Real Estate Investing School Podcast
Episode 122: REAL DEAL – Tiny Homes, Giant Returns
Host: Brody Fawcett
Date: January 11, 2024
Episode Overview
Brody Fawcett shares the full story behind his "tiny home resort" real estate project in Brian Head, Utah, walking listeners through how he found, funded, and forced value into the deal. With a blend of transparency and actionable advice, Brody discusses zoning challenges, creative funding, partnership structures, construction hurdles, and the impressive early returns of this unique investment. The episode is a practical guide for investors interested in alternative real estate assets, especially tiny homes and vacation rentals.
Key Discussion Points & Insights
1. Why Tiny Homes?
(00:02 – 03:00)
- Tiny homes offer high potential returns because they can rent for nearly the same nightly rates as much larger properties at a fraction of the build and carrying cost.
- Brody is drawn to creating unique guest experiences and sees tiny homes as a way to combine investment and design creativity.
Quote:
"Something about just creating experiences is really fun and enjoyable for me... I visualized what this tiny home resort would look like, and how do I go create this type of an experience for other people to come and enjoy."
—Brody Fawcett (01:40)
2. Initial Attempts, Lessons Learned
(03:00 – 06:00)
- Brody first experimented with shipping container homes but found them limiting in usable space and challenging to build with, so he sold them.
- Importance of selecting the right property with appropriate zoning.
3. Finding the Right Location and Zoning
(06:00 – 14:00)
- Location: Brian Head, Utah, chosen for strong year-round demand (winter ski, summer outdoors).
- Brody previously Airbnb’d a condo in the area, confirming high occupancy (approx. 85–86%) was possible so long as prices were kept accessible.
- Critical advice: Don’t chase locations blindly; focus on market and deal fundamentals, not just working in trendy areas.
- The property search started with understanding zoning (specifically R3/multifamily) via county resources and direct city outreach.
- Unique requirements: No “tiny homes on wheels,” must maintain at least 50% green space for the mountain “cabin” feel.
Quote:
"Find out what your buy box looks like... get really crystal clear on that and then it's going to come to you."
—Brody Fawcett (12:20)
4. Deal Details: Land Purchase, Subdivision, and Build Potential
(14:00 – 20:00)
- Acquired four weird-shaped lots and re-subdivided into three nearly equal lots (~0.5 acre each).
- Managed to structure the lots to allow up to 24 buildable units while meeting zoning restrictions.
- Land found via “for sale by owner” sign after targeted neighborhood research.
5. Replicating a Proven Strategy
(20:00 – 23:30)
- Brody encourages copying proven models—drawing on his own success with small condos in the area.
- Focus on high occupancy and value design to maximize returns.
- Set clear criteria: “sharpen your axe” before hunting deals by knowing exactly what you’re looking for.
6. Negotiations and Securing the Property
(23:30 – 27:00)
- Purchased land for $150,000, placing $5,000 earnest money with a 30–45 day close (all-cash deal).
- Used time under contract to line up clear cost estimates ("bids are free") and plan the build.
- Importance of factoring in all potential construction and development fees up front.
7. Funding & Partnerships: Creative Structuring
(27:00 – 35:00)
- Brody brought in a 50/50 partner to fund the cash needed to close and build.
- Partner contributed the down payment; Brody contributed project management and deal assembly expertise.
- Partnership terms were simple: "We're 50/50 out the gate." No backend return of initial investment required.
- Encountered shifting lending requirements, pivoted banks to secure 30% down (vs. 25% originally planned) and secured a 25-year amortized commercial loan to keep cash flow high.
- Brody had to come up with an unexpected extra 5% (about $50k) but felt it was fair considering his equity.
Quote:
“With partnerships... you can structure it however you want, and whatever’s going to be a win-win for you and your partner.”
—Brody Fawcett (33:10)
8. Construction Realities & Setbacks
(35:00 – 39:00)
- Construction took longer than planned, in part due to winter delays and missing critical utility window (“missed our deadline to tie into water”).
- All carrying costs during delays had to be paid, underscoring the importance of schedule management.
9. Forcing Value: Design, Amenities & Differentiation
(39:00 – 44:00)
- Made sure to maximize rentable nights and rates by making small units high-quality, with luxury touches and smart layouts:
- Each tiny home can sleep seven people (triple bunks, loft, sofa bed).
- Amenities include sauna, laundry, fire pit, and soon, a BBQ area.
- Used a specialized provider (Zip Kits) for custom units and closely managed build and contractor performance.
Quote:
“Even though these are tiny houses, they actually can sleep seven people... We did a really good job making it feel luxury.”
—Brody Fawcett (41:00)
10. Exit Strategy & “Bonus” Equity
(44:00 – 48:00)
- Received multiple offers to sell immediately after completion, which would have netted each owner ~$400k, but chose to hold for long-term cash flow and tax advantages.
- Brody negotiated to keep the third lot for himself as part of the overall deal, giving flexibility for future builds.
- Value appreciation: Each lot purchased for ~$50k is now worth ~$150k due to improved market conditions and the quality of the project.
11. Returns & Projections: Actual Performance
(48:00 – 53:00)
- In first month (January 2024), with just one month of operation, property manager reported net income (after expenses/fees) over $14,000 by January 5th, with a projection for $20–25k+ for the month and upside towards $40–50k/month over time as reviews and momentum grow.
- Brody’s net worth increased by an estimated $500,000 before rentals even began.
Quote:
“Before the deal was even done… my net worth probably went up half a million bucks plus.”
—Brody Fawcett (47:45)
Notable Quotes & Moments
- “You don’t have to reinvent the wheel… Copy success, find out what other people are doing.” (11:50)
- “If you already know that this is a proven method… why go recreate it, right?” (14:55)
- “We bought the whole thing for 150k. Each one has gone up 3x… each lot is worth 150 grand each.” (46:30)
- “We should this month for sure go and do well over 20,000 bucks, well over 25,000 bucks.” (51:10)
Practical Takeaways
- Do the homework: Study zoning, city requirements, and past performance in your target area before you shop for property.
- Sharpen your criteria: Explicitly define your buy box so you filter deals with focus and confidence.
- Creative partnerships: Deals can be structured to match what’s fair and win-win for both parties.
- Maximize value-add: Even small or “trendy” properties can be cash-flow winners if designed for high occupancy and experience.
- Be ready for curveballs: Plan for delays and extra costs, especially in seasonal locales.
- Hold for long-term gains: Sometimes the biggest wealth boost comes from value creation, not just short-term flips.
Timestamps for Important Segments
- 00:02 — Tiny homes as a high-yield investment; Brody’s inspiration
- 06:00 — Researching zoning, finding the right land
- 14:00 — Deal structure and subdivision
- 20:00 — Lessons from prior similar investments
- 27:00 — Funding strategy and partnership model
- 35:00 — Construction process and overcoming delays
- 39:00 — Forcing value through design and amenities
- 44:00 — Negotiating to keep bonus lot, equity upside
- 48:00 — Rentals launch and first-month returns
- 51:10 — Future revenue projections and goals
Tone & Language
Brody speaks directly and conversationally, emphasizing transparency, practical advice, and an encouraging, can-do mindset:
"Hopefully you took something out of this and you can take it and apply it… there’s still a lot more to cover.” (52:45)
Connect & Further Resources
- Instagram: @realestateinvestingschool
- Brody’s Tiny Home Resort: @unplugresort on Instagram
- Downloadable resources: Contact Brody for construction/expense checklist
End of Summary