In 2019, I bought a three-bedroom, 1,400-square-feet house in Atlanta, Georgia for $196,000. I figured I could earn extra income by renting out the spare rooms on Airbnb, especially since I traveled a lot for work and was rarely home.
Unfortunately, the bookings dried up in 2020. No one wanted to share a house with a stranger in the early days of the pandemic. My work travels also stopped, so I was living alone in a house that felt too big.
But that May, as I stared out the kitchen window into my huge backyard, something clicked: I could use that space to build a tiny home to live in, and fully rent out the main house.
Before getting started, I had to submit building, electrical and plumbing permits to the city planning office.
Then I purchased a shed from Liberty Storage Solutions and hired a local contracting team to pour a concrete slab foundation. They got to work in October 2020.
Overall, it cost me around $35,000 to build the home, which includes the prefabricated shed structure, labor and material costs.
Instead of taking out a bank loan, I cashed out $8,500 in stocks and put about $20,000 on my credit cards to pay for everything. I was able to pay off this debt last year.
While the house was being built, I rented out my primary home and rented a room from my neighbor for $300 a month.
After we finished building the 296-square-foot tiny home in March 2021, I immediately rented it out on Airbnb for a few months to recoup costs.
By charging between $89 and $129 per night and $1,300 for monthly leases, I was able to bring in almost $32,000 in gross rental income. And this January, I moved into the tiny home to save on living expenses.
Here are the monthly associated costs for both homes:
- Mortgage and property taxes: $1,200
- Electricity: $190
- Water: $110
- Internet: $80
All of this is covered by the $2,725 I make from renting out the main house, which means I'm able to live in my tiny home for free.
To give the place a light and airy feel, I painted the walls a coastal blue shade and added some rustic touches like a wooden ladder leading to the loft's queen-sized mattress.
In addition to the daybed that doubles as a couch on the main floor, there's a full bathroom, kitchen and breakfast nook.
My favorite area is the kitchen. Most people are surprised to see that it has a full-sized fridge and extra large sink.
The eight separate windows, wall mirrors and glass shower door all make the space feel bigger. I sometimes forget I'm living in a shed.
I've had to downsize my wardrobe and shoe collection. But rather than getting rid of clothes I still want to keep, I store some at a friend's house. Every few weeks, we do a wardrobe swap.
I don't have friends over very often, but once the weather gets warmer, I plan to use the fire pit as a hosting area.
Having this home has given me a ton of real estate options, including rental income and backup housing for myself or aging family members.
I believe that tiny homes will play an important role in offsetting the global housing crisis. Last year, I gave a TEDx Talk about how they can help create a sustainable sharing economy for land.
In 2021, after realizing effects of vacation rentals on the real estate market in Atlanta, I stopped listing my properties for short-term rental on sites like Airbnb. Renting out more and more space for vacations means less space for folks who need long-term homes.
I've since decreased my portfolio and am renting to local students and low-income workers. My plan is to add an attached guest suite to the main home and provide even more stable housing.
This year, I'm excited to fully experience the tiny home lifestyle for myself. It's amazing what you can do with a bit of backyard space.
Precious Price is a TEDx speaker, marketing strategist and social entrepreneur. In 2021, she founded LANDRIFT, a digital real estate marketplace, amidst the conversation around the impact of short-term rentals on housing affordability and availability. She holds a master's degree in management information systems from Indiana University. Follow her on Instagram, Twitter and YouTube.
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