it is true. You can, you could go to a city in the Midwest or you know, there are places in this, in the United States where you can buy a single family home for $120,000. So tiny homes aren't for everybody. On the finance front,

it is difficult still to, to buy a tiny home if you don't have the money. As the industry kind of grows up, there are more options there. Basically you can get an RV loan for a tiny house but those are more like auto loans than they are like mortgages. So they're. Shorter loans, you know, 5, 6, 7 years with higher interest.

It's still not really a thing to be able to get a 15 or 30 year fixed rate mortgage on a tiny home. In terms of demographics you know, so I'm, I'm a millennial, I'm an elder millennial, and you know, when I got into it, I really thought that everyone in the tiny house movement was kind of, It's gonna be like me, I kind of, I graduated from college right before the huge, you know, housing crisis of the, of the aughts.

And so I was kind of, I saw people losing their houses, people's houses going underwater. And so tiny Home Living really appealed to me. The idea of, of owning your own home, what I'm seeing in my audience and in the tiny house movement is that, People like me, you know, younger people are building and buying tiny houses, but they're not staying in them for a long time.

It's kind of a first home, it's a starter home. And then they're kind of moving on, moving up. And, you know, this, this happened for me, like I've kept my tiny home. It's now an Airbnb, which is great because it's an awesome source of, of income for me. But what I am seeing is like, is a lot of boomers retiring into tiny homes and they're the ones that are, that are like, I'm, this is my forever home.

I'm gonna stay in this tiny home until I can't live on my own anymore. So a lot of, lot of retirees doing the tiny home thing. Now, is there a specific demographic of people who wanna be more nomadic or travelers who you find are very heavy in the tiny home space? Or is it just kind of maybe some millennials, some boomers, just kind of like the average everyday American.

Yeah, I would say that it's, it's kind of the average everyday American doing, doing the tiny homes, you'll find a lot more of the nomadic types in the vans and school bus conversions because they're kind of bringing their home along with them and traveling around by van. I do think that a tiny home, Makes an awesome home base for being a nomad, but you know, if you're traveling it, it might work better if you're, say, traveling internationally or going somewhere where you can't like drive.

You've got this inexpensive but really great, cozy, well-built place to live when you're home. And then, Low expenses so that you can, you can go away and not be spending a ton of money. And I mean, tiny homes do so well on Airbnb and short-term rental sites like, so if you are gonna use a tiny home while you travel, you should list it on Airbnb while you're gone because you'll definitely get people booking it.

. Good. Recommendation for maybe some somewhat passive income if you already have your home built or purchased. Totally. I'm curious about Tiny Homes on Wheels. Now. I am no tiny homes expert, but I. Are tiny homes on wheels a thing. I would think that maybe when I asked that traveling question, maybe that was more what I meant.

Because it does give you the flexibility to travel around America or wherever you are, or is that, was that something that was maybe more in the beginning of the movement and now because people are just using tiny homes as their starter house or whatever that may look like? Mm-hmm. Is that kind of died out?

No, they still definitely are mostly on wheels. The industry is trying to kind of rebrand because when you, when you tell like a town that you wanna live in something on wheels, they're, they get scared. So they've been kind of rebranded as movable tiny homes. But most of the tiny homes that are being built are movable tiny homes.

So they're built directly onto a trailer. The trailer is the foundation and that, that's how mine is built too. But what I said before definitely applies, which is that, you know, my, my tiny home is, is 22 feet long and it weighs 10,000 pounds. Now, 22 feet would be considered really tiny. Now people are building 26, 28, 30, and you're into the, the zone where you need like a.

Semi-truck to move your house or a really, really big, specialized truck to move it. So it's, it's again, not like ideal if you're just like, I'm going on a road trip and I'm bringing my tiny house with me. It's more like I'm moving here for six months and I'm bringing my home with me. Interesting. Yeah, so interesting.

Yeah. I like talking to you about this because I've never really dived deep into the world of tiny homes. So in you saying that, I would love to hear, first of all the pros and cons of, I'm sure there's many tiny homes versus a normal home. . And then also the expenses, the bills. What goes, I mean, you've talked about the build, but the upkeep of it.

What does that look like? Yeah, I mean, the upkeep is, is fairly similar to any home because most tiny homes have all the same systems that you would have in a bigger house. So like for example, you know, my house is now 11 years old. I. Earlier this spring, I spent a few days reating the siding on the outside because the, the stain had gotten kind of tired looking.

And just yesterday I was there replacing a part in my hot water heater that had broken. So just like standard home, you know, plumbing, electrical, the same kind of issues that you'll have in a bigger home will happen in a tiny home. Obviously they happen. On a smaller scale. And what's cool about Tiny Home Living for a lot of us is that you really learn to be more self-sufficient.

Because the house is, is so tiny and the systems are so tiny, sometimes it can be hard to find people who will work on them. So you become more resilient. You kind of learn how to do things on your own. And I'm curious are, well, before we dive into the, the next part of that, I'm curious, are the bills themselves smaller just because the house has less consumption

yeah, I mean, it, it obviously depends like what you're using to, to heat and cool the house. A lot of tiny houses now use, use heat pumps, so mini split heat pumps and they're really efficient. So It doesn't take too much electricity to, to heat and cool the house. My house uses propane for heat, and that's a little bit more costly, but definitely a lot less than a cost to heat.

It would cost to heat like a single, you know, a home here in Vermont through the, through the long cold winter. So yeah, the bills are a lot smaller, you hear, you know, for the longest time where I was parked. I usually didn't meet the minimum electric bill, so like my electric bill was rounded up to like $9 a month because I just used so little electricity.

'cause I didn't, I didn't have ac. All the lights are l e d. And then all the appliances ran on propane, so there really was like almost nothing using electricity. So you can definitely $9. Yeah. Wow. Yeah, you can definitely be off grid pretty easily in a tiny house, especially if you're not, you know, heating or cooling with electricity.

I. Wow. That is just, wow. I think, you know, in the housing market and with inflation and everything that's happened the last, even just year. Yeah. To hear that a monthly bill for any home, anything can be basically nothing is Yeah. Pretty crazy. Exactly. Exactly. So let's talk about, yeah, the pros and cons.

Pros of tiny homes, and I, I don't, is there a specific term for them? Like normal homes? Is there, I don't know. What's the jargon? I always put like normal in air quotes. 'cause you know what we think of as normal now, you know, if you showed a house, you know, our standard single family home to someone 50 years ago or, or 75 years ago, they would be like, that's a mansion.

So yeah, there are definitely pros and cons. I mean, I would say that the biggest, the biggest con to tiny house living is that the legality is different. In basically every single municipality. So there are certain states, there are certain cities that are more friendly to them.

There are certain places that are not friendly to them, and then there's a lot of places where it's just kind of like a gray area where you're like, I. Probably isn't legal, but nobody's really asking and you're not really telling. So you have to be okay with that, that legal ambiguity, or you have to be ready if you are like, I wanna be a hundred percent legal in my tiny house.

You need to be ready to do a lot of research and read the zoning codes and contact your town and like, you know, really go through a whole process. Whereas if you're gonna build a standard single family home, There are, you know, you, you can't do whatever you want. Obviously you have to follow building codes and zoning codes, but there is a process that will allow you to do that and come out with, you know, a house that is legal to be occupied and lived in.

So I would say that was the, that's the biggest con with tiny houses. But like, you know, there's, I could say a million different things for pros and cons. Cost is obviously a big one. You know, the ability to, to own a really nice, like a high end home for, you know, I. If you're gonna build it yourself, $50,000, if you're gonna have someone else build it a hundred thousand dollars, you know, you see tiny homes with really nice stainless steel appliances and hardwood floors and really high-end windows and just like, because the space is so small,

it doesn't really cost that much. Like my tiny house has cherry floors in it, which would cost a fortune if we, if you wanted to put cherry floors throughout your entire house. But like, I literally used two boxes of hardwood floors for the house. So the cost difference between Cherry and like a laminate floor was maybe a hundred bucks.

Do you ever want for more space in a tiny home? Yeah. I mean, I would say that the, the biggest challenge for most tiny house dwellers is usually like your kind of.

Auxiliary items, like if you do any sports, bicycles, skis golf clubs, those kinds of things can be hard to fit in the house. And so a lot of tiny house owners will have some kind of outside storage, whether it be a small shed on the property or even a, a small trailer that they can pull that, you know, has their, their other stuff in it.

Yeah, I definitely resonate with that. You know, I live out of a suitcase and I have for almost two years now, so Wow. There are definitely limits to things that you can and can't bring, and hobbies that you can and cannot have. So it sounds somewhat similar to that. So now this may be a gray area, but I love to talk about taxes in a different way than what we are here, but, What does taxes, or is that not really well defined as of yet?

And then actually I'll let you answer that question first and then we'll go into the second part after. So it's complicated would be my answer. In it always is, you know, because, because the house is on wheels, it's tech, most municipalities. Don't have a way of defining a house on wheels.

Like the, the thing that it fits under is a vehicle. And so like vehicles don't pay property taxes. It's also not legal to live in a vehicle in most places. So if you're kind of flying under the radar in your tiny house, you won't, you won't pay any taxes and, you know, I don't currently pay any property taxes where my tiny house is parked.

I'm renting somebody's backyard, so they pay property taxes on the land and on their house. In towns and cities that are legalizing tiny homes where you can actually officially be legal, they are taxing them. And so I did have a parking spot for many years where I was getting taxed by the, by the town.

But you know, they, they appraised the tiny house at like $50,000 and my, you know, annual property tax bill was like 400 bucks for the house. Wow, that's so interesting. And it's just, it's such a crazy concept to me that these specific municipalities can tax. A vehicle, right. That's renting a space.

Like what a crazy world we live in. I love it. Yeah. But it's just, you know, it really goes beyond the concept of what you think a normal, I guess, property tax is. Right? I don't know what you would officially define that as. . So I mean, I think that most dining house owners are happy to tr to are willing to pay taxes, are happy to pay taxes in exchange for knowing that their house is, is legal to be there.

Like in, in a city for example, where they're saying we need more housing and tiny homes are a great solution to do infill, which is like where you, you basically have all these single family homes with yards and we say like, oh, we need to add housing units to those yards. You know, You're adding residents, you're adding services, you're adding, you know, a burden on the city to provide all the utilities and things.

So I think it's only fair that that you pay taxes. So I, there are certainly some people who do it as like a, specifically as a way of tax avoidance. I mean, for the longest time I knew this guy who was like, you gotta get put your tiny house in New Hampshire. 'cause like new dom in Vermont, New Hampshire doesn't have new income tax.

There's no state income tax. So he is like, you should get an address in New Hampshire and claim New Hampshire as your residence and not pay income tax there. And I was just like, I, I don't care. I'm happy to pay taxes. That's funny. I love it. Yeah. Alright, so I guess this goes into, you would categorize this as selling your tiny home.

But I'm curious because it's not on a piece of land, is it only valuing the home itself? Or what does that look like? Yeah, exactly. You're just selling the home itself. You know, you're, you won't see many tiny houses on wheels listed, like on Zillow. You know, you'll see them on Facebook Marketplace or Craigslist, or there are, you know, there's tiny house listings.com is is a website run by somebody where people can kind of post listings for tiny houses for sale.

And so you mentioned that you are Airbnb your tiny home right now. Now is there. I guess I, I'm just curious, how, how would you recommend somebody who does this lifestyle? Is it they maybe live or the best Monet monetization for your tiny home? Is it maybe to live in your tiny home full-time because it is so cost efficient?

Is it? Will you get so much more out of it if you rent another space and then mm-hmm. Rent out your tiny home because maybe there's a big market if you wheel it into a certain state. What does that look like if you wanna have a tiny home and also make some money? Yeah, I mean, I would say that, that like a lot of people are in, you know, are after the lifestyle of living in a tiny home and so that, you know, it kind of gives you more than just.

Money, you know, you're living small, you, you're, you consume less, you have more free time, you maybe don't have to work as much. So it's like, there's like a tiny house lifestyle that comes along with living tiny that a lot of people are attracted to that you don't necessarily get if you just, you know, build one to do as a short term rental.

I would say that if you know somebody listening. Owns a, a home and they're happy living there and they have a spot on their property there where they could see putting a tiny house, then yes, I would say it's like a great investment. It's an awesome way to, to make some extra money. I would say that, you know, for somebody listening who's interested in, in living small than, than live small yourself, you know, don't, don't build one to put it on Airbnb.

But the cool thing is that like, If you do build one and live in it for a couple years and then decide that it's not for you, it's not like you have to sell it in order to afford your next property, although you might. But if you can hold onto it, you can turn it into to kind of a moneymaking asset for you later on down the road.

I don't know how big of a market there is for Yeah. Renting them out in Airbnb. But I think it would be interesting to have almost like a portfolio of tiny homes to totally encourage people to live this lifestyle and then maybe have one yourself. Yeah, exactly. .

That's really cool. I've never thought of that. So, I am a minimalist. Mm-hmm. I love minimalism. Would you recommend this lifestyle of tiny home living to anybody or to a specific group of people? Maybe minimalist or those who are more virally con conscious? Mm-hmm. Would you say that there is maybe a group of people who would not be well-suited for tiny home living, or is it something that everyone can adjust to?

I think it's something that everyone can adjust to. I like to say that like not everybody who. Comes to tiny house. Living is a minimalist, but like living in a tiny house will kind of turn you into one. By necessity, of course, like you look around and see tiny houses, some are way more packed with stuff than others.

If you are a minimalist already, than you're gonna have a pretty easy time doing it. It's really challenging for people to get rid of their stuff. So like for you, Nicole, it sounds like moving into a tiny house would actually be like, I. Giving you, it would give you more space and more storage than you're used to.

Whereas, you know, I, I've interviewed people who have downsized from 5,000 square foot houses down to 200 square feet, and it's a multi, you know, it can be months or even years to get rid of your stuff and all the emotional entanglements that you have with that stuff. And it, that, that is almost harder than.

Living in the house itself is like getting yourself to the point where you can live in the house where you can downsize all that stuff.

Is there any last words that you would like to mention or to note or something that we have not touched on here about this lifestyle, what you have experienced this way of living? Yeah, I mean, kind of circling back to the, to the beginning of like trying to figure out what your why is, like if you're interested in living small.

Going beyond that and saying like, why are you interested in living small? Is it 'cause you wanna live debt free? Is it because you wanna be environmentally friendly? Is it because you wanna be a minimalist? Those questions and that why will really help guide your decision making and there are a lot of decisions to make if you're gonna, you know, build a tiny house yourself.

So I've been hosting the Tiny House Lifestyle Podcast for five years now, so there's five years of weekly episodes and interviews with people who have done. Pretty much like anytime I see like someone converted a potato into a tiny house, I'm like, I'm interviewing them.

So like, you know, no wait, you don't see that? Is that a headline? Did that really happen? Yes. My friend Christie Wolf converted it's an Idaho, it's, it's like the Idaho potato that they used to bring around to marketing trade shows. When they retired it, she bought it and turned it into a very successful Airbnb.

Whatever you're looking for. Check out the Tiny House Lifestyle podcast. I've probably interviewed somebody who's done it and, and shared their kind of process and, and how they did it.