8 Alternatives to Buying a House

The rent is too darn high, and the cost of buying a house keeps going up. Plenty of people are convinced they’ll never be able to afford to buy a home. 

Even if you do have the funds set aside for a down payment and can land a traditional mortgage, you might not love the idea of taking on hundreds of thousands of dollars in debt.

If you’re feeling the housing market squeeze, you have options beyond the traditional single family home. Many are much cheaper than your standard home.

Alternatives to Buying a House

It’s time to rethink the American dream. Your home doesn’t have to have a yard, four bedrooms, and two bathrooms. If you want to live somewhere unique and save money doing it, a tiny home, container home, or embracing van life might be the way to go.

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1. Condominium

  • Pros: Most like a traditional house, usually doesn’t require any DIY, and many buildings have fun amenities and perks.
  • Cons: Monthly maintenance fees can be steep and you share walls with neighbors.
  • Cost: Varies based on the size and location of the condo, from under $150,000 in low-cost cities to more than $1 million in highly desirable areas.

Buying a condo instead of a detached home can be one way to get a toehold into the real estate market without going broke. Condos typically cost less than single family homes. 

They’re smaller than single-family homes, too. This can be a plus or minus, depending on your point of view. On the plus side, fewer square feet means less to clean and maintain. On the minus, it means less room to store your stuff and spread out. If you have a lot of stuff and don’t want to downsize beforehand, you might need to rent a storage unit, which can easily cost more than $100 per month.

Condominium buildings often have amenities, which can range from on-site gyms and pools to community nights. Some buildings have door attendants who monitor comings and goings and accept packages for residents. 

Those amenities come at a cost, though. You have to pay monthly maintenance fees on top of your mortgage (if you have one). Common areas and building systems are shared. If the entire HVAC system breaks down or the lobby floor needs to be retiled, you and your neighbors will need to chip in toward the cost of the repair.

2. Tiny Home

  • Pros: You can move the home, it’s affordable, and it’s ideal for minimalists.
  • Cons: Not much living space, the land isn’t included in the purchase price, and a traditional mortgage is not an option.
  • Cost: $3,000 and up. DIY tiny homes cost a lot less than pre-built models.

Tiny house living isn’t for everyone. If the idea of fitting your life and your stuff into a 100-to-400-square-foot space is appealing, a tiny home could be the alternative housing option of your dreams. 

You can buy a tiny house kit on Amazon or work with a custom fabrication company to build a unique home. Whether you put the home on wheels or set it on a foundation is up to you. 

If you have a permanent spot to park the home, resting it on a foundation makes sense. But if you envision being mobile, a trailer allows you to move from one spot to the next. 

Speaking of being mobile: When you buy a tiny home, that’s all you’re buying. You have to find a place to keep it on your own. That might be in your parent’s yard, your adult kids’ yard, or at a friend’s place. Or you can find a tiny home community that lets you rent a spot to park your home — for a fee, usually between $300 and $600 monthly. 

3. Prefab Home

  • Pros: It complies with building codes for standard homes, it’s built on a permanent foundation, and you can use a traditional mortgage to finance it.
  • Cons: You need to have land and hire someone to put the home together and finalize the interior (or do it all yourself).
  • Cost: Varies depending on size and finishes, but expect to pay at least $100 per square foot.

Also called modular homes, prefab homes get built in pieces in a factory, then shipped to a lot to be put together. If you want new construction, but can’t afford the price of a new site-built home, prefab housing is the way to go.

Once they’re built, prefab homes are permanent structures. You can’t set them on a trailer and hitch them to a truck to take from place to place. That means you also have to land to build your home on, along with enough money to buy the land and the building materials. 

Still, your all-in costs could be lower than a site-built home. So if the traditional route is just a little out of reach, a modular model can be the way to go.

4. Houseboat

  • Pros: It’s a unique living option and the home is mobile.
  • Cons: Limited living space, unique challenges related to living on the water, you have to find somewhere to dock the boat, and traditional mortgages aren’t available.
  • Cost: Boats start at $5,000, plus the marina fees, which are based on the boat’s length and can be anywhere from about $10 to about $250 per foot, per year. The average marina fee is around $50 per foot, per year.

If you love the water, living on a houseboat could be for you. Houseboats cost significantly less than the typical single-family home and give you a unique living experience. 

Don’t confuse houseboats with floating houses. You can move a houseboat from place to place, so it helps to know how to drive a boat. Floating houses are just that, houses that float. They’re permanently attached to a dock. 

They’re also not great investments. Floating houses are slightly less expensive than land-based homes of similar size, but often not inexpensive enough to make them affordable to cash-strapped buyers. And their uniqueness can make them difficult to resell, which affects their market value.

Houseboats might be inexpensive upfront but may require expensive maintenance and repairs down the line, especially if they get damaged in a storm. You’ll also need to take extra precautions when storms roll through, such as tying down your furniture.

5. Manufactured Home

  • Pros: More affordable than single-family homes and easy to customize.
  • Cons: Traditional mortgages not available — you need to rent or purchase land separately.
  • Cost: About $110,000, on average.

Don’t confuse manufactured homes with modular homes. Both are built in factories and assembled on-site, but manufactured homes are built on a chassis that’s technically moveable. Smaller models are often called mobile homes.

Since manufactured homes are moveable, they don’t count as traditional real estate property. If you need financing to buy one, you need to get a chattel mortgage, which usually has higher interest rates and shorter repayment terms than traditional mortgages. 

As with a tiny house, you need to buy or rent a lot to put your manufactured home on. Some manufactured home communities let you purchase your lot, starting at around $25,000. Other lease lots to homeowners, usually for $400 to $600 monthly. The costs vary based on the size of the lot and the location. 

While you can technically move a manufactured home, doing so is costly. Depending on the length of the trip and the size of the home, the move can cost anywhere from $1,000 to $20,000. The average is around $7,000 per move.

6. Van or RV

  • Pros: You have unlimited travel potential, your home is also your vehicle, and it could be your shortcut to Instagram influencerdom.
  • Cons: You’re living in a van, you need to find a place to park, and tricking out the vehicle can add up.
  • Cost: Varies based on the van or RV you buy. You can spend a few hundred dollars on a beat-up old van or more than $100,000 on a new RV.

Maybe you’ve seen one too many selfies with the hashtag #vanlife and now you’re wondering if buying an RV or tricked out van is the way to go. If you don’t have a lot of stuff, don’t mind living in close quarters, and have the itch to explore, buying a recreational vehicle or van could be for you.

Vanlife might be particularly appealing if you’re a digital nomad and can work from wherever. But there are some caveats to consider. One is that you need to find a place to hook up and park your van each night. Options include state and national parks and private RV parks. Prices vary based on the location and demand, but can be anywhere from $20 to more than $50 per night.

You can also park your RV for free in the parking lots of some retailers, like WalMart or on federal lands. You can trick the van out with solar panels and water tanks so it’s self-sufficient, but doing so adds up. 

Before jumping into #vanlife full-time, rent an RV or van to try out. The last thing you want is to spend your life’s savings on a van only to discover you don’t love the idea of sleeping in a cramped space.

7. Shipping Container

  • Pros: Almost infinitely customizable and repurposes waste materials.
  • Cons: Not legal everywhere, you have to set up the container to make it liveable, and you can’t get a traditional mortgage.
  • Cost: Varies, depending on size and condition. The cost of a used container starts at around $1,500. There’s also the cost of outfitting the container with insulation, electricity, and other comforts of home.

Container homes aren’t always tiny homes. Sure, a home consisting of a single 20-foot container will be 160-square-feet, max. But you can stack and combine containers to make the affordable home of your dreams. 

Renovations transform an empty box into a livable space, though you’ll likely need to hire professional help along the way. The more creative you are with your design, the more engineering and finishing work your container house will need, and the higher the price tag. A complicated design can cost you up to $45,000 per container.

Of course, before you go and order a bunch of containers, keep in mind that your local zoning laws might not let you turn a few containers into your next home. And, if the law does allow container homes, you need to buy land to put those containers on. You’ll also need to hire someone to make your shipping containers into a home.

It’s a lot of work. But if you’re looking for a creative, affordable housing option, DIY-ing a container home can be the way to go.  

8. Go Halfsies With a Friend

  • Pros: You can afford a bigger house or new home, you get to live with a friend, and you share mortgage payments
  • Cons: Things can go bad quickly if the relationship sours, one of you can end up carrying the other financially, the ownership structure can get complicated, and your credit can suffer
  • Cost: Varies depending on location, size of the home, and your budget. The median sale price in the second quarter of 2022 was about $440,000.

Maybe you have some money saved for a down payment but can’t swing mortgage payments on your own. You have a friend in a similar situation. If you get along well enough, you can buy a single-family house or duplex together and split the mortgage, property taxes, and other costs of homeownership. 

But buying a home with a friend, even your best friend, isn’t something to do on a whim. If things don’t go well, you can end up losing someone you previously loved. You need to be on the same page about how much of the home each of you own, who’s responsible for what, and what to do when one of you wants to move on but the other doesn’t.

Frequently Asked Questions (FAQs)

Whether you choose to buy a traditional house with a picket fence or go off the beaten path in a tiny home or RV, buying a home is a complex process. It’s common to have a few questions about how it works and how to prepare.

How Can I Stay Within My Budget When Buying a Home?

Buying your own home often ends up costing more than expected. The best way to stay within your budget when buying a home is to stay near the lower end of your range. If you think you can afford something that costs $200,000 to $250,000, consider options under $200,000 as well. Give yourself plenty of wiggle room so you end up with a home you can comfortably afford.

What Are the Best Resources for Home Buying Research?

Home buying research involves learning about different neighborhoods, the mortgage process, and the price of houses in your area. Use apps like Zillow and Realtor.com to research pricing and availability. Talk to local real estate agents to get a sense of the market. And speak with a mortgage lender to find out if you can prequalify for a mortgage.

What Common Mistakes Do First-Time Home-Buyers Make?

First-time home buyers often make the same mistakes, such as not checking their credit score and report before starting the process, going over budget, and not leaving room for the unexpected in their budget. Underestimating closing costs is another common first-time buyer mistake.  

Final Word

Home is wherever you feel safe and comfortable. That might be in a tiny house parked in your friend’s yard, in a houseboat docked on the edge of a city, or traveling the country in a converted van. 

If you’re feeling locked out of the traditional housing market, you still have options. And those options might be a better fit for you than a four-bedroom home with a white picket fence ever could be.

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