The Pros And Cons Of Living In A Small Home

Lifestyle

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A while back, I got an email from Laura who is currently having a little difficulty with living in a small space.

So something I’ve been dealing with is that we live in an apt in a 4-plex we own in ******, OO. It’s been great financially but now we have 2 little kids – 2 and 4 yrs old. I’m starting to go crazy (mainly in wintertime) for the lack of space…

She asked me to write about the pros and cons of living in a small space and I’m happy to oblige. Living in a small home is fine when you’re young, but it’s a whole new situation when you throw one or two kids in there.

We used to live in a 2,000 square foot home in the suburbs before we moved to our 1,000 square foot condo, so we have experienced both sides. There were only the two of us in the house (aside from the occasional renters) and the place was way too big for just the two of us. Our 1,000 square foot condo is perfect for two, but we are making it work for 3. Luckily, we live in downtown Portland and there are a lot of things to do right outside our doorstep so we don’t spend all our time at home. All in all, we love living in a small home. For us, a big house is more trouble than it is worth.

Let’s look at the positives of living in a small home first.

*This post was originally written in 2013. I’ll add some updates at the end.

Pros of living in a smaller home

Cheaper utilities – I’m still amazed at how much less we are paying on utilities. Our electric bill this winter was about $75/month. We paid over $250 for gas and electricity in the winter at our old home 6 years ago. That’s a big difference and I’m sure the price has gone up even more since then.
Smaller mortgage – Assuming the location is the same, a smaller home should cost quite a bit less. You can check on Zillow and see how much the smaller homes in your area cost compared to your house. While you’re at Zillow, take a look at the smaller home property tax too. Wouldn’t it be great to pay less property tax and mortgage?
More money to invest – Living in a small home is a great way to build wealth. You can save and invest more. In the past, a house was a good investment, but that’s no longer true. A big house cost so much money to maintain. It makes more sense to live in a smaller home and invest elsewhere. There are many ways to invest in real estate now. I’m investing with the CrowdStreet, a real estate crowdfunding company with great track record. Check them out if you want to invest in commercial real estate.
Less stuff – We had a huge garage sale when we moved from our old house to a smaller condo. We only kept what we really wanted and sold the rest. Space is limited in our condo so we don’t buy as much stuff in general. As a friend of ours says, sometimes it is better to have the right stuff rather than lots of stuff. Whenever we visit friends who live in bigger homes, we are always amazed at how much stuff they have.
Quality – When you live in a smaller home, it’s possible to splurge on quality materials. We replaced the crappy soft engineered wood flooring in our kitchen with solid bamboo flooring and it wasn’t too expensive. In a big house, we would have to spend a lot more money.
Cleaning – It’s much easier to keep our living space clean because we can see what needs to be cleaned. It also takes less time to clean a small home.
TV – The 42-inch TV looks huge in a small living room! No need to buy anything bigger. 🙂

Cons of living in a smaller home

Kids – As I mentioned above, everything changes when you throw a crazy little person or two in the mix. Kids love to run around and there isn’t enough space in our condo for that. We live in a converted apartment building, so the people downstairs probably think we have a 300-pound elephant running around. Luckily, we found a few places nearby to go in the winter so we didn’t go stir crazy. My only input here is to find some places that you can go every day. Kids are just too energetic to sit around at home. It would be really nice if we had more space though.
Privacy – It’s hard to get away in a small home. You are always aware of the other people living there. In our old home, I could go upstairs and get away for a few minutes if need be. Now, I have to actually leave to get a few minutes of privacy.
Clutter – Our condo is getting cluttered. We rarely buy stuff, but things still accumulate slowly through the years. Once we have a kid, the clutter seems to take on a life of its own. Baby RB40’s stuff is all over the place now. Luckily, Baby RB40 will have a little cousin soon so we can ship off a lot of his stuff.
Entertain – It’s more difficult to entertain when you live in a small home. We had a few parties and while we limit the guest list, it gets crowded very quickly in our condo. It’s much easier to entertain in a bigger home.
Guests – Mrs. RB40 would love it if our relatives and friends who live some distances away came to visit, or to host exchange students. But if they stay with us, they would have to sleep on the floor because we really don’t have enough room. I guess this isn’t the ideal hospitable situation.
Storage space – There is just not a lot of storage space in a smaller home. For example, I would love to buy a kayak, but there is just no way to store it. I would have to violate my principles and rent a storage space if I get a kayak.

Living in a smaller space is working well for now because we adapted, but I don’t know if we can do it with 2 kids. (We are not planning on it.) It’s a big financial win and the pros outweigh the cons right now. We love living downtown, but we can’t afford a 3 bedroom condo here.

*2021 Update

Wow, it’s been 8 years since I wrote this post. Since then, we moved into our duplex and rent one unit out. Our unit is still around 1,000 square feet. However, we have a backyard and an unfinished basement now. The backyard is great. Our son is 10 years old and we can go play outside when we need to. The basement is great too. We have a lot more storage space than before so our living area is a little less cluttered.

All in all, we are still very happy with about 1,000 square feet. However, our son probably will need more space when he is older. We’ll see how it goes. We might ask our tenant to move out when he’s in high school. That way we will all have more breathing room. For now, we’re good.

In conclusion, I’m used to living in a smaller home now. I don’t want to live in a big house. It’s just too much work to maintain. A small home is so much easier and more affordable. It suits our lifestyle.

For Laura

As for Laura, perhaps it’s time to think about moving to a larger home. They can rent out the apartment to a smaller family. Do you have any feedback for Laura? Have you lived in a smaller and bigger home? What do you love and hate about living in a small home?

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Image credit: Scott Webb

Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.