Yurts can be expensive, sometimes costing up to $50,000 with utilities so it makes total sense someone might want to split up the payments. I wanted to find out if yurts could even get financing and find the best options to do so. So, I did some research. Here’s what I found.
You can finance a yurt using methods including personal loans from credit unions, land loans, and seller financing. If you already own a house, you can get a home equity loan and buy a yurt in cash. It’s crucial to understand your financial situation and consult with a financial advisor before choosing a method.
Whether your dream is to build a yurt on a new piece of land and call it home or you want to make a profit, we’ll go over some ways to finance your yurt.
How Much Does a Yurt Cost
The cost of yurts can vary widely based on size, materials, and the level of luxury you’re after. A basic yurt kit can start as low as $5,000. These are usually called wall tents or bell tents.
That’s for the kind of yurt you might take camping – a bit of a step up from a tent, but still relatively basic.
If you’re planning on living in your yurt full-time, you’ll need something a bit more substantial. A fully decked-out yurt suitable for a year-round living can range from $15,000 to $30,000. Pacific Yurts is a reliable company to buy yurts from and their cost range is the same.
Their yurts have things like a robust wooden lattice structure, a heavy-duty cover, and even skylights. This doesn’t include the cost of the land, any necessary site preparation, or utility hookups.
If you’re going completely off-grid, you’ll also need to factor in the costs of solar panels, composting toilets, and rainwater collection systems.
While this price can seem daunting, the beauty of yurts is their flexibility. You can start small and basic, and upgrade as your budget allows. Or, you can explore financing options to get the yurt of your dreams right off the bat.
In “The Complete Yurt Handbook,” Paul King shares a wonderful example of a couple who managed to build a beautiful yurt home for under $10,000 by doing a lot of the work themselves and sourcing materials locally. This kind of budget-savvy approach can make yurt living an affordable reality.
So, we’ve established that yurts can cost anywhere from a few thousand to tens of thousands of dollars. But don’t let the price scare you off – there are several ways you can finance your yurt dream.
1. Business Loan
Let’s say you plan on renting out your yurt on Airbnb or another vacation rental platform. Or maybe you’re planning on starting a glamping site or a retreat center.
Suddenly, your yurt isn’t just a home – it’s a business venture. And that means you can potentially qualify for a business loan.
Business loans typically come with lower interest rates compared to personal loans. Plus, they offer larger amounts of money.
Keep in mind, getting a business loan involves a bit more paperwork and planning. You’ll need a solid business plan to convince the bank that your yurt venture is a good risk.
Remember, every lender is different, so you’ll want to shop around to find the best rates and terms. And don’t forget to consider online lenders as well – they can often provide more competitive rates than traditional banks.
Some important things to consider when planning to receive a business loan include getting your finances in order, choosing the right type of business loan, and finding a lender.
Lenders will want to see proof that you’re financially responsible. They’ll likely look at your credit history, income, assets, and existing debt. If your credit score is lacking, it might be worth taking some time to improve it before applying for a loan.
If you plan on getting this type of loan, we go over the return on investment on yurts later in the article.
2. Personal Loan/ Credit Union Loan
This type of loan does not require collateral like a house or car to back it up.
The flexibility of a personal loan allows you to apply the funds towards the purchase of your yurt, covering both the cost of the yurt itself and any additional expenses such as delivery, assembly, and interior furnishings.
You can receive a personal loan from credit unions. These member-owned, not-for-profit financial cooperatives provide personal loans. Given their focus on serving their members rather than maximizing profits, credit unions often offer more competitive interest rates and more favorable terms than traditional banks.
Here’s a more detailed process on how to secure a personal loan from a credit union specifically for your yurt purchase:
- Membership: Your journey towards obtaining a credit union loan starts with becoming a member of the union. Each credit union has its unique set of eligibility criteria, which may be based on various factors such as where you live, your employer, or even certain family connections. It’s advisable to conduct thorough research and find a credit union that you qualify for and that suits your needs.
- Application: Once you are a member, you can apply for a personal loan. During the application process, you will need to provide detailed personal and financial information, such as your income source, employment history, and your credit history. When applying, be prepared to discuss the specifics of your yurt purchase, including costs associated with the yurt, delivery, setup, and any customization or interior design plans you have.
- Approval and Interest Rate: If the application is approved, the credit union will present a loan offer with a specified interest rate. Your credit score significantly influences this rate: the higher your credit score, the more favorable your interest rate.
- Repayment: After accepting the loan, you’ll enter the repayment phase, which involves regularly scheduled payments over a predefined period. It’s essential to make these payments promptly to avoid penalties and to maintain a healthy credit score.
3. Home Equity Loan
Another financing option you might want to consider if you already have a home when purchasing a yurt is a home equity loan. This type of loan allows you to borrow against the equity you’ve built up in your existing home.
The phrase “equity” in this context refers to the difference between the value of your home and the remaining amount on your mortgage.
As always, it’s advisable to consult with a financial advisor before making any major financial decisions.
4. Land Loan
If you’re looking to purchase a piece of land for your yurt, a land loan might be just the financing option you need.
A land loan is a type of credit extended by a financial institution specifically for the purchase of a plot of land. Unlike home loans, which are often used to purchase already constructed homes or homes to be built immediately, land loans are used when the buyer intends to use the land for future construction, like setting up a yurt.
You would most likely give monthly payments to whoever owns the land and the land will act as the collateral.
5. Seller Financing
This is an alternative funding option where the seller of the property (or in this case, yurt), instead of a traditional lender or bank, extends credit to the buyer for the purchase. It basically cuts out the middleman (the bank).
Seller financing can be an attractive option, especially if traditional financing methods aren’t feasible due to factors such as a lower credit score or unavailability of conventional loans for unique property types like land for yurts.
Are Yurts a Good Investment (How Long Do Yurts Last?)
Modern yurts have an average lifespan of 15-20 years but varies on materials, manufacturer, and maintenance. While the interior structure of a yurt is durable and can last for several decades or even longer, the exterior elements such as fabric, windows, and doors are more likely what is needed to be replaced.
Final Verdict: Are Yurts Worth It?
|Easy to assemble
|Only lasts 15-20 years
|Limited financing options
Yurts can be a relatively affordable option for adding lodging to a property, with prices ranging from around $5,000 to $30,000 for a basic structure. Investing in a yurt to add to a property can be a good decision depending on various factors such as the property location, demand for lodging, and investment goals.
If the yurt is rented out on Airbnb or other short-term rental platforms, it is possible to earn a good return on investment by charging nightly rates that are higher than the cost of building and maintaining the yurt. According to various sources, the average rate for a yurt on Airbnb ranges from $50 to $200 a night, depending on location and amenities.
However, keep in mind that there will be additional costs associated with owning and renting out a yurt, such as site preparation, maintenance, cleaning, and marketing expenses.
Yurts require some maintenance and upkeep, such as cleaning, sealing, and occasionally replacing the roof covering. The frequency and cost of upkeep will depend on factors such as the climate, the quality of the yurt materials, and the level of use.
Return on Investment for Yurts
The time to break even on a yurt investment will depend on various factors, such as the initial cost of the yurt, the rental income generated, and the expenses incurred.
Let’s say the initial cost of a yurt is $20,000, and the owner plans to rent it out on Airbnb for an average nightly rate of $100. Assuming a 50% occupancy rate and an estimated $5,000 in annual expenses for site preparation, maintenance, cleaning, and marketing, the owner could expect to earn about $18,250 in rental income during the first year of operation ($100 x 182.5 nights).
Based on these numbers, the time to break even on the yurt investment would be about 1.6 years ($20,000 / $12,250 annual profit). Of course, these calculations are simplified, and the actual time to break even will depend on many factors such as the specific rental market, the actual occupancy rate, and the actual expenses incurred.