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Flipping Tiny Houses

by blogger1
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on Wednesday, 16 July 2014
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Should real estate wholesalers jump on the tiny house movement and flip micro lofts and apartments?

There’s no question that small is the new big in many real estate circles. This may be far more to being priced out, and out of credit, than a new highly desirable home feature, but tiny houses are in. There is even a new reality show trying to nurture the art of living smaller – Tiny House Nation. The big question is whether real estate investors should get into flipping this ‘hot’ commodity?

Tiny houses are cute, they’re cheap, and they may be a profitable product line for some. However, they are not without their challenges. For a start there are certainly a number of government and utility agencies that are none too happy about a new generation living without their services, skirting building codes, and more.

With the best transactional lenders providing almost limitless capital to wholesalers, and landlord friendly mortgage lenders opening up the money gates to fund rental properties some investors may be under the impression that everything is a great buy, and easy flip today.

Aside from the code and title challenges of attempting to buy and resell tiny houses, there is perhaps an even bigger issue many are completely aware of. Even if everything else is great, most lenders won’t only shun small balance mortgage loan applications; they won’t dream of funding such small units. Most are unaware of these underwriting conditions because they rarely come up, but many lenders will have minimum square footage requirements.

There may be some exceptions for those really set on trying to work this niche. Where small condo units or homes are standard, and there are plenty of comps, some local banks may finance them. Then there are hybrid homes such as those being manufactured by Mesocore which are up to code in the areas they have been built, and offer all the benefits of green and affordable living, but are real homes. And they are at least 1,000 square feet.

 

Tiny house architecture is cool, but be aware that flipping tiny houses might be far more challenging, and less profitable than many hope.

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