One of the more interesting phenomenon in the real estate market has been the advent of the tiny house, fueled by television shows like “Tiny House Nation” on FYI Network.
And in an unlikely place, in the shadow of the Rocky Mountains in Lyons, Colo., there is a street where the houses are less than 200 square feet. According to a report by Forbes, Kenyon Waugh, Stephen Beck and Jason Malito, came together and invested $500,000 to create WeeCasa, an overnight resort originally comprised of 10 tiny homes. That number has grown to 22 homes available for rent and now the partners are finally seeing a profit — an overall revenue of about four times what they initially invested, or $2 million, according to Waugh.
Beck, WeeCasa’s operating officer, noted the founders developed the idea after a flood in 2013. A mobile home park that once sat on the land where WeeCasa is situated was demolished by the floodwaters.
“During the flood, the sirens were going off until one in the morning. There were 32 trailers here. We got everybody out, thank goodness. Nobody was left behind. But every trailer was unsalvageable. They were all piled up in the back.”
Waugh and Beck were approached about buying the land after the Federal Emergency Management Agency designated the property as a floodplain, prohibiting permanent residences. They cleaned up the land and started renting it out for weddings and the vision for a tiny house hotel for guests to stay was sparked, ignited by Waugh’s own experience of a hiking trip and living out of a backpack.
“Living out of a backpack for 142 days and carrying only 16 pounds on my back really made me start to think about how you could live with a small amount of stuff. When we came back, I started learning about tiny houses and really became fascinated with tiny houses.”
As the plan unfolded, the group was able to find tiny houses to fit what they wanted to do. However, one area that proved to be a challenge was financing. That’s where LightStream, a division of SunTrust bank, entered the picture. It is one of the few, if only, financial institutions that offers tiny home financing and loans, according to LightStream Business Development Officer Todd Nelson.
“For this unsecured product, historically, it’s always been the loan of last resort. You can go to your bank and get an attractive rate for a mortgage or a loan for a car. But if you say you want to buy money unsecured that doesn’t fit into predetermined categories, they say, ‘We don’t give out loans for that.’”
With houses secured, during its first season, which ran from May to October of 2015, WeeCasa had slightly less than 500 nights booked, or a 40 percent occupancy rate. In 2017, Waugh said the group is on track to have about 4,000 nights booked and in March, WeeCasa had a 70 percent occupancy rate. While the company does not reveal its revenue, Waugh said the team is working to acquire more properties to open WeeCasas and to partner with developers or current landowners to operate and maintain the WeeCasa brand in multiple locations.
“Really, our model is that WeeCasas need to be in beautiful outdoor settings … or really exciting dynamic areas around the count. I don’t know for us if it would work well in a parking lot in a city. We are looking much more for outdoor experience areas and where people like to go.”