Podcast Episode #328Real Estate Investing News
Tiny Home Hotels Near Boulder, Colorado
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The tiny house movement is turning into an investment opportunity for several forward-thinking entrepreneurs in Colorado. They created a tiny home destination for tourists a few years ago in a tiny town near Boulder that is now turning a profit and are looking for developers and landowners to expand their business model to new locations.
Kenyon Waugh, Stephen Beck, and Jason Malito founded WeeCasa in 2015 with the help of three other investors. They began with $500,000 and 10 tiny homes in Lyons, Colorado. The property now has 22 tiny homes available for rent.
Colorado’s First Tiny Home Resort
The website says it is Colorado’s First Tiny Home Resort. The city website calls it a Tiny House Hotel and Vacation Location. According to a WeeCasa profile in Forbes, it’s a place where tourists can book a unique place to stay, and a place where individuals can check out the tiny home lifestyle. Some guests even bring a few belongings, like the dog or cat bed, to see how they might fit inside the tiny home.
The idea for a tiny home community began with a tragic flood in 2013 that wiped out a trailer park. Everyone got out safely but 32 trailers were destroyed.
FEMA then designated the property as a floodplain, which made it difficult to re-establish the trailer park. Forbes reported that the private landowners partnered with two of the people who eventually created WeeCasa, and they rented the property out for events, such as weddings. It’s at that point that Waugh came up with the idea of a tiny home community, to house event guests. The city granted permission to place tiny homes on the property, as long as they have wheels, so they can be moved in the event of another flood.
Location, Location, Location
If you haven’t heard of Lyons, Colorado — It’s a small town nestled in the foothills of the Rocky Mountains, in Boulder County. The 2010 census recorded just over 2,000 residents, but it’s also home to two of the state’s largest music festivals, and the Oskar Blues Brewery, which has been at the forefront of the craft beer movement. Lyons is also close to the Rocky Mountain National Park and is considered a “double gateway” to the Rockies because of two highways that take you into the park.
A state website describes Lyons as a “mecca for artists, outdoor enthusiasts, and musicians” with many restaurants, bars, and coffeehouses. The two festivals it’s become famous for are the RockyGrass bluegrass festival in July and the Rocky Mountain Folks Festival in August.
But, WeeCasa isn’t just attracting people who want to visit the region for music, art, and outdoor activities. Forbes writes that people considering the purchase of a tiny home, are booking them to try them out. Waugh said in Forbes that they’ve had “tiny house enthusiasts that move every couple of nights and try different homes.” He says many fly in from elsewhere because they are thinking of “going tiny” themselves.
Forbes writes that WeeCasa had a 40% occupancy rate during its first season in 2015. They booked slightly less than 500 nights from May to October of that year. Waugh says the company is on track to book about 4,000 nights this year. In March, he says they had a 70% occupancy rate. Overall revenue is currently about $2,000,000, or about four times what they invested.
The company also handles any spikes in demand by leasing other tiny homes in the area, according to Forbes. WeeCasa provides management of those outside rentals, along with housekeeping and linens. In exchange, revenue is split 50/50 with the owners. Waugh says this helps tiny homeowners pay their own tiny mortgages.
WeeCasa Looking for Partners
WeeCasa’s plans for expansion could be an opportunity for other real estate investors. The company is looking for new locations and would like to partner with developers and landowners. The Forbes article says the founders are “actively working to license the WeeCasa brand”. They are interested in places with beautiful outdoor settings. They are particularly interested in Southwest Colorado, Hawaii, Texas, North Carolina, and Montana. Waugh is quoted in Forbes as saying: “I don’t know for us if it would work well in a parking lot in a city. We are looking much more for outdoor experience areas and where people like to go.”
Waugh believes the business model can be more profitable than a hotel because it’s flexible. He told Forbes that you can easily adjust the number of units depending on demand, so if you anticipate a particularly busy summer, you can bring in more tiny homes. He says the WeeCasa environment also offers a unique social experience for people who stay there. They are often curious about what all the other tiny homes look like and will exchange visits with their neighbors.
Renting a WeeCasa tiny home is affordable. According to the WeeCasa website, rates vary from $149 to $185 a night. They are based on the day of the week and the size and features of the tiny home. Glancing at their list of tiny homes, they can sleep anywhere from 2 to 5 people. There are also lots of photos on the website.
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