Could Tiny Homes Deliver Big Savings?

2 min read

Can this rental home type emerge despite onerous land use codes and NIMBYism?

As more communities attempt to address housing shortages through zoning changes, the idea of tiny homes is increasingly making its way into the conversation. While they may not present the most efficient use of land, tiny home rental communities provide a strong sense of place for their residents and an energy-efficient alternative to traditional multifamily dwellings.


“We’re encouraged to see some communities like Minneapolis and Oregon move to upzone their jurisdictions, eliminating single-family-only zoning in favor of a more inclusive housing market,” said Caitlin Walter, vice president of research at National Multifamily Housing Council. “We cannot begin to address our nation’s growing affordability challenges without finding ways to bring more supply to market. These upzoning movements are one way to add density and create new units, whether they be small, accessory dwelling units or traditional multifamily.”

Veterans Community Project (VCP) Village in Kansas City, MO is a community of transitional tiny homes and onsite services where the underlying cause of the Veteran’s homelessness are addressed. Image courtesy of Veterans Community Project

Alexandra Jackiw, chief operating officer, Hayes Gibson Property Services recently toured a LIHTC townhouse development in Minneapolis owned by Beacon Interfaith. She notes that HUD has an inventory of rent-to-own homes and that public housing authorities also have single-family developments.

“Tiny houses are also being built to house homeless vets at Veterans Community Project Village, a new development in Kansas City,” she noted.

The first and most successful tiny home village is real estate developer Alan Graham’s Community First! Village, a 27-acre master planned community just outside Austin. It offers affordable permanent housing in tiny homes and RVs for more than 200 people who were once chronically homeless. Rents range from $225 to $430 per month.

“What Alan and the team have built in Austin is a major source of inspiration for our team. They are the best at-scale community in the nation,” said Joe Basel, owner of Austin-based Paradigm Partners LLP, a global consulting firm actively seeking tiny house partners in every major market in America. “The opportunity is now.”

Basel is building tiny homes—just 200 to 600 square feet per unit–under the name Practical Revolution. “We’re targeting market return, but the political goodwill and counter cyclical nature of the product makes it a very attractive investment for most large investors looking to have major impact in their community and insulate their investments against a macroeconomic correction,” he said.

Basel thinks the homelessness crisis has catalyzed the necessary discussions to push past the land use issues and NIMBYism that has held back tiny house developments in the past.

Sector Insights rotates among market rate/luxury housing, workforce housing, low-income housing, student housing, senior housing and mixed-use.

Read the March 2020 issue of MHN.

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