Itty Bitty Homes: Promoting a frugal life style

Alternative housing has been an interest of mine for several years now. I don't know why the subject appeals to me. Maybe it's just a breath of fresh air after constantly seeing row after row of more or less cookie cutter homes in my neighborhood. Or maybe the life style of those who typically dwell in them is so unique and rare.

I wrote an article on eco-frugal homes about a year ago here on the minus sign blues. I really enjoyed researching and writing it. But I neglected something that's a bit less eco-frugal, but not so much to warrant it being barred from a discussion. The Itty-Bitty home. They come in all shapes, sizes and building materials. From ISBU styled homes made of steel shipping containers to more conventional wood and nail creations, just built on a tiny scale.

If you live in an itty bitty home you're the polar opposite of most people. You've thrown off most of the shackles of materialism and embraced a low square footage life style. You don't wind up collecting useless junk simply because of the fact that you just can't. You don't have enough storage space to hold onto your woefully out of date 1976 collection of Encyclopedias or that "antique" kitchen table that's more or less collecting dust in the basement. It's a clean life style. I'm convinced that this is very cool, although I do admit it's fairly hard to imagine myself becoming that type of person.

It's take a fair bit of work to shoe horn myself into this type of life style. But I have to admit that I've changed a lot in the past couple of years. Our credit card debt has taught me that living close to the edge isn't very fun most of the time. But it's also taught me to be a bit more humble as far as my expectations go. That things, while pretty freaking awesome, are not what define a person. And someone's earning power occasionally correlates with the decline of one's morality and self control.

So who knows. Another year and a half in debt might teach me that yes, small and humble (but comfortable) might be the way to go as far as a home goes. I certainly never wanted a McMansion, but I think my requirements for a home have changed substantially.

Itty-Bitty style homes are occasionally portable simply because of the fact that it's quite easy to slap some wheels and a towing hitch on something so light and tiny. But they come in a variety of shapes and sizes from a wide array of builders. They're gaining popularity. Not just among retired snowbirds and nomads, but people looking for permanent residences on their own lots of land. Some of these folk even call the suburbs home year around and just prefer to keep their interests vested in other endeavors.

For example, if you live in an itty-bitty style home you don't have to worry about heating a lot of empty space and disused guest bedrooms in the depths of winter. Or cooling 4,000+ square feet in the middle of summer. You just have to worry about a relatively small space. And since they're typically constructed from specialized builders who have a lot of experience in this small subniche you're going to get the best insulated new construction possible.

Since these homes are typically built with efficiency in mind they usually come equipped with wood pellet stoves, which have also been gaining popularity in the recent months as fuel prices reached record highs (although they've since for the most part dropped with the rest of the market). By no means do they all require wood pellets, though. Propane is another commonly used fuel throughout this niche. While not nearly as popular (or arguably cheaper) propane is a widely availible, relatively clean burnig gas that you can purchase anywhere from Costco to most local gas stations.

And depending on the style of construction you use, small wood burning fireplaces are also quite possible. While I'm not a fan of wood stoves (chopping wood and regularly stoking a fire throughout the night is not my idea of fun), they're by far one of the cheapest methods to heat your home. So long as you own your lot of land, an axe and know how to spot a dead free standing tree you have a ready supply of free fuel.

While burning hardwood may not be terribly environmentally friendly, it's my opinion that it's better than purchasing heating oil (which requires an industrial refining process) or more electricity (which in all likelihood is produced by a coal fire plant). So it's the one of the lesser of necessary evils.

Of course regardless of the fuel used to heat an Itty-Bitty home you're going to use a lot less than any conventional style variety fresh off of the market. If you're a hardcore green oriented person, these are also a perfect match to an alternative energy life style. Depending on your locale and means they're perfectly adapted for solar (passive or direct), wind or hydro. Since they're so small and built efficiently a lot less power is required to keep it lighted. Their footprint takes up so little room you can easily mount solar panels elsewhere on your lot in a sunny, but out of the way location.

As far as space goes many of them are surprisingly roomy given their tiny dimensions. If you purchase plans from a respected firm that specializes in the field of small home construction you'll find that most things in the home serve more than one purpose and are built with their size in mind. By no means is it common to have full dishwasher, sink, restaurant sized fridge, six burner stoves and microwaves large enough to cook a Thanksgiving day turkey but most are built with the average person in mind and as such have ample room for the required appliances needed in every day living. It's common to find full sized refrigerators tucked into surprisingly efficiently locations, or stoves placed in just the right location.

Most also take advantage of vertical space, which is sorely under used in many conventional style homes. Cathedral ceilings may be nice, but are ultimately unnecessary. The average person is no taller than 6 feet, so anything beyond 8 feet is completely wasted space.

Loft bedrooms and second floor living spaces are incredibly popular, as well as folding or collapsing staircases. These all make well use of rising heat, keeping it close to the ground to maximize efficiency. It also keeps clutter away from the main level and promotes a sense of privacy to certain areas of the home, something that newcomers to the style believe is lacking upon initial investigation. Few people like guests sitting on a futon that also happens to be the their master bed.

The vast majority of special built small scale homes certainly come with running water, water heaters and electricity. Although occasionally they may be a bit unconventional compared to what most people are used to on a regular basis. Since space is of the utmost concern small toilets may be used, sinks with built in wall recesses and stand up showers typically replace bath-shower combos. But this also opens up a potential money sink. When your special built wall recessed sink is broken, who are you going to call? Will the average plumber be able to fix such an unorthodox contraption? Or how hard is it going to be to find an especially small toilet if the one the house was built with suddenly stops working properly? Will this special toilet cost more than the average run of the mill one you can find down the street at Lowes or Home Depot?

Although the cost for smaller homes are by far significantly lower than average home prices. Simply because of the fact that less labor is required to construct a smaller space, which also means there are less building materials used. The average home runs about $25,000 to $40,000. Which may sound like a lot, but that's the typical down payment for a more conventional home, which usually run $200,000 to $300,000. With the money saved initially (in loan costs, not counting reduced energy and heating bills) you can afford to purchase an especially nice lot of land to place it on. Or invest the money that you'd otherwise be spending on a $1,500 to $2,500 a month mortgage into a retirement fund.

While I don't believe I don't have it in my to make my first real home something from TumbleWeed or one or their competitors, it's certainly an interesting idea. Perhaps when I'm in a better financial position it'd make for a nice vacation home or something to consider when I'm ready to "upgrade" after building some equity in my first home.

Sources, credit and further reading:

• Tinyhouses.net
• Tinyhouseblog.com
• Tumbleweedhouses.com
• Martinhousetogo.com
  

Selling your home: Top 10 things to do to get ready

Let's say you really are in a dire financial situation. The best self help books out there (and even many of the worst) suggest one simple thing before elaborate budgets, job schemes and everything else. They tell you to spend less. Which is quite often a lot easier said than done. But it's possible. The scale is of course up to you, but one of the biggest things you can do to slow the bleeding of your pocket book is knocking a mortgage out of the park.

When you buy a home you typically apply for a home loan from a lender. This lender will pay the seller of the home their asking price and establish a line of credit with you, the buyer. You will then receive monthly payments from them just like you would from Visa or American Express. The amount you pay will of course vary depending on the price of the home, length of the home loan and interest you are charged.

Which is perfectly acceptable. But in a tightening economy sometimes it is necessary to trim the fat. Sure, you can trade in your elaborate BMW for a used Chevy Malibu. But sometimes when the going gets tough it may be prudent to sell your home and either find a cheaper one, or simply tough it out in an apartment for a little while.

The real estate market is in shambles right now. Many big lenders have simply imploded under the stress of so many foreclosures. Many more have stopped issuing new lines of credit altogether. And of the few that are still offering home loans, they're being a heck of a lot pickier about who they reject and who is approved.

Needless to say it's a double edged blade. During the time you may need to sell your home the most it's the hardest. But there are a couple of tricks you can do to get your home on the market and sold as quickly as possible, saving you mortgage payments, time and energy.

1. Price it right: The market cannot be manipulated. It is a simple case of supply and demand. When there is more supply than demand, prices drop. When there is more demand than supply, prices sky rocket. So even though your neighbor sold his home, which is identical to yours in every way two summers ago for $250,000 that does not mean yours will go for the same price.
   
   So contact a realtor and ask about a cost market analysis on your home. Most realtors don't get paid until your home is sold, so the report should be free. Just don't lead them on.
   
   
2. Stay realistic: A real estate agent may give you a price that you don't like. Tough. While they may be off slightly it's probably a whole lot more realistic than your estimate. They are professionals. This is how they make their own mortgage payments.
   
   An agent who panders to you and says they can sell your home for a lot more is typically someone to stay away from. Your home is going to be listed on the same market no matter who sells your property. It's in an honest realtor's best interest to give you an accurate price. The more realistic it is, the faster it sells. The faster it sells, the sooner they get paid. If it's too low, that'll reflect their commission negatively, too.
   
   
3. Stay away from the buyers: Let your realtor do their job. When a showing is scheduled on your home, get the heck out of dodge. Go for a cup of coffee. Take the dog for a walk. If you stick around and chat up the buyers you may let an insignificant fact slip that may hurt your bottom line if they decide to write up an offer. Or you may come off as desperate.
   
   
4. Don't be difficult: A lot of people see houses on the fly. Sometimes they may only want to give you a couple of hours notice before they want to see your property. Very rarely will they give more than 48 hours notice. So don't shoot down the middle of the week buyer who wants to check out your home at 7 PM because you're tired and it's 5:00. He may wind up buying your property.
   
   Showings don't take more than fifteen minutes usually. You can manage.
   
5. Listen to feedback. No. Really. Listen: When someone sees your home through your real estate agent they're usually asked to provide some sort of feedback on how your home showed. Gather it and study it.
   
   If a lot of potential buyers didn't like the dark color you painted your bedroom, repaint it. If they thought your lot was too spartan, plant some flowers. And don't be scared to emphasize the good too. If some buyers liked your hardwood floors, polish them. If they thought the breakfast nook was especially cute, put some fresh flowers on the table.
   
   Remember, it doesn't matter what you think. Buyers are fickle and picky, you have to coddle to their general wishes sometimes in order to wash your hands of a home.
   
   
6. Use public open houses wisely: Open houses cost a lot of time and energy, so it's important to schedule them well. Not only does it destroy your day because you have to bust your hump cleaning and polishing before jumping ship, but advertising is expensive.
   
   So a real estate agent isn't going to want to have one every weekend. Not only will they have to sacrifice a day off, but they're going to shell out a couple hundred bucks to get the word out. All on the chance that someone might show up.
   
   So plan them for weekends that are looking relatively warm and sunny. Stay away from weekends with sporting events, holidays or attractions. If everyone is watching the superbowl or attending the county fair, no one is going to be paying your home a visit.
   
   
7. Use broker open houses wisely: A broker's open house is just that. It's where your realtor invites all of his cronies to your pad to check it out for their buyers. It's a powerful tool, but keep somethings in mind.
   
   Broker open houses usually only happen to the best priced and maintained homes on the market. Why? Because it's a chance for potentially every real estate professional in the area to critique your home. If they don't like it, they're not going to suggest it to their buyers.
   
   They're also usually in the middle of the week. No one wants to sacrifice their weekend just to stand around a some stranger's house on the off chance they might know someone who might be interested. So make sure you're able to clean house in the middle of your work week.
   
   They're also usually somewhat catered. Everyone loves a free lunch. Food acts as bait. So offer to help your real estate agent with food costs and ideas.
   
   Make it count, because you'll probably only get one broker's open house. Once everyone has seen it, they won't want to see it again.
   
   
8. Make an awesome first impression: Stupid little details impress people. Even the details that aren't going to stick around after you pack up and move. So consider fresh flowers on the dining room table, keeping the house immaculately clean inside and out and making sure there's as little clutter as possible.
   
   If you need to pack some things or put some stuff in storage, so be it. You're going to have to move it eventually anyway.
   
9. Keep pets out of the way: Sometimes a showing will happen in the middle of the day while you're at work. That's usually fine, if you don't have any pets. But what if you have a dog or a bunch of cats running around? What if one of them gets outside because of an ignorant agent?
   
   Whenever a showing is about to occur or you're going to leave the house for the day, secure your animals. Confine the cats to the guest bedroom with some food, water and a litter box. Crate your dog, et cetera. And make sure everyone knows about them. It's helpful for a buyer to know that you have a lab crated in the basement, but he's really friendly. Or you have a pug locked upstairs that loves to bark, but wouldn't hurt a fly.
   
   
10. Consider every offer, no matter how pointless it seems: Let's say someone likes your home. So they write an offer and send it along. They may ask for a substantially lower selling price, or that you pay for their cost of moving.
    
    There's probably a reason why they're doing that. Maybe your home is a little over priced. Try to negotiate. You'll be surprised how many people reject contracts on their home because of a couple of thousand dollars, but wind up staying on the market for months and end up paying way more than that in mortgage payments and price reductions.
    

Selling a home now is harder than ever. But if you stay focused and cut the sentimental value out of the equation you'll successfully wash your hands of your sky high mortgage and a lot of your financial woes.

Buying your home: Top 10 things to do to get ready

The biggest purchase any given person on the street is likely ever to make will be their home. Most people will never even imagine shelling out for an investment property or purchase any appreciable amount of stock. Which is fine. Some people just don't want to be bothered with big, sometimes unwieldy investments. They just want to work a nine to five job and put away a good chunk of their income toward retirement and enjoying themselves. And so long as they manage their finances properly, their financial lives will typically long outlive the foolish investor.

So, your very own home. It's the American dream. I know that at this point in my life it's the one thing I want the most. There's a good reason why a lot of people shell out a lot of cash on their homes, they spend a lot of time there. Your home is your castle, your sanctuary after a hard days work. If you own it, you can do with it whatever you'd like. Paint it whatever colors you'd prefer, furnish it with whatever furniture you find the most comfortable and decorate it however you want.

In the real estate industry I see a lot of clueless first time buyers. This serves to simply irritate everyone nine times out of ten. The buyers get frustrated because people are talking over their heads, the real estate agents get frustrated because they have buyers trying to behave in ways that are unrealistic and the lenders get annoyed because they're not getting their money when they're supposed to because everyone is all confused and frazzled.

When you're doing something for the very first time it's okay to be a little ignorant. But whenever you're getting ready to purchase a home it's always prudent to know as much about the subject as you can possibly know. You try to be savvy when you're buying a car, right? Well, even the most expensive car is about thirteen times less costly than the dumpiest single family home. And when the going gets tough, an expensive car is far easier to get rid of than an over priced home.

To make it short and sweet, a bad buy on your first home can ruin you for years if a couple of things go wrong. I've drawn up a short list of points you should keep an eye out for, but it's always a good idea to ask a local realtor in a no pressure situation, or check out the appropriate book at your local library.

1. Don't screw around. Get a real estate agent and stick with them. Real estate agents don't make a dime unless you find something to buy. And even then it's a commission check from the guy selling the property. It is in their best interest that they find a fair price for you.
   
   Driving around looking for "For Sale" signs isn't going to do you any good. You won't have anyone to represent your interests. So you're far more likely to get ripped off by the guy selling the home. Real estate agents are trained professionals. They know what needs to be done in order to make a fair sale. They know to ask about home inspections, conditions that may be concealed, tax rates, whether or not the price is accurate, et cetera.
   
   In short, it'll save you time and money. Would you enter a civil lawsuit without a lawyer?
   
   
2. Real estate books are crap. You see those glossy little books sitting outside grocery stores, chuck full of homes. Yeah, they're garbage. Why? They're published once or twice a month. A month is a huge time frame in an industry as fast moving as real estate. Homes get price changes, sell, expire, get withdrawn, go under contract, get renovated and changed all the time. I used to manage several real estate book accounts. By the time the book was in print, half of all the properties showcased were typically either sold or appreciably changed in some way.
   
   They only serve to make sellers happy. That's it. Nothing else. Don't waste your time.
   
   
3. If you have to look all by your lonesome, use the internet. Use realtor.com's search engine if you're looking within the United States. Don't bother with the search engines maintained by the real estate books, they're not going to be any more up to date than the paperback books.
   
   
4. Consider your savings account. You're going to need to make a down payment in some form in order to qualify for any type of loan that isn't going to rake you over the coals. It's a simple fact. It's usually a good idea to save up twenty percent of the amount you are looking to spend. This won't be going to the guy selling the home, his real estate agent, or yours. It will be going to the bank that you're getting a home loan from.
   
   
5. Consider what you can afford for a monthly payment. If a house has a price tag of $250,000 you're not going to pay that and that alone. The vast majority of people get home loans. That means you're going to have to pay interest until the home is paid off in full. It's almost exactly like a car loan.
   
   
6. Consider what you can afford for taxes. Owning private property means paying taxes. Taxes are paid yearly to the town or city you live in. They pay for things such as waste water treatment plants, police and schools. Very few people realize this fully before signing a binding contract. Taxes are typically paid yearly. So living on the outskirts of a ritzy town may sound appealing in theory, but you're going to be shelling out more than your fair share of hard earned cash. Before considering a purchase, call the town hall in question and ask them for their tax rate.
   
   Tax rates are usually per $1,000 dollars. So, if the tax rate in Lazytown is $25.05 and your home is $100,000 you'd simply divide 1,000 into 100,000 and get 100. Then you'd multiply that by the tax rate, $25.05 and you'd get $2,505, which means you'd have to pay $2,505 annually to Uncle Sam.
   
   
7. Don't get emotional. Keep it loose and easy. If you find a home you absolutely must have, you're far more likely to be manipulated and wind up paying more than you really should have to. If the seller isn't willing to compromise enough to make you happy, walk away from the sale.
   
   Nothing is final unless your name is on paper.
   
   
8. Wait it out. The market fluctuates. Right now as you may have heard the real estate market is tanking in the United States, due to some rather unsavory activity on the part of shady banks. This means the market is what they call a "buyers market." Buyers have the advantage because there are far more homes that need to be sold than there are people willing to pay for them.
   
   This means competition. And if you're looking to buy a home, it's your best possible scenario.
   
   In a buyers market homes are more likely to either be fairly priced, or below market value. People are also far more willing to compromise should you bring an offer to the table that suits your best interests more, versus their own. But even in a market that's declining, there's always a couple of extra bucks to be saved. As a rule of thumb, late fall is when prices typically start to fall even further.
   
   People want their homes sold before the holidays. But people don't want to buy, because they're busy with the holidays. So it's a win-win situation. You'll get your lowest prices of the year around late winter and early spring. Why? Because the properties on the market are probably still left over from the fall and winter. They've been on the market for months, and their sellers have probably authorized a number of price changes.
   
   Your real estate agent can find out just how much the price of any given home has fallen since it's been on the market.
   
   
9. Consider a bank owned property. There have been a lot of foreclosures all over the United States. These are homes that people couldn't afford when their shady banks got over zealous about their monthly payments.
   
   Banks are in the business of selling loans, not homes. So while you can't exactly see a bank and talk to a bank like you would a normal, average Joe looking to sell his home you're far more likely to get a better deal. Why? Banks want to wash their hands of the property. They want it gone and out of their mess of problems as soon as possible. This doesn't mean you need to attend foreclosure auctions, but keep an eye out for newspaper ads that contain the following language: bank owned, reo owned, real estate owned, foreclosure, foreclosed, lender owned
   
   
10. Be wary of "concessions." Occasionally someone selling their home will offer "concessions" to potential buyers. This sometimes mean they'll pay condo association fees for your first couple of months, they'll pay your first years taxes, they'll pay for your moving costs, et cetera. They're doing this because they want to sell the property, but don't want to really lower the price a substantial amount.
    
    Like a "sale" at your favorite retail outlet this can be good. But it might mean the home is over priced to begin with.

So long as you do your research, get a respectable real estate agent on your side and take your time to make a decision you'll wind up with the best possible home you can manage with as little possible hurt to your bank account.