Posts Tagged rent to own

Rent To Own A Tiny House On Wheels: How Much Does It Cost?

Rent To Own A Tiny House On Wheels: How Much Does It Cost?

As tiny houses get more popular people are looking for more affordable housing options and a rent-to-own tiny house is one option to move into a tiny house today!  Rent-to-own is an agreement, in which you rent a tiny home for a certain amount of time, then have the option to buy it before the lease expires.

rent to own a tiny house on wheels

So today we are going to break down all the key parts of a rent to own agreement and what you need to know when it comes to paying for a tiny house on wheels with this method.

How Does Rent To Own Work?

how does rent to own work

When it comes to renting a tiny house to own there are two main types: Lease Purchase and Lease Purchase.  The main difference is that with a Lease Purchase at the end of the time period you have the option to buy the tiny house.  While the Lease Purchase at the end of lease, you’re legally obligated to buy it.

In some cases when your lease window comes to an end there may be an agreed upon amount you’ll have to pay to finalize the purchase and in other cases you can make it so when the lease payments are completed, you’re the owner with no more additional money.

What Is The Cost To Rent To Own?

how much does it cost to rent to own a tiny house on wheels

Like many things in life, it depends.  Generally speaking a completed tiny house will cost the builder between $20,000 and $60,000 to build, with that in mind you’re going to typically see a monthly payment between $120 per month up to $460 per month depending on terms and cost of the house.

When you rent to own you’ll also be required to pay a down payment, which is between 2%-5% of the loan, so plan to put down at least $500 up to $3,000 as your down payment.  This number is often negotiable and can be worked out, but the more you can put down the better.

Tiny House Mortgage Calculator:

tiny house mortgage calculator

To get an estimate of your future tiny house that you’re going to mortgage or rent-to-own, you can use this mortgage calculator to get a rough idea of what you’re going to be paying for monthly.

For interest rates, figure 1 to 2 points higher than the going mortgage rate because tiny house loans often come with terms above market.  Also consider a shorter term for the loan: 5 year, 10 year and 15 year are most common, while most places won’t do more than 20 years and that’s rare.

Rent To Own Tiny House Shells

rent to own tiny house shells

A tiny house shell is another really great way to save even more money.  A shell is simply all the exterior elements (roof, siding, windows, and doors) built on a trailer.

I recommend tiny house shells to people who don’t have much building experience because it lets all the really important parts be built by a professional tiny house on wheels builder, but not going through the expense of all the interior work which really should be customized to your needs.

About a third of the labor that goes into building a tiny house on wheels is in the shell, while the bulk of the time spent on building goes into the last steps of finishing the inside.

Buying a tiny house that is already built can be tricky because if it isn’t designed for you, then it won’t meet your needs and you’ll be looking to move out.  So make sure you know the layout that you need to enjoy life and meet all your day to day needs.

Tiny House Builders That Offer Finance

tiny house builders that offer financing

At the time of writing this post there are several tiny house builders who do financing.  It should be noted I make no claims on their craftsmanship, business practices and this shouldn’t be seen as an endorsement.

Whatever you do, it’s important to get a contract with a tiny house builder.  This is very much buyer beware as I’ve seen many less than honest builders.

How To Find A Used Tiny House For Sale

how to find a used tiny house

Another option is to find a house that is second hand.  You can save a lot of money this way and since tiny houses are often difficult to sell, you could find a seller that will consider a lease to own arrangement.

This is really a win win for people because you can get a house that’s very affordable, below market value often, and get it on a rent to own lease.  For the seller they may have struggled to sell the house and they’re able to sell the house if it’s been sitting on the market for a long time.

Make sure you do your homework on the house before you buy it.  Get a home inspection, check to make sure they have a full title and their ID matches the name on that title, and finally request all the documentation they have for you to review. Even if you aren’t going to be doing any construction yourself, it’s really good to know how to build a tiny house, because if you understand the process, you can spot where people built the used house incorrectly.

Buying a used tiny house isn’t for the faint of heart, but you can find such amazing deals that it’s a really attractive option in my book.

Rent To Own Storage Buildings

rent to own storage building

A storage building or shed can be another option you should consider.  For many of the same reasons as the tiny house shell, a storage shed is pretty similar.  The added benefit is most storage building companies very commonly do monthly payment.  Typically they have terms of 36 months (3 years) and require between $300-$1,000 down payment.

This is another great option because you can quickly get finishing the inside and start living in a shed.  These storage buildings are commonly available, a quick search shows I have over 30 companies that build and sell these in my city alone!

The one downside is that they aren’t as mobile, but they still can be moved on a flat bed or many tow trucks with beds.  Realistically this is a great option for people.

Renting Land For Your THOW

renting land for a tiny house

Getting a tiny house is just one part of the puzzle, you also need a place to put it!

Some things to consider when it comes to finding a place to park your tiny house is what access do you have to the property, you need a big enough space to get it on the property.  What utilities are available or included with the rental?  Where will you park your daily driving car once you live there? How will you get mail, host guest and dispose of trash?

There is a lot that goes into setting up land for a tiny house, so do your homework.

To find places to park your tiny house on wheels you should check out my article about how to find land for a tiny house post.


Tiny Home Rent To Own FAQs

rent to own FAQ

Is It Good To Rent To Own?

Rent to own is one option out of many when it comes to buying a tiny house, it really depends on your financial history and budget.  For many people there is simply no other way that they could rent.

For some it’s because they have bad credit, others can only afford so much, for some they want a smaller monthly payment.  The one downside to rent to own is you’ll typically end up paying more for the same house over the long term because it’s seen as a riskier loan to make.

Is Rent To Own Cheaper Than Renting?

At this point I’d say yes, mainly because it’s hard to find a tiny house that is done as a rental with the exception of those run as a hotel which carry a high cost per night.

What If I Miss Payments On My Lease?

Depending on your lease agreement, you could be at risk to loose it all, including your down payment.  Different lease terms stipulate different things, so know what you’re signing and make sure you understand what you’re getting into.  Always make sure you keep 3-6 months expenses saved in case of job loss so you’ll never be in that position.

Can You Rent To Own With Bad Credit?

In many cases yes, but not always.  A rent to own agreement is treated like a loan and credit scores are used to asses your financial fitness to repay that loan.  Those with bad credit should expect to have to put down more money and pay a higher interest rate on the lease.

Who Pays Maintenance During The Lease?

In most cases the person who is renting to own (the one living in it) pays for all repairs and upgrades.  Different agreements will stipulate different things, but typically it’s on you.  Any upgrades and repairs typically aren’t factored into payments and if you end up walking away, you loose all that money you put in.

Your Turn!

  • What are your plans to live in a tiny house?
  • How are you planning on funding your tiny house?