Author’s note: (12/20/2019)

This article was prescient on predicting the imminent birth of mobile ADUs. The week after publishing this post, the nation’s second largest city, the City of Los Angeles, passed an ADU code that allows for mobile ADUs. The code went into effect on December 19th, 2019. You can read L.A.’s new ADU ordinance here.

This post offers a first-hand inquiry into the relative ease, flexibility, and affordability of mobile ADUs over all other housing forms allowed in residential zones, including conventional ADUs. 

In a recent property endeavor, I installed infrastructure and a gravel parking pad for a tiny house on wheels (THOW) at a residential property. We added a water spigot, a sewer cleanout connection, and a 50-amp electric connection. 

I’ll cover these development elements in more detail as well as the personal economics of this, but first I want to offer some important remarks about the concept of mobile ADUs on residential properties and compare and contrast them to ADUs. 

For purposes of this post, I’ll refer to our recent personal project as THOW site development, but this can also be considered Mobile ADU site development. That is to say-this is a setup for a Mobile Accessory Dwelling Unit on a residential property.  

A Pen-Stroke Solution to The Affordable Housing Crisis

While many policy makers eye ADUs as a solution to affordable housing, I’m reluctant to casually relate the two. Depending on what audience we’re talking about, ADUs are not going to be affordable housing to most people because they’re still very expensive to develop! 

ADUs are the least expensive form of legal housing development type currently possible in US cities and thus are relatively affordable to develop compared to all other conventional housing. However, even an inexpensive basement conversion ADU like the one I completed last year, still cost $100K.

In the face of severe affordable housing crisis, there’s been a fixation on making this already relatively inexpensive development type far more inexpensive than it actually is. It’s fair to say that there’s many policy makers and entrepreneurs working on the idea of reducing the cost of ADU development. 

There’s even some innovative ADU development business models emerging that can effectively eliminate the capital cost hurdle that ADU developers face, but they’re not fundamentally decreasing the cost of the construction process. 

Meanwhile, from where I stand, I can testify to the fact that a totally market-based approach to provide much less expensive housing than conventional ADUs exists, just beyond the realm of what is deemed permissible by commonplace regulations found in residential development regulations today. 

There’s a bounty of inexpensive new and used dwellings available right now in the form of mobile dwellings—self-contained, dwellings on wheels that include a bed, a kitchen and a bathroom.

Indeed, there’s a perennial supply of used travel trailers available for less than $10K on any local Craigslist site. These travel trailers could theoretically become adequate homes to someone pretty easily if zoning would allow them to serve that role. Beyond that, there’s a whole range of mobile dwellings including campervan conversions, RVs, tiny house on wheels, and park model RVs, costing between $20K-$80K that could provide a highly functional home for many people. (*Notably, “mobile dwellings” are not the same as “Mobile Homes”, which are now actually called “Manufactured Homes”. Manufactured Homes are placed on a foundation, and therefore would not be a form of mobile ADU.)

Smart and dedicated professionals valiantly striving to make ADUs fit into a concept of affordable housing, would be able to more effectively and quickly serve a far greater lower-income population by working on opening up their zoning code to allow for a market-based solution to the affordable housing problem in the form of mobile ADUs on residential properties.

There’s relatively little effort being invested into legalizing the habitation of mobile dwellings on residential properties. Yet, it seems that the primary obstacle preventing mobile dwellings on residential properties from taking hold is simply a lack of imagination. 

Allowing mobile ADUs on residential properties is not even a technically complicated solution. Conventional ADUs are much more difficult to programmatically execute from a planning, zoning and development perspective than mobile ADUs. 

I should know. I developed the first hotel comprised of tiny house on wheels back in 2013 (effectively, RV park development), as well as two ADUs (both detached new construction and an attached conversion), and most recently I did the development site work with permits for hosting a tiny house on wheels on our residential property. So, I’ve personally executed each these four, alternative development types. Here are my findings based on my personal experience: 

Compared to any other residential infill housing development, mobile ADU site development is:  

a) extremely inexpensive and 

b) extremely easy 

In terms of the dwellings themselves, a suite of mobile dwellings available today blow ADUs out of the water in terms of affordability. 

Whereas there’s mobile dwellings available with kitchens and bathrooms today for $10K, the site work and foundation alone for an inexpensive detached ADU in the Portland market typically cost ~$20K (with a common range of $15-30K). 

The average cost for a detached ADU in Portland today costs $194K. At $5K, our THOW site development cost 1/39th of that. 

This post illustrates the potential of this housing form, in the hope that it will spur some out-of-the-box thinking among elected officials, planning staff, and entrepreneurs who are actively working on creative solutions to confronting an affordable housing crisis in their city. But, it’s fair to stipulate right out of the gate that mobile ADUs won’t serve a large percentage of the population. In reality, they could only realistically serve a selective subset of 1+2 person households. But, for that swath of the population, it’s an incredibly great housing form economically, a claim that I’ll back up later in this post. 

The Birth and Evolution of Mobile ADUs

At the last Build Small, Live Large Summit in Portland on November 7th, 2019, I made a prediction- the next evolutionary change for ADUs would be mobile ADUs. 

As with ADUs regulations today, there are already fledgling examples of incremental regulatory changes occurring with THOWs being allowed as dwellings on residential properties. A very limited set of California jurisdictions have bonafide THOW regulations that define them as a type of ADU, including Fresno, San Louis Obisbo, and Placer County.

Other legislation is happening with THOWs; a statewide legislative bill in Washington even condoned THOW communities in a limited set of circumstances. But, for the purposes of this post, I’m limiting the scope of my inquiry to the legal habitation of mobile ADUs on residential properties. 

Taking a different tack on the matter, Portland, OR has “deprioritized enforcement against tiny homes and people sleeping in RVs parked on private property” during a housing emergency, which was declared in October of 2017. The explicit absence of regulatory enforcement is an implicit blessing of using mobile dwellings on residential properties. 

Notably, the deprioritization policy has resulted in almost no local media coverage in the Portland news in the last 1.5 years, and more importantly, there’s been almost no political backlash against mobile dwellings since this policy was put into effect, according to key city policy staff in Portland. And, there’s been no noticeable mad rush of tiny houses flooding into our city. 

What does that tell us?

Well, it signals something really important, actually. Allowing THOWs and mobile dwellings on residential properties apparently is actually no big deal. Maybe Portland’s experience can provide a little political cover for other cities to actually test out mobile ADUs without much ado. 

There are a couple different policy approaches for legalizing the habitation of THOWs on residential properties. My preferred approach is to incrementally deregulate ‘camping’ activities on residential properties, as Portland and Eugene, Oregon are doing. The other approach currently being used in CA is to regulate the THOW to meet ANSI 119.2 or 119.5, the standard to which Park Model RVs are built. These will be treated as a new planning/zoning pathway to installing a detached ADU. 

Mobile ADUs as a concept is new enough that it’s simply too early to know which regulatory approach is the ‘best practice’. Perhaps other zoning approaches will emerge as more communities test out this idea.  

Aside from the zoning regulation of the dwelling itself, there’s already actually common development protocols for adding the requisite infrastructural connections (water, sewer, and electric) to residential properties to provide an umbilical cord connection between the mobile ADU and the grid. 

I suppose that’s a good segue to a visual description of the formal site development process for a mobile ADU.

Formal Site Development for a Tiny House on Wheels on a Residential Property

In the following set of images, I’ve documented the method by which I added water, sewer, and electric infrastructure connections with building permits and inspections, as well as a gravel parking pad and landscaping screening for aesthetics, on my residential property. 

Pragmatic Benefits to Mobile ADUs over Conventional ADUs

I’m a huge advocate for ADUs (see BuildinganADU.com and AccessoryDwellings.org), but there are some other significant benefits to a THOW over an ADU for many people (landlords and tiny house dwellers alike). 

1) Tiny house site development costs roughly $5K. That dwelling site rents for $400-$800/month in the Portland market. 

Our tiny house site development cost us roughly $5K. After 7 months, the site development costs will be covered, and the monthly rental income we’ll make ($650/month, including utilities and internet) will reduce the primary home’s mortgage expenses by ~⅓. 

For our landmates, they’re living in a brand new construction house (albeit a tiny one), in a desirable location, for roughly ½ the cost of renting a comparable unit in our neighborhood. This close-in neighborhood gets a Bike Score of 94 from WalkScore.com—a “Biker’s Paradise”, which is good, because they don’t own a car. 

2) Our landmates spent roughly $70K purchasing their THOW. In 2-7 years, they suspect that they’ll be ready to move away from Portland and head home. At that point, maybe they’ll sell the tiny house (a liquid asset they independently own) to someone for roughly what they spent paid for it initially. Or, maybe they’ll decide at that point to bring it with them if they want to live in it elsewhere. 

(A mobile-dwellings-will-depreciate-quickly argument will arise amongst policy wonks thinking about affordable housing, so I’ll just state that my personal experience with buying and selling THOWs for my business over a six-year period is that they have held their value over time. There’s no formal studies on the depreciation of THOWs.) 

By contrast, an ADU is fixed in place & tied to the land; it can’t be removed from the site nor can the ownership of the ADU be physically or legally separated from the land on which it sits.  

3) Maybe our landmates will move their THOW to a new location that suits their needs better in a year. Or, maybe they’ll live on our property for a decade. 

Unlike an ADU, both the landlords and the landmates have flexibility in this living arrangement. Should either of our needs change over time, either one of us can opt to end the rental arrangement with adequate notice. 

4) The average 800 sq ft ADU costs $210K to develop. In our market, that ADU would rent for $2K/month. That’s 8.75 years before the ADU income would pay for the cost of its initial construction. 

By contrast, with the THOW site development approach, after 8.75 years we’ll have generated $68K from rental income (105 months x $650/month - $5K for site development).

5) In our case, our landmates purchased their own THOW. As the landlords, we didn’t have to provide and pay for the THOW, or assume responsibility for maintaining it. Alternatively, we could have opted to also provide the THOW, but the cash-on-cash return, or breakeven period, wouldn’t be as good for us. 

Flexibility of Ownership- The Mobile ADU

This flexibility of ownership that is intrinsic to a mobile ADU is likely to be understood over time as the revolutionary attribute it offers over all over housing forms. 

This ownership flexibility and the innate mobility of the dwelling itself, foretells the opening up an expansive and fascinating ecosystem of mobile ADU providers that doesn’t currently exist. 

Third parties could provide mobile ADUs as assets for lease to either landlords or dwellers, much like the ecosystem for acquiring new, used, and leased automobiles that exists today. 

Furthermore, automobile financing could be applied to mobile ADUs since they’re actually assets that can be repossessed by a lender unlike a conventional ADU. This new avenue of financing for mobile ADUs will fundamentally open up access to purchasing off-the-shelf ADUs for whoever purchases the dwelling. 

Automobile & home hybrid financing opens up fascinating business models, but more importantly, it provides homeowners and dwellers with tremendous flexibility and the possibility of creating housing opportunities in very desirable locations with very low out-of-pocket costs. 

The Birth and Evolution of Mobile ADUs

While there is not yet a predictable pathway for evolution of mobile ADUs, it is evident to me that this is one type of housing option that we will start to see much more of in the not-too-distant future. 

Like with ADUs, this seems to be an inevitable outcome of a set of evolving economic market needs, demographic trends, and available technologies. 

We will start to see the birth of mobile ADUs over the coming decade. The advantages of mobile ADUs will become self-evident quickly as they get formally adopted as a viable housing apparatus within residential zones.

With broader geographic adoption and institutional acceptance of mobile ADU regulations over time in US cities facing a perennial and acutely growing housing crisis, the technology for mobile ADUs will evolve both significantly and at a blistering pace due to a growing and diverse market that will emerge for this flexible and affordable housing type.