Tiny Homes Are Big!

Date: August 15, 2012      Publication: Bottom Line Personal      Source: Gregory Paul Johnson      Print:

Add a Guest Cottage, Home Office or “Granny Pod” for Surprisingly Little

Is your home too cramped? Before you add an addition, consider the advantages of erecting a small freestanding cottage on your property.

These separate structures are quieter and more private than additions, and adding one won’t turn your home into a construction zone for months. There can be tax benefits when freestanding structures are used for business purposes, and there are freestanding “granny pods” specifically designed to comfortably house elderly parents near family members. The cost of a separate structure is likely to be comparable to adding an addition of similar size and function.

Smart uses for 500-square-foot (or smaller) structures…

Guest cottage. Sharing living space with houseguests can be disruptive. Having houseguests is far more pleasant and less invasive when the guests can retire to their own cottage on your property each night.

Private living space for an elderly parent or adult child. Adding another adult to a household often leads to friction. Providing this adult with a separate structure means more privacy and independence for everyone.

If you’re taking in an elderly parent, consider purchasing a freestanding “granny pod” designed specifically for this purpose. These typically are handicapped accessible and often include health-monitoring devices that inform the nearby family members if assistance is required. Options include Practical Assisted Living Solutions (877-771-7257, www.PALSBuilt.com) and MEDCottage (888-797-5818, www.MEDCottage.com).

Example: MEDCottage is a 12-by-24-foot handicapped-accessible dwelling that features a hospital bed and extensive health-monitoring equipment. It even can serve as a hyperbaric chamber for those who require supplemental oxygen. The cottage’s plumbing and electricity can be connected to the nearby family home. MEDCottage is priced between $40,000 and $85,000, plus shipping, depending on the features included. A buyback program allows some of that cost to be recouped later if the unit is no longer needed.

Home office or studio. Creating a home office within the home means enduring household noises and distractions. Constructing a separate structure on the property avoids this.

A freestanding home office can have added tax benefits as well. You probably will be able to deduct the full cost of the structure’s construction, maintenance and utilities, not just a small percentage of your overall homeownership costs. If your home office is not your principal place of business, you often can’t deduct it unless it is a freestanding structure used exclusively and regularly for your business. Consult your tax preparer.

Vacation home. Opting to build a small cottage instead of a full-sized second home on vacation property that you own greatly reduces taxes, maintenance, homeowner’s insurance, construction costs and utility bills—not to mention the time you’ll spend cleaning and maintaining this space.

Dorm room for your college student. Renting a dorm room or off-campus apartment for your child could cost $20,000 to $30,000 or more. It might be possible to construct a very small home for the student near campus for well under $100,000, then sell it upon graduation, depending on the local real estate market. You will need, of course, to purchase a small plot of land.

Helpful: Your ownership expenses for this property even might be tax-deductible if your college student pays you market-rate rent (you can give the child the money needed to pay you this rent if necessary). Your tax preparer can provide details.

Temporary residence while constructing a larger home. You can put up a small cottage very quickly, then live in it while building a full-sized home. The small structure can serve as a guest cottage or office once the large home is complete.


Contact your local zoning department before erecting a small structure. Many areas impose restrictions on their construction and use. If these restrictions do cause problems, there might be loopholes…

Zoning laws often don’t apply to homes on wheels. Some tiny structures are constructed on a flat commercial-grade trailer to exploit this loophole. Example: A company called Little House On the Trailer (www.LittleHouseOnTheTrailer.com) specializes in this.

However, some areas have rules that prevent “nonfixed structures” from being used as full-time residences or from being connected to city water and sewer lines, so be sure to research local RV rules before opting for this route. Water tanks and chemical or composting toilets could be used to get around water and sewer-line restrictions, if necessary.

Some areas specifically permit “temporary family health-care structures,” such as the granny pods mentioned earlier, even where small residential structures would not otherwise be allowed. A letter from a doctor confirming that the resident requires daily assistance might be needed.

Many areas do not require permits for structures of less than 120 square feet. The rules might be less forgiving if this tiny structure is permanently attached to water, sewer or electrical lines.


There are builders and architects in many regions who specialize in the design and construction of tiny structures. A list of these is available on the Web site of the Small House Society (www.SmallHouseSociety.com). Reputable providers include Alchemy Architects (www.WeeHouse.com), Historic Shed (www.HistoricShed.com) and Rocio Romero (www.RocioRomero.com).

Alternately, you can purchase plans for tiny homes online from companies such as Tumbleweed Tiny House Company (www.TumbleweedHouses.com) and Ross Chapin Architects (www.RossChapin.com), typically for $100 to $1,000. Provide these plans to a local builder, or erect the structure yourself—putting up structures of modest size is within the abilities of many skilled do-it-yourselfers, assuming that they have professional plans. Consider hiring pros to handle the electrical and plumbing.

Be sure to opt for high-quality, low-maintenance components. You probably won’t spend as much time in this small structure as you do in your home, so you might not notice leaks or other problems until they have caused extensive damage. Low-maintenance components unlikely to experience problems could save you money in the long run.


Living in a 500- square-foot or smaller home could save you a bundle. Home-construction costs average around $80 per square foot, so tiny homes can provide up-front savings of more than $100,000 when compared with average-sized residences.

Homeowner’s insurance, property taxes, home décor expenses and heating and cooling costs will be slashed dramatically as well. Expect discretionary spending to drop, too—with less room to store possessions, tiny home dwellers tend not to waste money on things that they don’t really need.

But saving money isn’t the only advantage. Paradoxically, living in a tiny home can be a way to enjoy luxurious home components. High-end features such as cedar shingles and hardwood floors are pricey when installed in a full-sized home, but they don’t bust the budget with a tiny home, as only a small quantity is required. And having less home means having less to clean and maintain.

Living in a very small home can be an adjustment, however—particularly when two or more people are living together. Spend a few weeks living in just the kitchen, master bedroom and bathroom of your full-sized home before you take the plunge to make sure that you can handle the close quarters.

Some find that living in a small space isn’t the problem—the challenge is that their possessions won’t fit in the small space. Modern technology offers a partial solution. Wall-mounted flat-screen TVs take up hardly any space…libraries can be replaced with eBooks…DVD and CD collections can be replaced with streaming movies and music. Rent a climate-controlled storage locker for items that you need only occasionally or seasonally. Example: Keep winter clothes in storage during the summer and summer clothes in storage during the winter.

Source: Gregory Paul Johnson, president of the Small House Society, an organization that supports the development and use of smaller living spaces. Based in Iowa City, Iowa, he spent six years living in a 140-square-foot home and is author of Put Your Life on a Diet: Lessons Learned from Living in 140 Square Feet (Gibbs Smith). www.ResourcesForLife.com

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