Rent to Own Tiny Homes: Is it Worth It?

Much of the tiny house movement’s popularity centers around a pathway to affordable homeownership. Of course, tiny house designs are adorable. But determining if a tiny house is right for you is still a significant financial decision and lifestyle change too.

That’s why rent to own tiny homes seem so appealing. 

If you’re not able to dedicate a year of life on a DIY tiny house build, or if poor credit is keeping you from securing a loan for a new tiny house purchase, it is definitely worth considering a rent to own option. 

In a nutshell, a rent to own tiny house agreement allows you to rent a home for a set time period before gaining ownership, or simply provides the option to buy the house.

While the contract specifics vary, part of your rental payments go toward your down payment for the big purchase at a later date.

Sounds easy enough, right? But is it worth it? And are rent to own tiny homes on wheels even available?

Keep reading for a deep dive into how rent to own tiny home agreements work to help you decide if this is the right option for your future tiny home.

How Do Rent to Own Tiny Homes Work?

Before we can dig into the world of rent to own tiny homes, it is essential to understand how this specific rental process works. So let’s get to it!

1) Agreement type

Rent to own tiny homes’ agreements come in two general categories: lease option agreement or lease-purchase agreement. 

As the name implies, a lease option agreement gives you the option to purchase the home after an agreed-upon period of time.

At this time, if you choose not to buy the tiny house, your contract simply expires. Unfortunately, you will lose any money paid above and beyond rent, like the option payment.

In contrast, the lease-purchase agreement legally obligates you to buy the house.

It is highly recommended that you do your due diligence on both the seller and the home before making this financial commitment. Think house inspection, check Better Business Bureau complaints, etc.

2) Purchase price

No matter the type of rent to own agreement, the home’s purchase price is set upfront. Or you can agree to negotiate at the end of the lease. 

3) Lease term

You and the seller will agree to a specific lease term, usually one to three years. Importantly, this time period needs to be long enough for you to shore up your finances to qualify for a mortgage.

4) Option fee

You will be required to pay a one time, non-refundable option fee when leasing a rent to own tiny home. Typically, it is around 1% of the agreed upon purchase price. Sometimes the seller will agree to apply this amount toward the home purchase.

5) Rent payments

You’ll negotiate and agree to set monthly rental payments. Keep in mind, the amount will be, on average, 25-30% above the market rate. A percentage is reserved as credit toward your future home purchase–a way to save up for the down payment.

6) Closing process

When your rent to own tiny home rental term nears the end, it’s time to apply for a mortgage. The extra rent money set aside each month will then be credited to you.

Pros of Rent to Own Tiny Homes

The beauty of rent to own tiny homes is the opportunity they provide to expedite achieving your homeownership goal.

Available financing options for tiny houses are usually more limited. As a result, application requirements tend to be strict. That means a good credit score and a hefty down payment are necessities.

Unfortunately, if you can’t qualify for a loan, buying a tiny house is now out-of-reach. 

A rent to own agreement is a pathway to overcome this hurdle.

Your rental payment could end up being less or the same as your current housing situation. But it helps you save up for the down payment while repairing your credit score. 

Now your monthly rent becomes an investment in your financial stability, as well as in a future asset.

Within one to three years in a rent to own tiny home on wheels, you could become a homeowner. 

Even if your living space needs changes, like your family growing, you can turn your tiny house into a rental to generate income. And with your improved credit score, you’ll have more housing options.

Another significant benefit of a rent to own tiny home agreement is the ability to lock in the sales price. In just a couple of years, the same house could potentially sell for a few thousand dollars more.

Cons of Rent to Own Tiny Homes

Probably the biggest disadvantage of rent to own tiny homes is the available selection. 

You may be limited to stock models with limited customization. Of course, remodeling offers a way to modify the design to suit your needs better, but the seller may not allow this until you are the official owner.

Currently, only a small list of builders and manufacturers advertise rent to own tiny homes on wheels. More may do so, or be open to the idea, so don’t be afraid to ask. 

Another route is to seek out a used house that’s been stagnant in the resale market. An owner struggling to sell may be amenable to a rent to own agreement. But you’ll be even more limited on design and potentially quality too.

Another reason to give you pause on pursuing a rent to own tiny home on wheels is maintenance.

Unlike traditional rentals, where landlords are responsible for upkeep and repairs, this will most likely be your sole responsibility. 

Finding Rent to Own Tiny Homes

You might be wondering, “How do I find rent to own tiny homes near me?” The short answer is, be prepared to be flexible on purchase location. With limited availability, you’ll need to cast a wide net.

To help you kickstart your search, here are a few available rent to own tiny homes:

1) Cross Creek Village Rent to Own Tiny Home

A dream come true! Cross Creek Village is currently offering an adorable rent to own tiny home on wheels, as well as a legal parking spot.

If you have a steady job and solid rental history, you may qualify for an affordable homeownership opportunity in a tiny house and RV community in Leesburg, Florida. 

Learn more about the community here. For full details about the rent to own tiny home, contact Suzy at 352.630.8207. 

Looking for more tiny house options in Florida? Check out these 16 tiny houses for sale in Florida.

2) Wildcat Barns Portable Amish Log Cabins

Wildcat Barns offers several portable Amish log cabins. Choose a charming rustic single floor or lofted rent to own tiny homes, available in a shell or fully finished interior option.

Rental costs start at just $217.88 per month. However, these are only available in the following states: Kentucky, Ohio, Tennessee, Indiana, or West Virginia. But if you are searching for ‘rent to own tiny homes near me’ in those states, you might be in luck!

Learn more about Wildcat Barns here.

Take a look at these posts if you are looking for a tiny home in Texas or California!

3) ESCAPE Rental Program

ESCAPE offers a different take on rent to home tiny homes.

Through their vacation rental program, qualifying individuals receive an ESCAPE model at an exceptionally low cost, a $1,000-$2,000 security deposit. The catch? 

Although approved, partners won’t be able to live in the tiny homes themselves full-time. However, they will receive 40% of the revenue from rental fees. At any time, with 90 days prior notice, a partner has the option to purchase the model at a predetermined price.

It’s not quite as easy as it sounds. To qualify, you need to have access to land. Additionally, you are responsible for site preparation, from the RV pad to utility hook-ups.

And perhaps the most challenging aspect, you must be able to supply ESCAPE with any necessary permits or approvals from the local authorities.

For more details and to apply for the Escape Rental Program, visit their website here.

4) Tiny Homes Detroit Rent To Own Tiny Homes

Do you qualify as low-income? Cass Community Social Services has built more than two dozen rent-to-own tiny homes to help revitalize its city while making homeownership accessible to citizens struggling to get by. 

Monthly rent for Tiny Home Detroit is only $1 per square foot, so a 250 square foot house is only $250 per month.

After renting for seven years, renters will be given the opportunity to own the property, house and land.

Cass Community Social Services is currently accepting applications for their Special Tiny Homes Development for low-income individuals or couples with diagnosed physical or mental disabilities.

Learn more and print an application from their website.

Conclusion on Rent to Own Tiny Homes

Rent to own tiny homes might be the ideal affordable homeownership opportunity you have been searching for. 

Most importantly, it gives you the flexibility to save up a down payment while enjoying the benefits of downsized living.

Just remember to do your homework before signing a contract! You do not want to be stuck with a defective tiny house.

If you are ok with limited design options, a rent to own tiny home might be your ticket to a sound financial future and a cozy home of your own.

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