Tiny Houses as ADUs in Los Angeles

 

The average cost of a professionally built, movable Tiny House is about $60,000.
The average self-built (no labor costs) tiny house is built for around $20,000.
These numbers are for a movable tiny house built upon a trailer, which is a large percentage of the total cost.

As an investment, a home owner could rent out a tiny house on their property. If the cost to prepare the lot (utility hookup + trenching, water and electrical hookup, parking space, fees) is about $15,000, that makes a total investment of about $75,000.

TOTAL INVESTMENT = $60,000 house + $15,000 site prep = $75,000

RENTAL INCOME = $600/month or $7,200/year

ROI (Return on Investment) = $7,200/$75,000 = 9.6%

Instead of paying for the cost of a tiny house themselves, a homeowner could simply prep the lot for $15,000, and invite a Tiny House dweller to reside on their lot as an Accessory Dwelling Unit. Charging $400 /month in rent or $4800 a year would allow them a very high return on investment at 32 percent! 

TOTAL INVESTMENT = $15,000

RENTAL INCOME = $400/month or $4,800/year

ROI (Return on Investment) = $4,800/$15,000 = 32%

For the Tiny House dweller residing as an Accessory Dwelling Unit, cost-savings in rent could also be phenomenal. Consider the average rent of a one bedroom apartment in Los Angeles as $2000. A tiny house dweller with a self-built tiny house (~$20,000), with rent of $400 a month would save $19,200, enough to pay back their self-built tiny house in just over a year!

AVG COST OF 1 BEDROOM = $2,000 a month or $24,000 a year
POSSIBLE RENT FOR TINY HOUSE AS ADU = 400 a month or $4,800 a year
RENT SAVINGS = $24,000 – $4,800 = $19,200 a year

The average size of an American Household is 2 ½ people.
A tiny house is customized to meet the spatial needs of its user. While many single people find tiny living an attractive option, tiny homes can have two or more bedrooms in their design. Below is an examples of a family friendly floor plan.

 

While opportunities for borrowing money specifically for financing a tiny home are limited, there are multiple companies emerging to help meet this demand. With more movable tiny homes being built in accordance with ANSI standards and by certified builders, banks are beginning to support lending for such products along the lines they provide loans for other personal property such as recreational vehicles and boats.  Having a legal placement approved by the City adds confidence to lenders that their investment is relatively secure. The number of banks supporting tiny house lending will likely expand once they are more widely legally permitted.

A beautiful thing about the Tiny House Movement is the hope it gives to those without great credit to own their home. The average cost of a self-built tiny house is $25,000. It would be possible to save $500 a month and in less than 5 years, have enough saved to afford a home, debt free! A lifestyle less burdened by a mortgage or other loans is desirable to many people, regardless of their credit score. 

Movable Tiny Houses are built to resemble a typical cottage or bungalow. They are built for permanent occupancy versus frequent travel, and use conventional building materials.

 

Tiny houses are usually made with all of the same housing systems as a regular house (heating, cooling, plumbing, electrical) and are insulated. Tiny houses are most often outfitted with comfortable-to-use appliances and regularly sized showers or bathtubs.

                                           

 

There is no strict definition for a tiny house. Usually the term Tiny House refers to a home under 500 square feet. Tiny Houses can be built on a permanent foundation like most homes. They can also be built in a factory and then moved onto a permanent foundation, or they can be built on a chassis (the trailer) as the foundation. 

 

It is legal to build a small or tiny house on foundations in Los Angeles as long as zoning and building code requirements are met. For Movable Tiny Houses, there are less options currently available for legally living tiny. This is why including Movable Tiny Houses within the Accessory Dwelling Unit ordinance is so desirable! There are underutilized yards all over Los Angeles that could potentially be home to a small family. Currently, Tiny Houses are allowed for occupancy in RV parks. The short-term requirements for staying in RV parks are not a great match for Tiny Houses designed for permanent dwelling.

“Moveable Tiny House”. A structure intended for separate, independent living quarters for one household for year-round residence that meets these eight (8) conditions:

1. Is licensed and registered with the California Department of Motor Vehicles and meets ANSI 119.2 or 119.5 requirements;

2. Is certified by a qualified third party inspector for ANSI compliance, or provides sufficient evidence to the satisfaction of the Director that the moveable tiny house was built to applicable ANSI standards.

3. Is towable by a Class 3, 4, or 5 hitch, a frame-towing hitch, or a fifth-wheel connection.  Cannot (and is designed not to) move under its own power.

4. Is no larger than allowed by California State Law for movement on public highways; 

5. When sited on a parcel per requirements of this Code, the wheels and undercarriage shall be skirted;

6. Has at least 70 square feet of first floor interior living space;

7. Is a detached, self-contained unit which includes basic functional areas that support normal daily routines such as cooking, sleeping, and toiletry; and

8. Is designed and built to look like a conventional residential structure.

The City’s current draft of the Accessory Dwelling Unit ordinance already addresses requirements for creating additional parking for backyard homes. Because Tiny Houses are, well … tiny, it would most often be easier to fit an extra parking space on the property.

You can currently build a small or tiny Accessory Dwelling Unit on an acceptable foundation system through the City of LA. You cannot currently place and live in a Movable Tiny House (or other RVs) in a yard legally, unless your primary dwelling is being built or undergoing renovations. If you want to place a tiny home in your yard, let your Council District staff and elected representatives know that you desire this option!
 

 

Tiny houses are built using conventional materials and standard methods. If legalized and regulated, the City of Los Angeles can require them to be built to nationally recognized standards. Professional Tiny Home companies build to ANSI 119.2 or 119.5 requirements and have their builds certified by the Recreational Vehicle Industry Association (RVIA) or a third party such as Pacific West.

 There are some who look to tiny houses as a way to customize their home using non-toxic materials so that their day-to-day environment is an improvement from other conventionally built homes.

 In terms of safety, during an earthquake, tiny houses are actually better equipped to avoid major damage, as it is the shear force between the earth and a structure fixed to the earth that causes the most damage. Because a Movable Tiny House is on wheels and not permanently attached, it can sway with the quake.