It’s a small world! A dear friend of ours forwarded an email from HomeAway that he’d received highlighting exceptional tiny house rentals across the US. In it was a photo of a stunning version of our 28′ hOMe tiny house so I reached out to the listing owner, Kenneth Wheeler. In communicating with him, I realized there was a scorching hot story there and want to showcase how to turn $299 set of tiny house plans into $30k monthly income.
What Kenneth and his family have accomplished since purchasing their first set of tiny house plans from us is nothing short of extraordinary: nearly 100% occupancy rates year round (virtually unheard of in the industry), the creation of a family-run tiny house construction business to keep up with demand, stepping into container homes to expand their rental offering, starting a rental management company, and now launching an exciting offering which allows investors and tiny house wannabes to gain the benefits of his successful business model. If you’ve been curious about how to make money with a tiny house rental, this is the article for you!
Please introduce yourself and let us know how you came about the idea of purchasing the 28′ hOMe plans.
My name is Kenneth Wheeler and I’ve been involved in construction for over 28 years. I’ve done everything from log homes to conventional framing and even helped build President George Bush’s ranch house in Crawford, Texas. I’m also a furniture maker and have built a few acoustic guitars (I play guitar) so I really enjoy building and working with my hands. In recent years I haven’t been able to do as much building since I’ve moved into management of a collection of small hand craft studios and retail outlets.
In 2016, after seeing the tiny house movement starting to make waves, I got a hankering to build something again and decided to jump into making one with my sons as a sort of school project to teach them what I know about building. After scratching around trying to come up with our own plans I came across your 28′ hOMe plans and loved the design instantly. We bought them and within a week had ordered a custom trailer and dove in head first.
We wanted to finish the tiny house in time to display it at a local fall festival so we actually completed it from start to finish in just over 6 weeks! And in that time frame, not only did we build the tiny house we also built a small solar trailer that had solar panels and a wind turbine on the roof, inverter and batteries inside and siding that matched the look of hOMe. The entire house plugs in with a 50 amp RV style plug and can be towed and powered anywhere. My boys learned a ton and now are part of our family business building tiny container homes (another story).
Any unique customizations or personalizations of the build you’d like to highlight?
For the siding we decided to go with Shou Sugi Ban (charred wood) siding. We’d recently read about this Japanese technique for preserving wood and decided to try it ourselves. We got a large roofing torch and laid out the siding on concrete blocks and then torched, wire-brushed and power-washed each cedar board. We were able to obtain the two-toned look on the tiny house by varying the degree of wire-brushing and power-washing. We were very happy with how it turned out. We also custom made all the cabinets ourselves and we made butcher block style countertops out of hard maple. Another interesting item not directly related to the build is the Roman shades on the windows. One of my sons enjoys weaving and he handwove all the cloth for the shades on a drawloom while my daughter sewed them up.
You purchased the hOMe plans, built it, and started offering it on sites such as HomeAway and AirBnB. Did you purchase the plans with the initial intent of using it for guest lodging?
So initially we planned to build the tiny house and turn around and sell it since we didn’t have need for it personally. After several months of taking it to a couple fairs and advertising in a few locals, it became clear that while a lot of people were very interested, most couldn’t afford it because of the difficulty in finding financing. One night my wife and I were talking and decided, kind of on a whim, to list the tiny house on Airbnb and HomeAway. We took some pictures, wrote up a little description and published it.
Within 8 hours of listing it, we had 5 bookings. Before we knew it, we were booked out several months and the rest is history!
Where is your rental located? How often does it book out? What is customer feedback on it? Does this floor plan meet your and your guests’ needs?
We are running anywhere from 85% to 100% occupancy rates on a monthly basis which is almost unheard of.
We named our hOMe the “Montana Escape” (I love Montana). But it’s located near our house on some rural property just outside of Waco, Texas. Our guests absolutely love it. Most of them have “seen the tiny house shows” and have always wanted to try one out. We generally get a text from them the minute they walk in the door and it’s usually some version of, “Wow! This is beautiful and so much bigger than I pictured!” We have a lot of young to middle-age couples coming to Waco to visit Magnolia so in general it’s not much more than two or three people staying there but we’ve had as many as six! They piled up in the two lofts and put an air mattress on the kitchen floor and absolutely loved it!
If I built it again with a vacation rental in mind, I would have less cabinets and a smaller kitchen. It would be nice to have a little more room for the couch and a place to just stretch out and relax. We’ve talked about making the whole side where the built in couch and “table” are into a full length sofa and then making the front wall of the kitchen into a bar top for dining and work. Besides that, it’s been great and everyone is ecstatic about staying in it.
Has your success exceeded expectations? Does your tiny house rent out more than conventionally sized homes in your area or is it in line with market trends?
Our rental rates have far exceeded our expectations. We really didn’t know what to expect but assumed maybe it would book out 10 to 12 nights a month. We generally have at most 2 or 3 nights a month that don’t book out and often in the spring and fall we have 100% occupancy. Our occupancy rates run around double the average in our area.
We believe that is primarily for three reasons: One, pictures sell on Airbnb, and this tiny house offers spectacular photo opportunities. Two, it offers a more unique experience than just staying in a regular home. Folks are looking for an experience when they book a vacation rental and this fits the bill perfectly. Third, the tiny house fills a niche for couples or small families who don’t need or can’t afford an entire home but don’t want to stay in a shared space such as a bedroom rented out of a house. Young Millennial couples especially love this option since it gives them the perfect “Instagram” moment, a reasonably priced stay and privacy. We’ve now hosted over 1200 guest stays and have a full 5-star rating.
You’ve now stepped into container homes. So cool…tell us more!
After the somewhat surprising success of our first tiny house rental we decided we had a good thing going and should build more. By that time I’d gotten interested in shipping container homes so we decided to build one. We converted a 20’ container into a tiny house with a Murphy bed, small kitchenette and bathroom. We used the original 8’ container doors as the main entrance and put full length glass in the door frames after cutting out the corrugated panels. Part way through the project we decided it needed a rooftop deck to balance out the look and it ended up turning out great.
We put it up on Airbnb and it immediately started booking up as well. Our guests’ favorite part is the rooftop deck. Because the main shell is already done, we’re really just insulating and finishing out the interiors. Because of the low cost and speed with which we can build them (a 20’ can be done in a little over 2 weeks) we’ve found the ROI for vacation rentals on these are terrific and so have built quite a few more. We’ve also had some success selling them and have even shipped them as far as California. We primarily build 3 different models–a single 20’ called The Anchor, a single 40’ called The Mainsail, and a double-stacked 40’ with 20’ on the top called The Helm. We’re currently working on developing a side by side double 20’ model.
Is this a side hustle for you or are you full time with your tiny house ventures?
This is our family business and includes my sons and daughter, wife, brother-in-law and several others. We now have 7 container homes in addition to the hOMe and they are all renting out with close to 100% occupancy rates.
I personally have my hand in a lot of different pots so it’s not full-time yet for me but we’re getting close. Our container home building company, CargoHome, has just this year really gotten off the ground with orders into the foreseeable future so that has an exciting road ahead.
Our vacation rental company, VillaStay, is expanding rapidly and we’re planning to have another half a dozen or so container homes renting out by the end of the year. We’re also currently working on a couple of exciting expansion opportunities in other locations. We’d eventually like to see a number of our tiny house rental villages spread across the country. We feel very fortunate to have sort of stumbled into a successful, integrated business model between the creative/building side and the service/hospitality side.
At this point, it seems we can rent out as many as we can build and our biggest issue is keeping up with the demand from customers as well as building our own portfolio! We’ve also recently expanded our rental business into management for other owners, both tiny houses and full-size homes. This has enabled us to gain a lot of efficiencies in operations and inventory of supplies and such. So far we’ve really enjoyed the journey of building this hospitality business.
What advice do you have for others wanting to step into creating an income from overnight accommodations?
The three most important things to being successful in the short-term rental business are: One, stellar customer service, Two, stellar customer service and Three, stellar customer service. But seriously, today’s travelers expect a high level of service and communication and keeping those stellar reviews coming in are the key to your listings ranking high in the search engines and OTAs. Also, it’s important that the general look and decor of your tiny house fits your local area and the type of guests you have coming to your area. For instance, in Waco everyone is coming to see the Fixer Upper/Magnolia empire so we use lots of shiplap on the walls and decor that looks like something Joanna Gaines would have chosen.
Our guests are often Millennials and young families so we offer a fairly “tech-y” experience with super fast WiFi, internet based TV, WiFi enabled locks and QR codes on all our instruction plaques with links to videos on how to use things like the Murphy bed, A/C remotes and such.
Another very important part of the business if you have more than one or two units is a Property Management Software or PMS. This enables you to push your listings and synchronize your calendars between multiple booking channels (e.g. Airbnb, HomeAway, TripAdvisor, Booking.com), integrate with operational software to coordinate cleanings and update remote lock passwords, as well as automate a lot of communications. The auto-messages feature is incredible since it allows you to send useful information to the guests on a schedule relative to their arrival date and throughout their stay that helps them to feel cared for and prepared for their stay.
Both of our properties near Waco are just outside city limits so it allows us to not have to deal with zoning and permitting issues (in most Texas counties there are no zoning regs). As we expand to new areas we are initially starting the same way. Even if there are county regulations, they’re generally much easier to deal with outside city limits. But we’ve now been working with the city of Waco and are very close to opening our first collection of tiny homes in city limits a little later this year. They’re allowing 3rd party inspectors to report from our shop and have generally been really supportive of our proposal to set these up in town for short term rentals after seeing how well they’ve done and the quality of the homes.
Please share more about your business and how investors/tiny home owner wannabes can get involved!
An exciting new opportunity we started offering earlier this year is an “investment” package where an individual can purchase a tiny house from us at a discount and then contract us to manage it as a vacation rental on one of our properties.
This offering is attractive to both individuals who want a tiny house for their own use as a guest suite or permanent residence, as well as folks who want to purchase a tiny house as an income producing venture. For those who want a tiny house but aren’t in a hurry and have limited finances, this can be a way to pretty much pay off the tiny house in a couple year’s time and then they can move it wherever they wish. For those wanting an income producing asset, this enables them to immediately start bringing in an income without having to go through the major ordeal of developing a property and utilities infrastructure to put the tiny house(s) on.
We have a working relationship with a couple of local banks that are happy to finance these for folks with decent credit since they see we’ve proven the business model and it cash flows well. We currently have several properties already developed and have more in the pipeline. We’ve done a number of these deals now and it’s providing a tremendous value for the customers.
If anyone is interested in this they can email us at [email protected] and we can send an information packet. Folks can visit our website, www.CargoHome.com to price out their own tiny container home and visit our rental website, www.VillaStay.com to see our current rental offerings. We frequently post pictures of our current projects to our Instagram profiles @cargo_home and @villastay. Please follow along!
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