Living Large and Saving Money in a Tiny House

It was just a couple of years ago when I first heard of a new trend growing in and around my area. In NYC, they were building tiny apartments in some of the most expensive and sought after locations in Manhattan. There were places where the rents were just astronomical and only the rich and famous could dwell. Tiny apartments? It was something that certainly peaked my curiosity quite a bit. After all, haven’t most of us always thought the concept of bigger is better as the way we should go?

Could you ever see yourself living in a tiny house? It can be a great way to save on expenses, but more than that, it's a lifestyle.

I became even more curious and puzzled when I found out some of the details. I thought, what is tiny anyway? Most of the people I knew where always looking for a nice big place to live. You know the kind I mean with multiple bedrooms, an office, and an eat-in kitchen, and yes a couple of bathrooms too. That is an apartment!

Houses, well that’s even more of a big story. If you have a family can you remember house hunting? It was always a case of “How much house can we afford? I’ll be earning more money in a few years so we can grow into a bigger house, and besides that, a bigger place will have better re-sale value and build more equity.

Not so fast, my friend. Some things have really changed and are becoming the new normal when it comes to housing and your personal finances.

Location, location, location!

One thing that has not changed though is the cardinal rule about where you live. That’s the magic phrase: “Location, location, location!” Where you want to live and the real estate you seek is always priced on demand. Even if it’s out in Timbuktu, if it’s where you want to live, it will probably cost you a pretty penny.

That brings us back to NYC, Manhattan, and the world of tiny. The Big Apple is the place that an awful lot of young and upwardly mobile people around these parts want to live and work. But of course, the killer fact is that this location is what costs a ton. Thus, it’s out of the league of most young professionals. Until…the tiny apartment arrived!

Construction of tiny apartments is growing and people have decided that in order to live in New York, be close to a really good job and financial opportunity, plus have the nightlife and all the bells and whistles of the Big Apple, they can make a “few” adjustments in their lives. Some are happy just to get a place of their own that they can afford (imagine living in high rent areas like the Upper West Side, Park Slope, Chelsea, or Greenwich Village). You may be wondering, “how much for a tiny apartment in such prime areas?” Well a typical larger apartment can go anywhere from $3,000 to $15,000 a month and up! Are you still breathing? Tiny apartments can be found for a mere $800 to $1,500 a month and are leasing right now if you can find one (check the obits if you’re interested)!

So what do you get for your money in the city? You can plan on a space no larger than 200 to 300 square feet of living. That’s usually just one room that includes your kitchen, bedroom, closet, and bath & shower. And that’s the luxury version. You can even find 90 or, believe it or not, 54 sq. ft. versions of this unique living accommodation in some high rent areas. I’m not kidding.

It’s really thinking outside of the box, and living inside one!

You may be thinking right about now, well I’m not a millennial or I don’t live in the NYC area so what do I need to know about tiny living? Good question. The fact is that there’s a movement out there making tiny houses all over the USA the newest and maybe hottest trend among the financially frugal and just those looking to change their entire view of money in their lives. Even seniors, retired with the family up and gone, are checking it out. These tiny house adventurers are sometimes minimalists, sometimes environmentalists, but are always looking for ways to free their time and energy from the feeling of living and working just for their homes. That’s a real fact that all of us need to look at in detail!

Typically these tiny houses range in size from 200 to 480 sq. ft. That leads us to the big advantages that are pretty obvious here. In addition to a lower cost to buy or build than a regular larger home, there are much reduced monthly expenses for heat, air, cleaning etc. That and having no mortgage will give you a lot of extra money for yourself to spend each month.

Most Americans currently spend from one third to one half of all they earn annually in paying for their living space and its expenses. That amounts to about 15 years of working in your lifetime just for that alone. Scary? To make it even worse, if you buy a typical 2500 sq. ft. home in the U.S. you might be shocked to know that after your mortgage and interest payments, real estate taxes, insurances, maintenance and home improvements, in just 30 years you will have paid almost $1,000,000 in total. That total includes any great mortgage rate you obtained, even the near 4%, 30 yr. rate that is available right now.

Meanwhile, nearly 7 in 10 tiny home buyers typically have no mortgage at all compared to one third of all home owners in our country today. By living in a smaller space, they have the peace of mind of little to no debt and freedom from the slavery of working long years for lots of dollars for their living space.

What will you have to do to live large in a tiny house?

Finding land is one of the most basic and difficult things to do when you need to build your tiny house. Sound strange? Keep in mind that available desirable land near to the town or city you desire may be scarce. Despite the fact that you will be living “tiny”, you will need a parcel of land big enough to hide your home and keep your stark exposure to a minimum and hidden. You’ll want to be out of the way of those who are curious and just want to check you out as if you are living some kind of science experiment.

Getting a loan may be a big hurdle. Banks and mortgage companies like the idea that when they lend to someone, the collateral will appreciate, and lending for tiny properties just doesn’t fit that scenario. Downsizing from your existing larger property works best and in almost all cases, there will be no loan on the house, but perhaps on the land.

The laws are tough. Fight for you right to be small! Local municipalities may have the cards stacked against you when trying to build your tiny house. Municipalities have shunned code modifications for tiny construction projects and you may find you will have to fight and obtain serious variances and zoning changes and appear before local boards to get you home approved and built.

Social pressures may be placed on you. The “bigger is better” pressure and “are you just plain weird?”  Plus, there’s the “WTF are you doing to the neighborhood?” pressure.  Pressure which will surely turn up!

Setting up new services may be something you haven’t done before. Whether it’s for water & sewer, electric, or trash, your location may not be set up for these basics.

Understand what you’re getting into

Finally, you need to know how different a tiny house will be compared to what you may be accustomed. To learn more, there are countless stories on the net and bloggers writing about this growing trend as well as cable network TV shows like Tiny House Nation, Tiny House TV, Tiny House Big Living, and Tiny House Hunters featuring these homes and the people living this lifestyle. Check them out even if it’s just for fun. You will be very surprised at the appeal that these spaces have for so many people!

The tiny house idea appeals to many, and not just the young city millennials or the “weirdos of the outer limits” either. Downsizing in retirement has seen its share of tiny house dwellers that can minimalize their living expenses and free thousands of dollars locked in their once needed family sized dwellings to help them enjoy their retirement.

Do you live in a huge space that you are finding a financial burden? Can you imagine downsizing to 200 sq. ft. or less?

Image courtesy of Tammy Strobel on flickr via CC 2.0 (with changes)


  1. I enjoy reading how others have made the transition to a tiny house. For us, a family of five it would be tough to do so right now. I like the idea of not have a big house to maintain, clean, stuff to store, etc. I agree location is key. Living in a mild weather location I think you would tend to sped more time outside and not care about the size of the living space.

  2. I can’t see living in that small a space. Have you seen the price some of them are going for? High end tiny homes for $95K? I don’t think the resale value is very good. But renting one might be smart. I noticed a few on Airbnb. If I were thinking about it I would try it out first.

  3. WOW a 54 sq. ft. apartment.. That’s like three steps and that’s my entire apartment. No one to invite over, for sure! I would be happy living in a 475 sq. ft. apartment by myself. Right now I’m at a 600 sq. ft. and it’s more than enough space for me, I could even argue that there’s too much space!

  4. Jayson @ Monster Piggy Bank

    Of course, that is still wide space for me. I think downsizing is very ideal for those who want to have a better retirement, and I’d go for downsizing if it gives me more opportunities to save more money.

  5. Holly

    I love watching Tiny house shows. I could see living in one when I’m older if I’m alone, perhaps on my daughters property if they move out to the country. I wish municipalities made it easier to build and live in tiny homes. Glad to see the trend of the Mcmansions is changing.

  6. This is a great article! I have always thought it would be really fun (and cheap) to live in a tiny house out on some land somewhere but you point out some really interesting challenges about zoning and financing that I don’t think a lot of people think about. Great post!

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