How to Creatively Finance Your Tiny House
a.k.a. How to Find Sponsors 101
Guest post by Michelle Boyle
If you’re like me, you started out with a dream to build a tiny house. And then, as you did your research, you quickly discovered that since a conventional bank loan is not a tiny house financing option; paying with cash or an “alternate” funding option would be needed. Banks, as it turns out, don’t like to lend money on tiny houses that move around easily on flatbed trailers. I guess it makes sense. How would they get their money back, if worse came to worse?
At this point (as is often the case with obsessive pursuits) reality has smacked you around a bit, and you are left…….a bit shaken……but still determined to find a way.
I am a single mom, I am 47 years old, I work 45+ hours per week at my full time job, I have two children in college, and I live paycheck to paycheck. For years I have been the sole source of income for our household and have struggled to keep a roof over our heads and food on the table. While I am looking forward to the Empty Nest phase of my life, I am also faced with how best to navigate it from now into retirement. In a nutshell, my life has been a “series of unfortunate events” leaving me with no sizeable assets (I do not own a home) savings (not even sure what that term means) or retirement accounts.
I do, however, have a crap-ton of tenacity and a failure-is-not-an-option ability to find a solution to any problem that is put before me.
Question: How am I financing my tiny house build?
Answer: Creatively (and with sponsor’s help!)
Vintage Campers (aka My First “Building Tiny” Experience)
A few years ago I was bit by the Glamper bug and refurbished a 1964 Scotsman trailer that had been sitting under a tarp since 1967. When a new neighbor moved in a few doors down with a 1950’s era trailer, I introduced myself and offered my assistance with renovating hers. She never got around to it and moved a year later. Overwhelmed with the time, efforts, and expense of moving she offered to give me her vintage trailer in exchange for my help. A few months and $600 worth of materials later, I sold the better-than-before vintage trailer. The tidy profit from my little vintage project was then immediately used to buy my custom build tiny house trailer. It’s amazing, that feeling you get when the trailer is delivered. It’s like…ohhhh…..this is REAL NOW!?
Odds, Ends, and Craiglist Stuff
One of my best friends is an addicted “recycler”. As the maintenance and rehabilitation manager for a large low income housing provider, he has spent the majority of his 30 years collecting building materials and things that other people find useless. (His garage sales are EPIC!) He recently contacted me to determine my level of interest in finding a home for a circa 1950’s all-in-one-kitchenette. I bought it from him, had it repaired and certified as “working” then sold it for a 3x profit. I also take furniture and various items from around the house I no longer need, as well as re-furbished garage sale finds; and sell them on craigslist. These efforts have netted me over $1200 in the past year.
401K, Overtime, and Job Changes
Did you know that you can take a “hardship” withdrawal from your 401K, without being required to pay it back, for the construction or down payment on a primary residence? (Disclaimer: Please consult with a tax professional to determine if this is the right financial path for you.) I had only worked at my job for a little over a year, and was looking to change jobs soon so I did just that; I took a $2000 withdrawal on my 401K (almost the entire balance). At that time, we were told that we could work all the overtime we wanted to, so I did. I started working 11 – 12 hour days. After a few months of that, I decided to change jobs and since my employer had held my first paycheck for a month (normally, employers hold them for 2 weeks so it was a tough first month!) when I left; my last paycheck was pretty sizeable! Cha Ching! With all that hard work, and creative “financing”, I added another $4000 to the project plan and used that money to pay for the framing, welding, and electrical labor. (and I now had a new job which paid more than my previous one, while also being required to work less hours.)
Far and away, however, the biggest contributors to my project’s progress were my sponsors. As I write this, my sponsors have contributed almost $16,000 dollars’ worth of materials and labor. (and more is still pending) The question I get asked, more than any other, is “How did you find sponsors!?”
I started my tiny house project, just like you, and couldn’t imagine how I would build a tiny house without cash in the bank. While I was snowed in last Spring, I found an e-book online by Andrew Odom called “Your Message Here!” (http://tinyrevolution.us/store/tiny-rev-products/) I didn’t read it, I devoured it. It was, above all, an “AH HA!” moment. I immediately got started with reserving a domain name, and asked my son to design my logo. I created a blog, and ordered business cards, and created a sponsorship outline. I was off and running at a break-neck pace. (and, with four days of nothing else to do because we had a foot of snow on the ground, the timing was perfect!)
The details of your project will probably be very different from mine. I took the concept and really ran with it. You might, however, decide to scale it differently and only pursue a sponsor or two. I can tell you now, it’s a lot of work! It’s not just a “you give me stuff and I’ll talk nice about you on facebook” scenario. Sponsorships are like any other relationships and require communication and documentation of the specific expectations so the relationship doesn’t go sour.
But, if you’re interested in the concept of pursuing sponsors (one of them, or fifty!?) here are the six initial steps I took to make it happen:
Step 1 – First, I had my 17 year old computer whiz kid son create my project logo in Photoshop. Then, I immediately ordered business cards with said logo on them. Sponsors want to know you’re serious and want to align themselves with a “brand” they can relate to. (or so I read…lol…) These steps are necessary in order to present yourself to them in the most professional light, as is possible.
Step 2 – I brainstormed a list of potential sponsors that would align with the materials I needed. I then researched said sponsors to determine their marketing strategy and if their corporate goals and values aligned with My Empty Nest’s goals and values. (Sustainability, minimalism, social responsibility, use of reclaimed materials, and a creative approach to solving problems)
Step 3 – Using Andrew’s outline, I wrote up a template for a sponsorship request email. Also, I developed a Tiny House Sponsorship Overview sheet which included web links to other tiny house projects and success stories, to make it easier for them to research; and to build excitement for the Tiny House movement in general. (Steps 1 thru 3 took just a few hours!)
Step 4 – Next, I started making phone calls to sponsors, asking who their marketing manager was and their email address. Then I started sending emails and logging the information I had gathered into an Excel spreadsheet so I knew who was who, and when and how I had contacted them. Staying organized, is a key step here. Knowing who you called or emailed, and when, will help you know you’re not “bugging” someone and also when to follow up with them. It’s a fine line to walk.
Step 5 – After each cold call email, I followed up via phone if I did not hear back from them within 7 days. Some sponsors will appreciate your follow up, some won’t. Some sponsors will think your idea is awesome. Some will hang up on you.
Step 6 – After I had talked to them I noted their response on my spreadsheet and immediately sent out thank you cards to anyone I had talked to, thanking them for their time, regardless of their response. Some asked for additional details, or a conference call, or a sponsorship agreement, or a list of materials I needed.
I have to admit. I am amazed at the generosity, enthusiasm, and overall support I have received from almost everyone I have talked to. Even if they could not sponsor me, for whatever reason, most of them were encouraging and gave me great advice. I did reach out to a few people with whom I already had a relationship with but most of them were just cold calls / emails.
Cheap, Fast, or Good?
Building a tiny house is a HUGE undertaking. Can you build a tiny house for $5,000? Sure. But there’s a famous saying in the construction industry that goes like this: Cheap, Fast, Good; Pick Two. And, it’s very true. You can build a house for cheap if you proceed VERY slowly, do all the labor yourself, and find free or discounted materials on craigslist and from friends. Or, you can maybe even find a contractor who will build your tiny house cheaply and quickly, but the quality of your build and materials will very likely suffer.
Having, or finding, the money to build a tiny house is every bit as big of a challenge as the build itself. Keeping track of where you spend your money, how much you have left, and what’s next is part of what helps your contractors and sponsors, stay involved and engaged with your project. So, I guess what I’m trying to say (but not quickly, apparently) is that if you’re thinking of building a tiny house you’ll need to understand that even with, or without sponsors, it is a pretty complicated process that requires a sense of commitment and organization you may have not yet experienced in your life.
But, if this old single mom from rural Oregon can do it, I’m thinkin’ that anyone can…..
If you’d like to read more about my process of finding and managing sponsors, you can find those details here:
If you’d like to hear more about my sponsor story, I’ll be speaking at the upcoming FREE Tiny House Jamboree – August 7 -9 in Colorado Springs: http://www.tinyhousejamboree.com/speakers/
Michelle is an outgoing single mom, published author, speaker, patented inventor, blogger, craigslist stalker, enthusiastic Glamper, and Northwest native; as well as a tiny house enthusiast, designer, and builder. Her Tiny House, aptly named “My Empty Nest”, is the culmination of a life spent dreaming of a tiny reclaimed space, all her own. Her build-in-progress has already been featured in Tiny House Magazine and she is a frequent contributor to TinyHouseBlog.com. If you’d like to follow Michelle’s tiny house build, you can find her at: http://mytinyemptynest.blogspot.com//.