top of page

What is the First Step in Starting a Tiny Home Community Project?

Updated: May 18, 2023

Building plans, Investors and Value Calculations.

Let's get started!

If you need investors to fund your project, you must determine the value of your project.

To execute a community building plan, you will need to start with an evaluation. Putting a value on your project will help you split ownership and determine investor partnerships if necessary. How do I do that?

1. Project Value Your project's value is the sum of your assets, the proposed property value (including your vision), and your business' project value. Now, assets and property value are pretty easy.

2. Assets For the assets, simply add up all the assets you have that will be used on your property. Things like trucks, tools, wood.

3. Property Value Deciphering your property value is also easy. If you have not purchased the land yet, get similar prices for "builds" where you are planning to buy. In other words, find a community, RV park, campground, trailer park, tiny home communities, farm.....whatever is SIMILAR to your idea and come up with an average price. That will be be the property value. 4. Business Value

Determine your business value. This number is projected. To calculate this, you will use the multiple of earnings evaluation. It is a method used to determine the value of a company or asset based on its earnings. This method involves calculating the multiple of earnings, which is the ratio of the value of the company to its earnings. The multiple is then used to determine the value of the company or asset based on the expected future earnings.

5. Earnings

Taking on a ‘community’ project should be done in phases. Do the first phase only for this evaluation and first round of fundraising. There are several factors in building a community that can affect the multiple of earnings, including the growth rate of the company, the stability of the company's earnings, and the level of risk. If you are just starting out, we recommend that your multiple is 2 but can be as high as 20! Much more on that here. So, for example: - Land w/vision evaluation: raw land = $30K, vision = $300K total $330K - Assets: truck $30K, trailer $10K, tools $20K = $60K - Multiple of earnings evaluation: Add up all your projected earnings [if you are planning to have STR on your land, go to VRBO or AirBnB and get an average nightly rental for a similar accommodation]: yearly STRs $60K, produce sales $80K, classes $70K = $310K .... now add the multiple of 2 and your projected value for the business is $620K

Add them all up and you’re at $980K for your first phase of the business. This is how you evaluate the first phase of your community project for use in your pitches to potential investors.

For more information on zoning, build plans, or investors contact us at here.

tiny home community


bottom of page