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shipping container house

What Is a Shipping-Container House and Should You Invest In One?

Shipping containers can be significantly cheaper to build than traditional frame homes.


[Updated: Apr 13, 2021 ] May 18, 2020 by Liz Brumer
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A shipping container house at first glance may seem like an unlikely option for a home or investment property, but it's growing in popularity as a cost-effective housing alternative that can pack style, space, and affordability into one steel package.

While they can be an economical and eco-friendly option for a rental property, developing container homes isn't for everyone. Learn what a shipping container house is, the pros and cons of shipping container homes, and where to find repurposed shipping containers as an investment property.

What is a shipping container house?

A shipping container house is a housing structure made from recycled shipping containers like a storage container or cargo container. These modular steel boxes, which typically come in two sizes -- 20 feet by 8 feet or 40 feet by 8 feet -- can be assembled to create a permanent or mobile living space that varies in design, square feet, and cost. A shipping container home can be one container by itself or multiple containers combined to create a more traditional housing structure by removing walls.

Pros of shipping-container homes

Shipping container homes are becoming increasingly popular both for homeowners and landlords as an affordable alternative to traditional rental housing. While there are a lot of pros to shipping-container properties, there are cons that come with this alternative housing design too.

Durable

Steel is extremely durable, and container homes can be designed and constructed to be a permanent, low-cost home. Certain design elements -- like positioning large windows or sliding glass doors to face the proper sun exposure while utilizing special flooring materials and including proper insulation in the walls and ceiling -- will help keep cooling and heating costs down in the home. Most steel container homes can last a lifetime if designed and constructed well.

Sustainable

For most shipping companies, the cost of returning an empty container after shipment exceeds the cost of building a new container, leading to millions of old shipping containers sitting unused. Creating container homes from upcycled shipping containers is a perfect way to reduce waste, use recycled products, and provide a sustainable alternative for home construction.

Cost effective

Shipping containers new or used can be purchased for as little as a few thousand dollars, making shipping-container homes an affordable option, especially for homes at the most basic level. A 20-foot shipping container runs between $1,500 and $3,000 per unit, while a 40-foot shipping container costs between $3,500 to $4,500. If you're looking to create a tiny home using this structure, then your cost for containers can literally be a few thousand dollars. But if you're looking to build a more sizable house, there are shipping-container homes that are over 2,000 square feet now, you could be looking at closer to $25,000 for the containers. While this may seem like a huge jump, compared to building a traditional wood home of the same size, the cost of materials is still nominal.

Customizable

A container-home build is extremely customizable. Designers are beginning to specialize in container construction, providing innovative container architecture designs that allow owners to add their own personalized touches, like using recycled materials, adding a full wall of sliding glass doors, or installing off-grid components like solar panels, for example.

Cons of shipping-container homes

Environmentally harmful

Surprisingly, many shipping-container homes are less eco-friendly than people think. Because a container's original use was for shipping goods, they aren't a suitable structure for living in their current condition.

According to Ship Technology, 20% of shipping containers have concentrations of harmful chemicals or dangerous gasses that exceed occupational hygiene limit values. It can also be difficult to measure what gasses are present in a specific container, so having a container tested before purchasing is an important part of making it a safe living environment.

Limited space

Custom container living embraces the concept of minimal living, with most homes having 320 square feet or less of living space in the most basic models. While you can create a much larger space around 1,000 square feet or more by combining multiple containers, this increases costs and reduces the sustainability of the project through the conversion process. Those who choose to embrace container living should be comfortable with tiny living or living in a more restricted space.

Expensive to customize and transport

While it doesn't cost much to purchase a storage container, it can be expensive to transport and make habitable. Getting the container to you can cost several thousand dollars; in addition, you'll need to own the land you plan to place the home on. Don't forget to account for permitting and getting the site ready to build a home, which could include having public utilities added to the property.

Proper spray-foam insulation, reinforcing walls, removing walls, adding openings, installing glass doors, in addition to basic home finishings like flooring, plumbing, and roofing add up. While container homes can still be assembled and built for less than typical framed homes in most instances, they can also cost quite a bit more depending on the features, size, or design of the building. Professional labor to install and build out a container home will cost an average of $75-$150 per hour depending on your market. The total cost therefore will ultimately depend on the total square footage and how elaborate the finished build is. You will likely be looking at a minimum of $15,000 in labor but more likely closer to $30,000 per container.

Which states allow shipping container homes?

One of the biggest hurdles for this type of housing is state restrictions prohibiting container homes. Currently, there are seven states that allow shipping-container homes:

  • Texas
  • California
  • Tennessee
  • Louisiana
  • Missouri
  • Oregon
  • Alaska

The International Code Council has recently established regulations for shipping containers, which should open the doors in more states soon. Keep in mind: State and municipal laws may differ, meaning while your state might allow a shipping container home, your city might not. So make sure to check with your city for more details on zoning laws and building codes.

Where to find repurposed shipping containers

If you're interested in building your own custom container home, the first step is finding a suitable container. Used shipping containers can be purchased online from websites like shipped.com, eBay, ContainerDiscounts.com, or Container Discounts. Most will handle the coordination and delivery of the steel shipping containers and any other materials needed, such as a steel flat roof. From there you can customize and build a container to your heart's desire.

Alternatively, there are companies selling prefabricated container homes that will deliver or build a custom shipping container home on your land that ranges from $30,000-$100,000+. Most homes can be built in a few months provided you have the land readily available and permitting allows for container homes at that site.

Will the container-home movement last?

The trend for building a custom container home is definitely on the up and up. More and more shipping-container homes are popping up on Pinterest, HGTV, and in tiny-living communities, and this growing trend will likely continue as affordability continues to be a concern. With the right shipping container, the right land, and the right design, a container home can easily be a large-scale solution for the current affordable housing crisis. These homes can also provide a beautiful, durable, and even luxurious abode for the right homeowner.

Are shipping container homes worth the investment?

It depends on your investment goals and use of the property. If you're looking for short-term vacation rentals in a trendy area, then a shipping-container home can very quickly pay for itself. The average monthly income from an Airbnb (NYSE: ABNB) is $924 per month. You could potentially get your money out for the cost of the build in just a few years, not counting the cost of the land itself. But this largely depends on if the state or municipality will allow for the home to be built, in addition to the container home's location, size, and design. However, if allowable, a container-home rental property could be a lucrative opportunity.

There is also the inherent trendiness of the concept. Since it's not yet legal in many states, there is a bit of a niche market for the foreseeable future. Add to that millennials' drive for a circular economy and you have a huge market of homebuyers who are financially and environmentally conscious -- the perfect scenario for building and selling shipping-container homes. Although shipping containers do have some disadvantages and limitations (most importantly where they are legal to build), for many investors it can be a great investment opportunity. Just do your research to be informed of local regulations, and get an accurate estimate for the build out of your project before committing -- as you would with any other investment.

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Liz Brumer-Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Airbnb, Inc. The Motley Fool has a disclosure policy.