This article is written in the first person.
In 2019, I purchased a 1,400 square foot, three-bedroom home in Atlanta, Georgia for $196,000. I thought I could earn extra income by renting out the guest rooms on Airbnb, especially since I traveled a lot for work and was rarely home.
Unfortunately, bookings ran out in 2020. No one wanted to share a home with a stranger at the start of the pandemic. My business trips also stopped, so I lived alone in a house that seemed too big.
But in May of that year, as I looked out my kitchen window at my huge garden, something clicked: I could use this space to build a small house to live in and rent out the main house.
How I built my cute little house
Before I started, I had to submit building, electrical and plumbing permits to the planning office.
I then purchased a shed from Liberty Storage Solutions and hired a local crew to pour a concrete slab foundation. They went to work in October 2020.
All in all, it cost me around $35,000 to build the house, which includes the prefab shed frame, labor, and material costs.
Instead of taking out a bank loan, I cashed in $8,500 worth of stock and put about $20,000 on my credit cards to pay for it all. I was able to repay this debt in 2022.
While the house was being built, I rented my main house and rented a room from my neighbor for $300 a month.
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After I finished building the tiny 296 square foot house in March 2021, I immediately rented it out on Airbnb for a few months to recoup the costs.
By charging between $89 and $129 per night and $1,300 for monthly rentals, I was able to generate nearly $32,000 in gross rental income. And in January, I moved into the tiny house to save on living expenses.
Here are the associated monthly costs for the two houses:
- Mortgage and property taxes: $1,200
- Electricity: $190
- Water: $110
- Internet: $80
Total: $1,580
This is all covered by the $2,725 I earn renting out the main house, which means I can live in my tiny house for free.
A peek inside my loft-style home
To give the place a light and airy feel, I painted the walls a shade of coastal blue and added some rustic touches, like a wooden ladder that led up to the queen-size mattress in the loft.
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In addition to the lounge chair that doubles as a sofa downstairs, there is a full bathroom, kitchen and dining area.
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Jeffrey Beard for CNBC Make It
My favorite area is the kitchen. Most people are surprised to see that it has a large refrigerator and a very large sink.
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The kitchen is equipped with an induction hob and a small breakfast area.
The eight separate windows, wall mirrors and glass shower door expand the space. Sometimes I forget that I live in a shed.
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The “tiny house” lifestyle
I had to reduce my wardrobe and my shoe collection. But instead of getting rid of clothes that I still want to keep, I store some at a friend’s house. Every few weeks we do a wardrobe change.
I don’t often have friends, but once the weather warms up, I plan to use the fire pit as a place of reception.
Owning this home has provided me with a ton of real estate options, including rental income and supportive housing for myself or aging family members.
I believe that tiny houses will play an important role in offsetting the global housing crisis. Last year I gave a TEDx talk about how you can help create a sustainable sharing economy for the planet.
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In 2021, after realizing the effects of vacation rentals on the Atlanta real estate market, I stopped listing my short-term rental properties on sites like Airbnb. Renting more and more space for vacations means less space for people who need long-term housing.
Since then I have reduced my portfolio and rent to local students and low income workers. My plan is to add a guest suite attached to the main house and provide even more stable accommodation.
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This year, I’m excited to experience the tiny house lifestyle for myself. It’s amazing what you can do with a little space in the garden.
Precious Price is a TEDx speaker, marketing strategist, and social entrepreneur. In 2021, he founded LANDRIFT, a digital real estate marketplace, amid the conversation about the impact of short-term rentals on home affordability and availability. He holds a master’s degree in management information systems from Indiana University. Follow her on Instagram, Twitter and YouTube.
This article was originally published in English by Precious Price for our sister network CNBC.com. For more on CNBC, head here.