What are some alternative uses for tiny homes or backyard sheds now that social distancing is a distant memory? A lot of people built backyard tiny homes to create extra space for work or family the last few years. Maybe your lifestyle has changed, just like theirs has. What can you do with that space now? Here is one idea: repurpose your backyard tiny home as a rental property.

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Steps to repurpose a tiny home as a rental property

Tiny homes usually have a kitchen, bath and multipurpose workspace with a loft or separate bedroom. If you have been using your backyard tiny home for a home office or to house family or homeschooling activities during the pandemic, it shouldn’t be too hard to remodel your tiny home to be used as a rental. After all, you already have a kitchen and bath and separate entrance from your home. If you don’t have those features installed in your backyard shed, get quotes from contractors on what it would cost to add these features.

Related: Here are some big tips on building a tiny house

Next, look up your local ordinances on short-term rentals. Some cities have enacted limits on the number of short-term rentals allowed in your area. This is a move intended to stop homeowners from turning a large portion of permanent housing into hotel space, as this worsens the housing shortage for locals. If you don’t need a license or you can get a permit, a short-term rental is probably the most profitable way to repurpose a tiny home.

Finally, do the math on how well your tiny home would fare as a rental. Long-term renting is an option too. If you can’t turn your backyard shed into a short-term rental, look into local ordinances on long-term rentals and fix up the space to comply with local housing ordinances. You usually will need up-to-code electrical, smoke detectors, locking front door, proper ventilation and running water to meet local ordinances. Note: If you aren’t preparing food for guests on site, this frees you up from a lot of extra rules about food prep kitchens being up to commercial standards, and you won’t need inspections like hotels have to do.

To figure out if your tiny home could make you a side income as a rental property, look up rental rates on nearby similar properties on VRBO or Airbnb for short-term rentals, and on Realtor or Zillow for long-term rentals. Assume a 30% vacancy rate to be conservative about how much you can book the space, then calculate what your property could earn based on what other properties with the same bedrooms, baths and amenities are earning in your neighborhood. Short-term rentals will rack up rental income a lot faster because of the higher rate for nightly hotel room rentals compared to monthly rent. Either option could be a good way to create a passive income stream out of your tiny home.

The last step is to subtract the cost to fix up the space. Then hire your contractors or do your own renovation. Voila! You can list your tiny home on rental sites for a small percentage fee (calculate that to cut in to your profits as well), and all you need to decide is if you want to clean up after guests/renters yourself or hire in a property manager or cleaning service.

A square tiny home in the middle of a wet plains

Alternate uses for a tiny home

Got more of a she/he/they shed than a tiny home on your property? You could repurpose it as a craft shed, a garden tool storage unit, or you could install heating and make an outdoor workspace. Make sure if you add electrical or a wood stove that it’s up to local codes for safety. That means getting on YouTube and learning the proper installation yourself, or hiring in contractors to fix up the climate control.

We have seen people repurpose tiny homes and backyard sheds as:

  1. Flower farm flower arranging studio
  2. Recording studio
  3. Independent living space for college-age kids or in-laws
  4. Indoor half-pipe (that would require a BIG shed, but it’s an option)
  5. Game room
  6. Tiki hut
  7. Storefront or farm stand

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