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Paying cash for tiny house doesn’t make it smart

Photograph by Tammy/wikimediaSmall living: an example of a mobile tiny house in the US. The homes are cheaper to buy, but may not be easy to sell onwards, warns Dave Ramsey

Dear Dave,

What is your opinion on paying cash for a “tiny house”?


Dear Wes,

This may be a really un-hip or uncool thing to say, but I wouldn’t buy a tiny house at all. Paying cash for something like that might make the mover smarter, but that still doesn’t mean it’s a smart choice.

Now, don’t take what I’m saying the wrong way. I don’t have a problem with people who build tiny houses or buy them. My problem with these things is that there’s no track record on them. There’s also a pretty good chance they’re going to be just a fad. Another problem is that you’d have a really small market when it comes time to sell your tiny house. In other words, they probably won’t go up in value like a traditional home. They may actually lose value over the years.

There’s a thing in economics called the supply-demand curve, and from what I’ve seen tiny houses also have a tiny demand and pretty narrow market appeal. Their appeal seems to be mostly for early adopters and people who think they’ll never be able to afford a house. That means they’re not going to have broad appeal when you get ready to sell them, either. And that creates a problem.

I could be wrong, though. I mean, if enough people buy tiny houses and they become a real part of our culture, then maybe they’ll do okay. But right now it’s an unproven product line and an unproven concept. So I wouldn’t buy a tiny house. Honestly, I wouldn’t even buy one at half of its current value because I’d be afraid it would drop to a fourth of its value. There’s just no proven record at this point of these things going up in value.


Dear Dave,

My father loaned my husband and I money 20 years ago to help us start a business. The business eventually failed, and it forced us into bankruptcy. After this, we never seemed to get around to paying him back. He died earlier this year, and when we got together with my brother and sister for the reading of the will, we realised he had deducted the amount of the loan from my inheritance. Everything was equal between us before that. I think that’s wrong. What’s your opinion?


Dear Karen,

I’m really sorry about your dad. I’m also sorry this was never taken care of or discussed while he was still alive.

There are a lot of emotions at play, so I don’t want to beat you up too much. But legally, he didn’t have to leave you anything in his estate. The stuff we’re talking about, money included, was his to do with as he saw fit. It was a little odd that he didn’t address this with you beforehand, but there are lots of instances where kids get nothing from an estate or not as much as others. It’s not uncommon.

In my mind, and, from the sound of it, his too, he left you an equal share minus what you still owed. He loaned you the money, and he had the right to set terms on that. I understand your frustration. You feel like he took something away that was yours. My point is it was never yours; it was his.

I know it still hurts though. This is one of the reasons I advise never borrowing money from, or loaning it to, relatives. The best of intentions can end up in places like this.


Dave Ramsey is America’s trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven bestselling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.