IKEA Now Sells Prebuilt Tiny Houses: Good Idea for Rental Property?

IKEA Now Sells Prebuilt Tiny Houses: Good Idea for Rental Property?

If you’ve ever spent a long afternoon struggling to put together IKEA furniture for your home, what would you think about assembling the entire home? If your answer would be, “Not a chance,” you’d probably not be alone.

This Swedish ready-to-assemble furniture and home goods conglomerate has a plan, though: Ikea’s now selling tiny houses — houses you can possibly use as rental property — and they’re already put together. So should you buy one?

IKEA’s selling tiny homes

IKEA is experimenting with offering prefabricated tiny homes, 187 square feet in size, for under $50,000. These hygge homes (think cozy, like sitting under a weighted blanket next to a crackling fireplace during a snowy winter’s evening) come with neutral colors, some built-in furniture (furniture from IKEA, not included, for what’s not built in), compostable toilet, solar panels, and kitchen cupboards made from recycled plastic bottles. It’s a vibe.

IKEA partnered with Vox Creative, a branding company — note the vibe — and Escape, maker of tiny homes, to offer the Escape Boho XL Wide, a tiny home on a trailer that’s large enough to house a queen-size bed, kitchen/living room area, and bathroom. (Here’s a video walkthrough.)

Should you put one on your property?

The question is really, “can” you put one on your property? You first need to determine whether your jurisdiction allows tiny homes on personal property. Tiny homes are either on wheels, like the one IKEA’s selling, or they’re on a foundation.

Because the product IKEA’s selling is on wheels, it’s not considered a single-family house; it’s considered a recreational vehicle, or RV. And many local ordinances don’t allow RVs in backyards. If they do, some locales don’t allow people to live full-time in a tiny house on wheels. You would need to check into the regulations for your area.

Another consideration when buying a tiny house on wheels is that since it’s considered an RV and not real estate, the tiny house won’t appreciate as real estate often does. It’ll depreciate as a car would.

A case-by-case basis

Some cities, to combat a housing crisis, are more lenient on whether they allow a tiny house on wheels in the backyard. If your city does allow this, you might wish to buy IKEA’s product and use it as a rental property — again, if it’s allowed.

This would be a similar scenario to buying a duplex, living on one side and renting the other. You’d need to maintain a good relationship with your tenants when you share a wall, as in a duplex situation, or see them in your backyard every day.

Portland, Oregon, for example, allows tiny homes on wheels to park on private property. However, you might not be allowed to use the home as a rental property. The laws change often, so be sure to check. Fresno, California, allows tiny homes on wheels, calling them “backyard cottages” with certain restrictions. Those aren’t the only cities that allow tiny homes on wheels to park in backyards, and more cities are allowing this all the time.

Accessory dwelling unit status

Some cities that allow tiny homes in the backyard classify them as accessory dwelling units, or ADUs. The IKEA product, however, can’t be classified as an ADU since it’s on wheels; ADUs need to be built on a foundation. You might wish to consider that option, although you won’t find that product at IKEA, at least not at this time.

The Millionacres bottom line

If you want to get into the landlord business, before you consider heading over to IKEA to buy a tiny house, check the local ordinances with a real estate agent or the city to determine whether this is allowed. If so, you might want to earn a monthly income from your backyard space.

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