Our friend (and tiny house entrepreneur) Kai Rostcheck is at it again! Last year we talked with him about the launch of Tiny House Dating, which now has more than 500 fascinating Tiny House Enthusiast members. And now with the launch of Tiny House Lending, a website aiming to be the easiest, fastest way to find funding for your Tiny House purchase, Kai is bringing another angle to the Tiny House Movement. Fortunately for us we recently caught up with him for a quick chat about the new service. (pictured below are Kai and friend Ola Szelagat at Country Crafted Log Cabins in Flat Rock, NC)
Tiny r(E)volution: First of all, are you a Cyborg?
Kai Rostcheck: Only on Mondays, but why do you ask?
TR: You seem to have unlimited energy for this Tiny House stuff. You just keep creating incredible projects built around the tiny house community.
KR: So true. You should have been with me and my girlfriend as we were traveling through Flat Rock, NC and drove past a Tiny House for sale. I nearly lost my mind – like a 8-year old kid at Christmas – and she was quick to remind me how much the whole Tiny House thing aligns with who I am.
TR: You know, I actually have photos of you as an 8-year old.
KR: I should have known…
TR: Seriously though, let’s talk Tiny House Lending. What is it?
KR: Tiny House Lending is website that matches potential borrowers with qualified financial institutions offering bank-backed and/or peer-to-peer loans.
TR: Can you give me some more specifics about the loans?
KR: Sure. In all cases, we are talking about non-collateralized, personal loans. Borrowers can apply for up to $35,000 which can be used toward the purchase of a complete Tiny House (from a manufacturer) or for the purchase of materials for a do-it-yourself build.
TR: What are the interest rates?
KR: That completely depends on the borrower’s credit score and other related financial data. Generally speaking, rates begin at 6% and go up from there.
TR: I want to play the opposite side of this for a minute, if you don’t mind?
KR: How so?
TR: Do Tiny House people even want loans? I mean, I’ve seen lot of conversation about financing and there is usually talk that basically amounts to “don’t be a debt-slave!” I know I didn’t want a loan or mortgage hanging over my head when our build was done.
Kai: I couldn’t agree more! I want people to be extremely judicial about how they set up for financial success. If you’ve got cash, that’s the way to go for sure. But looks look at one example, and I think it will help you see the other side of the story.
TR: Ok, go ahead.
KR: First, you need to understand that we spent nearly a year quantifying demand. During that period we simply accepted non-binding “pre-applications.” We were essentially asking people “IF we could help you find loans, what would you be looking for.” The organic responses astounded me. We didn’t do any kind of public outreach at all, yet people found us and kept filling out the form. Meanwhile, I was talking with scores of financial institutions and finally began to get their attention as we soared past six figure demand.
TR: So at a macro level, the market validated your concept. But why? What’s the real value proposition for individual borrowers?
KR: For me, the most compelling answer is “RENT!” The average rent paid in the U.S. is $905 per month (for people interested in specifics, refer to U.S. Census data shown on recent market research). $905 per month x 36 months = $32,580 over 36 months. We’re talking about a really nice Tiny House if you had saved that money! Instead, it’s gone forever – your landlord got it and he’s not giving it back.
TR: Yeah, but you have to pay interest on the loans, right?
KR: Yes, but there are many scenarios in which someone will come out way ahead at the end of their loan period for two reasons: first they will now own an asset (specifically, a Tiny House worth more than $30k). Second, they are now rent free so they can be saving that $905 every month. This will add up quickly!
TR: Oh yeah. I’m seeing what you’re throwing down. I get it!
Kai: And I’m hoping that other Tiny House Enthusiasts will “get it” too, because we’ve got something that can really help out!
TR: Are there any basic requirements to apply?
KR: Lenders are typically looking for U.S. applicants with a credit score of 660 or higher. Also, our current partner is able to service residents of all states except Maine and North Dakota.
TR: And how do people apply?
KR: Simple – just visit www.tinyhouselending.com and click “Get Started.” We ask for a bit of brief background information then match them to the lender(s) best suited to their needs.
TR: Is there a cost to apply?
KR: Nope. None. Not ever.
TR: What else should we know?
KR: Just that these are the early days. We’re going to continue adding partners and listening to customer feedback. Oh, and also….I am sometimes a cyborg on Tuesdays, too.
TR: I know. I have photos of that, too.
Kai: Umm. And on that note….gotta go!
To see if you qualify for a Tiny House loan visit www.tinyhouselending.com.