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Title : Builder's Tiny Houses Caught In a Very Mortgage Quagmire - Catherine's Blog
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Builder's Tiny Houses Caught In a Very Mortgage Quagmire - Catherine's Blog

Builder's Tiny Houses Caught In a Very Mortgage Quagmire

Each week, we seek expert advice to aid a small or medium-sized business overcome an integral issue.

Three a long time ago, Christoph Kesting built a smaller home for himself in Guelph, Ont., by using a standard shipping container as being the base. Then, after selling it – the customer ended up moving it over the province to Peterborough – Mr. Kesting wrote the sunday paper about his experience.

Now he's got taken his talents to offer.

For $40,000, customers can order their unique kit to get a shipping-container home from Mr. Kesting’s company, called How to Build a Container House. It arrives with programs and a copy of his book to start. The entrepreneur, who lives in Vancouver, can even pay for the very first 200 kilometres of shipping from the two-tonne steel home, that he calls the Foxden.

“It’s a do-it-yourself container home,” the 35-year-old Toronto native says. “It is included with all the materials, the solar panel if you need the off-grid version.”
The house that Christoph Kesting built, by using a shipping container in the base. For more pictures, click the link.

Mr. Kesting estimates that it's going to take the purchaser and a number of friends fourteen days to cut the holes for doors and windows, cover the outdoors with the precut wood and add the next storey, which comprises bed and rooftop balcony.

The homes could be on or off the grid, which has a composting toilet and solar energy panels available for people that don’t need to pay water and hydro bills.
Building the house around the shipping container.

Though he doesn’t yet get employees, Mr. Kesting has partners, like designers, who've helped map out how a homes work, especially the option to add second or third shipping containers to make larger homes with two and three bedrooms.

Mr. Kesting travelled to Toronto a few weeks ago to pitch his idea for the CBC show Dragons’ Den with the idea of securing $150,000 to assist launch his business. He expects to market two or three Foxdens over the following year, and seven to 10 in Year 2, attracting $1-million altogether after 3 years of operation.

In addition into a cash investment from Dragons’ Den, actually is well liked hopes to be entitled to sustainable-technology grants on the government. He says the Foxden runs a carbon deficit because of its solar cell.
Christoph Kesting, in Vancouver nearby the port where he gets his shipping containers.

Perhaps Mr. Kesting’s biggest challenge, however, is assisting customers buy his product in the initial place. The price point is a bit too low to allow them to qualify for just a conventional bank mortgage and also a little excessive for an unsecured personal credit line.

Though according to him that banks desire to lend money for mortgages, they're usually secured by “large bits of land and enormous homes specifically,” Mr. Kesting says, and the shipping container homes are neither.

The Challenge: How can Mr. Kesting help customers buy his tiny homes if banks won’t lend them money?

THE EXPERTS WEIGH IN

Sunil Mistry, partner, KPMG Enterprise, Toronto

You can’t really own one of those homes without land, so maybe if your bank won’t give you a regular mortgage, they can allow you to secure the credit against the land.

It’s almost incumbent on Christoph to venture to banks. Maybe it’s not the original banks, maybe it’s a few of these credit unions that could be willing to assist. So that point on his website he could say, “I’ve got a partnership with these 2 or 3 types of institutions who'd lend to you.”

Christopher Molder, principal broker, Axess Mortgage, Toronto

I spoke with mortgage insurer Canada Mortgage and Housing Corporation (CMHC) within the topic, also it said that in order for any home to be insurable, it must be fixed to your foundation, which these shipping containers are, and yes it must mould to the housing standards from the jurisdiction where it’s built. If it meets those standards nationally, then arguably, although it’s not proven yet, these homes ought to be insurable by CMHC, which often would mean that some lender should be ready to lend about it.

In my professional opinion, these homes are not financed by any conventional lender. The only solution I see is when Christoph were to look for a venture capitalist of sorts would you be ready to provide the mortgage financing, and there’s absolutely no reason why that can’t be considered a lucrative business.

Probably the most effective candidates for these sorts of properties are folks who live in the town, who own homes, who wish to have a cottage property or country property. They’ve got equity and so they can take out private financing or a credit line.

Shannon Persse, director and owner, Tiny Living Ltd., a builder of custom micro-homes on wheels, Delta, B.C.

We got in touch using a few mortgage broker-type folks who can find financing for clients. They’re not always a bad option because they’re ready to do the legwork and discover the lenders and so they have the contacts. A lot of tiny-house companies inside U.S. accomplish that, they’re finding lenders for clients.

THREE THINGS THE COMPANY COULD DO RIGHT NOW

Go the non-traditional route

Strike up partnerships with non-traditional lenders, for example credit unions.

Talk to venture capitalists

Consider forming a partnership for providing loans, which could be described as a lucrative business.

Work with mortgage brokers

They contain the contacts to help you your customers find loans.

Are you interested in living in a shipping container home?

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