The hype on tiny homes has been anything but small. But how practical is it for investors to scale a portfolio of cash-flowing micro-dwellings into an oversized income?
Loudoun County, Virginia, could give landlords a chance to find out. The affluent northern Virginia county is studying whether one-bedroom homes under 800 square feet can serve as a realistic path to increased homeownership and, in doing so, more affordable rentals. According to a recent feasibility study reported by Homes.com, the Board of Supervisors asked for an evaluation of how county-owned land could reduce the sale prices of units in the 400-to-600 square foot range.
WTOP News reported that in 2025, the average price of a one-bedroom unit in Loudoun County was $348,650. The Loudoun County Board of Supervisors report suggests that the units could be priced between $125,000 and $155,000 per unit. Taking the latter number, a tiny home here could generate a 10% to 11% cash-on-cash return (see later calculation).
Scaling to Multiple Units
Loudoun’s feasibility work models about 45 tiny homes on the Ashburn park?and?ride site at around $155,000 each. If an investor acquired three similar units:
- Total equity (approximate): $93,000–$105,000
- Aggregate pretax cash flow (three units × $3,550): About $10,500/year
The Tiny Home Movement Is Nationwide
The awareness around tiny homes has increased significantly amid the housing crisis in other counties and cities such as Hamilton County in Ohio, as well as Tillage Farms master-planned community in Princeton, Texas, which, according to the Houston Chronicle, is building tiny homes through national developer Lennar in its fastest-growing city. Homes start around the mid-$100,000s for just over 600 square feet.
“With exceptionally affordable pricing, this new collection brings a unique opportunity in today’s market—especially for first-time homebuyers,” Greg Mayberry, Dallas-Fort Worth Division president for Lennar, said in a press release. “Tillage Farms delivers the thoughtful design, quality, and value buyers expect from Lennar, located within an amenity-rich community in a highly sought-after Dallas suburb.”
According to Zillow, the average listing price for all homes (new and old) in the Dallas-Fort Worth area is $359,523.
Why Tiny Homes Could Present a Practical Key to Scaling for Small Investors
Tiny homes present a unique investment opportunity due to:
- Lower per-door capital: It is possible to buy or build multiple units for roughly the price of a single conventional starter home in more expensive markets
- Improved rent-to-price economics: Tiny home rents often track one-bedroom apartment rates. With tiny homes, acquisition costs are lower, which can, in some instances, boost the cash-on-cash return. However, the square footage can also play a role in determining the rent price.
- Multiple rollout models: Investing in small homes is a test in creativity, utilizing various scenarios such as ADUs/infill development, clustered land-lease communities, modular build-to-rent clusters, or public-private partnerships for discounted parcels.
Case Study: Ashburn Park-and-Ride Site, Loudon, VA
Using the Loudoun County sales and approximate rental numbers as an example, this is how a 10%-11% cash-on-cash return could be achieved:
- Purchase price per tiny home (416 sq. ft. one?bedroom): $155,000 based on the Loudoun feasibility estimate for Ashburn’s park?and?ride site
- Down payment (20%): $31,000
- Loan amount: $124,000
- Assumed loan terms: 30?year fixed, 6.5% interest (typical recent investor rate range)
- Monthly principal and interest: About $785, or roughly $9,420 per year
Rent and income assumptions
- Typical Ashburn one?bedroom rents: Roughly $1,800–$2,200/month; several data providers put the average near $2,060/month.
- Assumed market rent for a new 416?sq.?ft. tiny home (priced below Class A apartments): $1,750/month
From that:
- Gross scheduled rent: $1,750 × 12 = $21,000/year
- Vacancy and credit loss (5%): $21,000 × 0.05 = $1,050/year
- Effective gross income (EGI): $21,000 ? 1,050 = $19,950/year
- Operating expenses and NOI: In higher?cost, suburban single?family rentals, a 30% to 40% expense ratio is a common underwriting range for taxes, insurance, maintenance, management, and shared?area costs. Using 35%:
- Operating expenses (35% of EGI): $19,950 × 0.35 ? $6,980 /year
- Net operating income (NOI): $19,950 ? $6,980 ? $12,970/year
Cash flow and returns
- Annual debt service (principal + interest): $9,420.
- Cash flow before taxes: $12,970 ? $9,420 ? $3,550 per year (about $295/month).
- If the total cash invested (down payment plus closing/initial costs) is roughly $35,000, Cash?on?cash return: ? $3,550 ÷ $35,000 ? 10%–11%/year.
These numbers are based on current interest rates and assume yearly leases, not short- or mid-term rentals.
Glamping, Ecotourism, and Tiny Homes
Tiny homes have been a particularly enticing proposition in the short-term rental space because high per-night rents, coupled with low purchase prices, equal high cash flow. Tiny home resorts such as Cabinscape, The Fields of Michigan, and many others are great examples of how profitable a cluster of tiny homes can be when location meets opportunity.
Earlier this year, BiggerPockets featured Manny Reyna, who started a tiny house business with just a $12,000 down payment and later scaled it into a glamping tiny home business.
Final Thoughts
Investing in tiny homes is great for one main reason: cash flow. However, traditionally, they appreciate at a lower rate than conventional single-family or small multifamily homes. Also, if you plan to start an STR business, you’ll have to deal with the hassle of intense management, overseeing bookings, seasonal fluctuations, and maintenance. While this can be outsourced, it is by no means a hands-off investment if you want to oversee it properly.
Also, tiny homes might not be built to the same exacting standards as a conventional home, so wear and tear, particularly in a short-term rental, could be an issue.
For investors skittish about the proposition of a tiny home as an investment, one solution for singles or couples is to build an ADU next to their personal residence, rent out their single-family home, and live in the ADU—thus maximizing cash flow, while being near their investment, and minimizing wear and tear on their ADU. and live in the ADU—thus maximizing cash flow, while being near their investment, and minimizing wear and tear on their ADU.
