Life in a tiny home: How to maximize a tiny lifestyle

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Susan Meyer

Senior Editorial Manager

  • Licensed Insurance Agent — Property and Casualty

Susan is a licensed insurance agent and has worked as a writer and editor for over 10 years across a number of industries. She has worked at The Zebr…



Tiny homes — dwellings with between 200 and 400 square feet of space — have gained popularity as people seek to reduce environmental impacts and lead more transient lifestyles. While the movement may seem unique, it has become a part of mainstream culture for younger Americans. An estimated 2,000 to 5,000 tiny homes are sold per year, with more DIY homes popping up in states like Texas, Colorado, California, and Florida every month.

Not all tiny home projects are lived in year-round. A slew of homebuilders create these micro-homes as guest houses, remote work facilities, or rental properties in highly populated areas. We assessed the reasoning behind this alternative lifestyle, the benefits of tiny home living, and gathered some actionable steps for a pain-free transition in our guide and infographic below.

Benefits of tiny home living

No matter what type of tiny home you choose, there are benefits to be derived from this lifestyle. From financial incentives such as smaller utility bills, lower taxes, to environmental gains including opportunities for renewable energy usage and sustainable material incorporation. Many micro-home dwellers report increased happiness levels after adjusting to this minimal way of life.




Environmental benefits

Aside from the monetary benefits of tiny home living, these small dwellings lead to reduced environmental impact and make it easier to use renewable energy. Because of their size, tiny homes require less lumber, plastic, and metal fixtures, reducing the natural materials salvaged for the home. In fact, some tiny homes are made from 100 percent recycled materials, further reducing their environmental impact.

  • Tiny homes are significantly cheaper to update and may have fewer maintenance issues throughout their lifecycles.
  • Renewable energy options such as solar panels allow homeowners to reduce their carbon dioxide emission rates and still live comfortably.
  • Rainwater barrels and composting toilets are more eco-friendly add ons that can be used to create a self-sustaining home.




Monetary benefits

According to the American Enterprise Institute, the average living space per person in traditional homes has doubled in the past 42 years. Even though American families continue to shrink and accumulate debt, the housing market shows little signs of slowing down anytime soon. In turn, many people are looking to alternative housing options that allow them to become homeowners without being swallowed up by debt or high interest rates. The tiny home movement was born directly out of this need, as 50 percent of 18–34-year-olds rent housing because they can’t afford a down payment on a typical home.

Tiny homes provide homeowners a wide breadth of savings opportunities:

  • Tiny homes have an average cost of $23,000, comparable to an average down payment without looming mortgage fees and high tax rates.
  • Because of their limited space, smaller homes also encourage their owners to practice minimalism, allowing them to save income for retirement or traveling.
  • Tiny homeowners, on average, make around $500 more a month than their peers in the suburbs which can help grow a bigger nest egg for the future.




Planning your tiny life

After learning about the pros and cons of tiny living and the effect this lifestyle can have on the environment and your wallet, you might be considering this as a legitimate lifestyle choice. However, there are steps that must be taken to optimize your living situation and save yourself from potential problems down the line.

From learning about your city’s housing regulations to reducing your spending habits, here is a breakdown of how to plan for your new tiny life.


1. Select your tiny home's location

While tiny home living has skyrocketed in popularity over the years, city regulations are still playing catch-up. Permanent living in an RV, which is what many tiny homes are considered, is actually illegal in some cities. Once you have figured out where you want to live, if you plan to put your home there long-term, check into your city’s housing regulations and take the proper steps early on to get your housing plan approved. This will save you time and money in the long run, and allow you to move into your new living situation sooner.

Below are the top five cities for a tiny house:

  • Fresno, California
  • Spur, Texas
  • Asheville, North Carolina
  • Durango, Colorado
  • Rockledge, Florida




2. Build your new home

Once you have an idea of where you want to live, the next thing you need to decide is whether you want to build your own home or buy a premade tiny home. While designing your own home allows you to customize it to your preferences, it’s a lot more work and those without a construction background may choose to have a professional build their new home.

Below is an outline of steps to take when building your new home:

  • Rent a small Airbnb to test tiny home living.
  • Set a budget.
  • Decide if you will build it yourself or buy from a builder.
  • Decide on must-have features and draw a floor plan or look for homes that have those features included.
  • Find the proper utility hookups and electricity options based on your preferences.
  • Research materials and decide if you want to use salvaged materials or brand new.
  • Buy your new home or starting the building process.


3. Downsize by room

A question many people have while considering tiny home living is how to get rid of all the items they have accumulated over the years. Downsizing can seem daunting, but when taken room by room, it's doable. For example, when downsizing your kitchen you should aim to get rid of all single-use appliances such as an ice cream maker or waffle iron. Any movies and books should be digitized to save space and rarely used beauty products and clothes should be donated. When downsizing, it’s important to focus on your needs and only keep the items that help you accomplish those needs in an efficient, space-saving way.




4. Create a budget for your tiny lifestyle

Taking a hard look at your monthly spending patterns will serve multiple purposes on your journey to a minimal life. Not only will it help you become more aware of what you spend your money on, but it will also help you move more money into your savings which is important to build up before you strike out on your own.

Get started on your savings journey by following these tips:

  • Track your spending habits with an app like Mint to track your spending habits.
  • Pick one or two categories to cut back on and set a max monthly budget for each.
  • Stick to the monthly budget, moving the extra income into your savings each month.
  • Make note of problem areas for the future so you can continue spending less and saving more.
  • Research outdoor and cost-effective hobbies to take up once you move into your tiny home.




5. Buy less, but better

Living in a tiny home means your shopping trips are limited to only the necessities. But when decorating your space, it’s important to choose furniture and other items that serve multiple functions. To maximize your space, look for well-made products that will last you a long time to ensure your tiny home won’t cause you any additional stress.

Some examples of multifunctional and well-designed furniture pieces are:

  • Bed or couch that folds into the wall
  • Hideaway dining tables
  • In-wall storage
  • Stools with removable lids for storage
  • Convertible couch
  • Floating shelves




As houses across America double and triple in size and the average family size continues to shrink, the tiny house movement has taken off as an affordable option of home ownership and a great lesson in materialism.

How to insure your tiny house

A few short years ago, it was hard to find any insurance company that would take on a tiny house. Unless it was classified as a recreational vehicle, most insurers didn’t quite know what to do with them. Nowadays, the tiny home movement is growing, and just like the mobile home movement back in its day, a few long-sighted insurance providers and agents are gradually coming on board and figuring out ways to underwrite and offer specialty coverage for them.

If you are looking to build or buy a tiny house, it’s a good idea to speak with an insurer before you buy or begin construction on one.

Three tiny house insurance options

To simplify an already complicated process, you may want to look for a company that specializes in providing insurance for alternative living structures – if there are any in your state.

There are a lot of variables to consider, but for insurance purposes, tiny homes can be categorized in three ways:

1. Fixed-foundation tiny house built by a certified builder

A typical home insurance policy will cover you for the contents of your home, the structure of the home, and liability in case someone gets hurt on your property. However, because of the unique facets of a tiny home, there are exclusions to keep in mind. A conventional homeowners policy won’t cover theft of the house itself or any damage to the house when it’s in transit.

You can buy either a regular home insurance policy or a tiny home-specific policy (if it’s available) as long as a certified builder built your home and you plan on moving it rarely, if ever. Some providers will want to do an on-site inspection, and may also require a certified electrician to perform an inspection of your electrical system.

2. Mobile tiny house built by a certified builder

If your tiny home is of the moveable variety, it gets a bit more complicated as it’s a combination of a residence and a recreational vehicle. RVs are defined as towable units with a maximum size of 400 square feet, built to stringent standards, and designed for temporary living. To get the seal from the Recreational Vehicle Industry Association (RVIA), your home will need to be built by one of their members and have a VIN attached.

If tiny houses on wheels are considered RVs and not suitable for permanent residence, how do you get around that if you plan to live in it all year? The good news is most insurance companies have “full timer’s” packages similar to homeowners' policies that treat the home as a dwelling as opposed to an RV. However, the homeowners policy will no longer be in play if you connect your house to a tow switch. In this situation, ideally, you want your insurer to include a trip endorsement that adds auto coverage in the form of comprehensive, collision and liability coverages to protect you while you’re on the road.

3. Fixed or mobile tiny house built by non-certified builder

The biggest benefit of tiny-house-specific insurance is that you can get coverage even if your home wasn’t built by a certified builder, since most regular homeowners policies will only cover certified constructions. If you’ve gone the DIY route, it’s a good idea to document your entire build with photos in case your insurance provider requires on-site and electrical inspections.

If you have a tough time finding tiny home coverage in your area, consider checking out companies that offer coverage to manufactured homes. If you try to go with a regular home insurance policy, keep in mind that if your house doesn’t comply with local building codes and zoning regulations, because it’s below a certain size and/or is on wheels, it may not qualify for a regular homeowners policy either.

The basic question for tiny home insurance

Despite the current confusion and lack of regulation in the movement’s nascent state, it looks like the popularity of tiny houses – and the freedom they offer – will continue to gain momentum. And sooner or later (hopefully sooner), the majority of insurance providers will figure out the best way to offer protection, and local authorities will standardize zoning ordinances and building code laws.

Until then, it may sound simplistic, but to ensure you’re adequately covered in the event of a claim, consider the type of property you actually own and ask yourself what risks your tiny home might pose.

For example, if your home is on a fixed foundation and built by a certified builder, ensure your coverage reflects any damages the property might sustain in that location. Or if your tiny house is on wheels, check that you’re covered to take it on the road and around other motor vehicles. And lastly, if you built your tiny home yourself and it’s non-certified, your coverage should protect the structure and the people it might hold as best it can.

Here’s to living big in your tiny house!





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