The Pros and Cons of Capsule House [2024 Expert Review]

The  concept of capsule homes has gained traction in recent years as an innovative and unconventional approach to urban living. Postmodern, unique, compact, and minimalist, a capsule house is a novel architectural trend. That's why it makes sense that purchasing one is a hit-and-miss business. Therefore, understanding a capsule home beyond its surface, down to its pros and cons, is an essential move in gaining a solid grounding in its market. 

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Let's delve into the fascinating world of capsule houses to unveil the strengths and weaknesses of this avant-garde living style. 

What are the pros of a Capsule House? 

The pros of a capsule house are as follow: 

Sustainability

Several capsule house units, akin to their factory goal, undergo manufacturing processes that leave a low carbon footprint percentage. The materials used for constructing the house off-site are also certified eco-friendly. From the innovative insulation to its energy-efficient lighting technology, it often prioritizes environmentally-conscious design and a sustainable living condition. 

Minimalism

The house's compact and minute size encourages homeowners to put only the least but essential features in. In other words, it encourages you to go minimal. Minimalism is a new age trend borne from the need for practicality. With this kind of setup, you'll be able to imbibe the values of simplicity and elegance and manifest it into your home. 

Affordability

The capsule home is known to be more cost-effective than conventional homes. And this has much to do with its small size. Consequently, its cost-effectiveness is an attractive option for individuals planning to venture into the housing market without shouldering the burden of excessive loans. 

Space-Optimized

Space optimization is the ultimate goal of a capsule home. Its compact size allows it to utilize the smallest space in a plot of land in the best condition possible.  This can contribute to sustainable urban development and help address housing shortages in crowded cities. In turn, homeowners living in a densely-populated urban area benefit significantly from such home setup. 

Mobility

Most, if not all, capsule homes are modular, portable, and light, making it easy for homeowners to relocate. This mobility can be advantageous for individuals who need to move frequently due to work or personal reasons and prefer a flexible living setup. 

What are the cons of a Capsule House? 

The cons of a capsule house are as follow: 

Lack of Privacy

Most capsule home designs are made to accommodate open-space layouts, often sacrificing privacy. And as a consequence of space-optimization, most houses leave partitions and room divisions out the window. People who value privacy may find this configuration awkward and unsafe. 

Resale Value

Despite its prospect, a capsule unit may not be enticing for future buyers in the real property market. In that case, it can be challenging for homeowners to secure profit from it in the future should they decide to sell or arrange it for rent. Even with the shift in house preference, some buyers still prefer the traditional, less-confining homes. 

Limited Customization

Not all houses of this type can be customized. This limitation is especially caused by its smaller-than-usual size. For instance, adding a feature in its open-space layout may prove impossible at times given its minimal square footage consumption. Even if you get to update its design, you'll only end up with an even more confining structure. 

Now that you know the pros and cons of buying and owning a capsule unit, it's time that you learn the tips for purchasing the perfect one'

Building Codes and Regulations

The trend of capsule home construction does not guarantee a full integration into certain land area building codes, regulations, and policies. Setting up in a land plot not supported for capsule home construction can be extra-difficult. As a result, homeowners and architects may have to rethink the house design and fully abandon some of its ideas for the time being. 

Limited Space

While an optimized space is indeed smart living, it can, at times, still feel confining and limiting for families who are used to extra-spacious homes. Its minute square footage breadth especially feels more of a drawback to a large family. A family of five is considered a large family for this kind of home. Although it is not impossible for a family of five to live here, certain drastic adjustments still had to be made for them to fit. 

Tips for Buying the Right Capsule Home 

The following are the tips for buying the right capsule unit for your needs: 

• • Consider essential features and factors:

    Choosing capsule homes will prove futile if you don't know its features to begin with. Thus, you will need to look into its quality of material, sustainability and eco-friendliness, overall purchasing cost and construction budget, tools and materials needed for construction, unit capacity, and size, requirements for shipping and assembly, and many more. 

• Determine whether you are buying it as a single unit or in bulk:

  Unless you are planning to wholesale or start your own capsule home business, you shouldn't consider the bulk-buying solution. Nevertheless, bulk order solutions still fulfill the adage 'cheaper by the dozen'. Homeowners who are not only aiming for real property resale in the future, but are also looking to save and ensure customizability, should find bulk-order advantageous. In this case, they must ensure that the company is a trusted one and the building codes and settled for. 

• Research, plan, and evaluate

  : When planning for capsule home construction, a buyer must learn to plot maps, arrange for land-owning deals, and triangulate with experts on the best companies to partner. Further evaluation of the unit's possible ROIs vis a vis the ongoing real property market will provide the owner efficient strategies for reselling and setting the unit up for maximum profit in the future. 

Conclusion

Capsule homes mark a dramatic shift from traditional housing norms, offering a range of benefits alongside inevitable challenges. The decision to embrace this unique living concept ultimately depends on individual lifestyle, priorities, and preferences. 

Although some people thrive in the sustainable and minimalist environment provided by capsule homes, others may find this setup confining, challenging, ang fairly unconventional. But as the architectural trends continue to evolve, capsule homes no doubt provide us a glimpse into the future of urban living. And it is thus our responsibility to learn the pros and cons of capsule house. 

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To make the leap from renter to homeowner, you'll need to save, or have already started saving, for a down payment. A down payment is typically between 3% and 20% of the purchase price of a home, but if you're like the median successful buyer, your down payment might be anywhere between 10% and 19%. That may feel overwhelming if you're just starting out, but setting up a budget and finding creative ways to save money over time can help. A Zillow study found that 63% of recent buyers who obtained a mortgage used savings for at least part of their down payment.

The exact amount you save every month will depend on how much you expect to spend on a down payment ' if you're stuck, don't hesitate to talk to a lender. They can help you break down the numbers, and once you've pick an estimated moving date, you can calculate your necessary savings from there.

If you already have a designated monthly savings bucket, that's a great start. Of course, the more you're able to put away, the faster you'll reach your savings goals for your home. Here are 21 ideas to help make that happen.

1. Start a 'new home fund' on your wedding registry

It's more popular than ever for engaged couples to ask friends and family for cash instead of traditional wedding gifts. The share of couples adding a 'home fund' to their wedding registry has increased 55% compared to five years ago, according to research from The Knot. Now, nearly 20% of all couples who are registered on The Knot are creating down payment funds; in , it was the second most popular cash fund ' right behind the beloved honeymoon fund.

'Couples feel empowered to make their registries ultra-personal to their goals as a married pair,' Esther Lee, Deputy Editor and wedding expert at The Knot, says. 'While some guests may prefer their cash gifts to go toward a celebratory treat like a honeymoon dinner, there's something so special about a wedding contribution helping new spouses reach another meaningful milestone: homeownership.'

If you're considering starting a home fund, know that  'approaching a down payment registry option requires some additional thought when it comes to etiquette,' Lee says. This includes leaving behind the expectation that wedding gifts will fully cover the down payment. And couples shouldn't anticipate or expect to receive the full gift amounts until after the wedding takes place.

To create your own home fund on The Knot Registry, choose 'new home fund' from the pre-curated list of cash funds or create a unique cash fund name of your own. From there, you can add the requested amount and write a short message to guests that describes how you'll use the gifted funds. It's important to be clear here as it can help you get what you want. 'It does help to include the down payment amount on your registry, so that your loved ones can thoughtfully consider their contribution and celebratory gift for your next journey,' Lee says. 

When it comes to showing gratitude, Lee's advice is to 'remember that this is a wedding gift over a simple down payment contribution, which should also help you approach the thank you note process with grace and care.'

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2. Get a side hustle

If you're willing to put in a little more work on the weekends or in the evening after your day job, a side gig offers numerous creative ways to save and earn more money. You could try dog-walking, babysitting, waiting tables or house-sitting. You can even tap into an artistic hobby, selling handmade crafts either online or to co-workers and friends.

'A side hustle doesn't have to take up a lot of time,' says Bill Promes, a financial planner at Austin Creek Capital in Mill Valley, California. 'When you introduce a new source of income that has a specific purpose, it's easier to stay on track.'

3. Cut out your commute or car payment and save on gas

If you currently drive to work alone, consider other options that might be available. That might mean relying on public transportation if it's available where you live. If that's not an option, try carpooling, biking or asking your employer if you can work at home at least a few days each week. When you get creative with your commuting, you can relocate those expenses to your home down payment savings.

If your commuting expenses are unusually high, it might be worth it to consider looking for a job that enables you to work remotely or shorten your commute. With that being said, if you plan to buy a home within the next two years, you may want to check with your loan officer before changing jobs. A recent career move or switch to self-employment could hurt your ability to be approved for a mortgage.

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If having a car is the only option for you and you spend a lot of money every month to pay off your car loan, take a look at your finances. Consider buying a cheaper vehicle for cash if that's feasible for you.  Of course, this largely depends on how much you rely on your car, and it's important to pay attention to gas mileage. You don't want to swap out your current car for a gas guzzler that will cost you more money. 

It's also important to make sure you're not buying a car that would end up costing you even more than your previous car. If you get into a cycle of constantly repairing your car, you won't be able to save up enough money for a down payment.

4. Pay off debt when you can

If you get a bonus or find that you have extra savings to spend, consider putting it towards your debt.

It may seem counterintuitive to pay off debt so you can save money for a mortgage, but paying off debt with a high annual percentage rate (APR) can help you boost your down payment savings by lowering or eliminating your monthly interest expense. The more debt you pay off, the more interest expense you'll free up to save for your home down payment.

5. Consider a capsule wardrobe

No matter the season, it's always a good time to do a little spring cleaning. Challenging yourself to focus  on a minimalist wardrobe may inspire you to buy less and only invest in the items you really need. Plus, you can sell the clothes you don't wear, which could help you make money that you can then use for your down payment, and declutter your space. A number of online sites ' like Depop, Poshmark and ThredUp ' can help make this process easier. Or, you can drop off goods for sale at a local consignment shop or throw together a garage or yard sale that could help you rake in cash.

6. Restore and resell

If you have some refurbishing experience, talent or interest in the creative arts, consider this creative way to make and save money: restoring secondhand furniture. While you're selling your unwanted belongings on online marketplaces, look for opportunities to purchase used furniture at a low price, spruce it up by reupholstering or painting, and then resell it at a profit. While it's definitely not one of the easier options when it comes to making some extra cash, you can rely on online tutorials to help you get started.

7. Buy used instead of new

Whether you're looking to buy clothes or furniture, try to buy second-hand goods or join a 'Buy Nothing' group where you can swap goods with people in your neighborhood. Whether you're looking online or at a thrift shop in person, you might be surprised by what you'll find for free or at a discounted rate.

8. Don't buy things you don't need

Before making a nonessential purchase, do an 'edit' of your home, closet or garage to make sure you're not buying something you already have, don't need, or, in the case of clothing, may not wear often enough to justify. Unsubscribe from automated purchases and lists that encourage you to buy things you may not need.

9. Limit your spending with the 'cash-stuffing' approach

Limit your spending with 'cash-stuffing,' an approach that went viral on social media and is also known as the 'envelope system.' To use it, put set amounts of cash into envelopes marked with different spending categories on the first day of each month. When an envelope is empty, you can't spend any more for that category until the next month. Cash leftover? Carry it over to the next month or reallocate it as money toward your down payment.

10. Save your credit card rewards

If you're a responsible credit card user, consider applying for cash-back rewards cards and saving that cash for your house down payment.

Research your credit card programs to learn more about how you can use your credit card rewards to your advantage. For example, credit card points can go towards airline miles, which can help you cut down on or eliminate spending on plane tickets.

11. Cut down on travel

Eliminate any unnecessary travel until you feel like you've saved enough money for your down payment. While this doesn't seem fun ' and it might mean cutting down on a well-deserved vacation ' reconsidering extraneous travel plans is a great way to cut down on unnecessary costs and save money. If you don't want to cut out vacations altogether, look for a happy middle ground. Perhaps consider a shorter or cheaper trip, going away for less time and using credit card points instead of cash.

According to a recent buyer survey conducted in by Zillow researchers, 41% of prospective buyers canceled their vacation plans to save money for a down payment on a home. 

12. Automate your savings and use a high-yield savings account

Treat your savings goal like a monthly bill. Set up an automatic transfer from your checking account into your down payment savings account. Automatic savings are easier to stick with, and allocating your income to a separate account lowers the temptation to spend it.

Take it to the next level and get creative with the way you save.

A high-yield savings account, bank certificates of deposit (CDs) or certain Treasury bonds can help you supercharge your savings with higher interest rates than a regular savings account. Your savings will grow as money sits in your account.

'There are some rules to be aware of, but overall, Series I Treasury Bonds are an amazing location for some of your cash and especially a house down payment fund,' says Jovan Johnson, co-owner of Piece of Wealth Planning in Decatur, Georgia. 'And, the interest is taxed only at the Federal level.' Interest on other types of savings may be taxed at the state level, as well. That takes a second bite out of your returns.

13. Downsize your housing

Although it might be a tough decision, downsizing your current space may help you put away more money each month for the down payment on your future home. According to a buyer survey conducted by Zillow researchers in , about one in five (21%) prospective buyers lived in a smaller home than desired in an effort to save money. If you can move from a one-bedroom apartment to a studio or from a rental house to a smaller rental apartment, your savings may add up quicker than you think.

The added costs will shrink, too. 'Getting a smaller place will allow you to save on rent and utilities,' says Ryan Graves, president of Bemiston Asset Management in St. Louis, Missouri. 'A smaller space also requires fewer things to fill it up, again saving you money. When the time comes, it's also a lot easier to move from a small place to a larger one, filling it up over time,' he said.

14. Get a roommate

Living alone is a luxury, and you can cut down on your cost of living by adding roommates to the mix. Taking on even one additional person can cut your rent in half. If you really want to commit to cutting costs and feel comfortable with this option, think about if you have a family member or friend who would temporarily let you live with them in exchange for helping with house maintenance or other tasks. 

15. Cancel subscriptions

Do you really need twelve different streaming services? Do you have apps or subscriptions you can live without? Try cutting back to just one streaming service. In Zillow's survey of prospective buyers, about one-third (33%) reported canceling subscriptions for streaming, cable and even internet and , to help put away more money toward a down payment. These savings may be much more doable than you imagine.

16. Borrow from your local library

Libraries have so many free resources, and utilizing them can help you save money that you can put towards a down payment. Next time you want to buy a book, consider going to your local library to see if they have it in stock first. 

Some libraries go beyond books, though, letting cardholders borrow unique items. At select St. Louis Public Library locations, for example, you can rent fishing poles, tackle boxes and telescopes. Check out your local library. You might be surprised to find out what they offer.

17. Cut your monthly costs

Everyday essentials, like cell bills, Internet services and car insurance, are necessary items to budget for. With that being said, these bills present opportunities to save by shopping around for the best deals.

'Maybe you're overpaying for auto insurance, or your provider doesn't offer many discounts,' Johnson says. 'Or maybe you could weather a higher deductible for a year or two to lower your monthly premium.'

18. Buddy up for accountability

Saving isn't easy, but you don't have to do it alone. Communicating with your partner or a friend creates a sense of accountability as you work towards your savings goals. Make regular dates to discuss your savings with your friend or partner. You can cheer each other on while you plan your monthly budgets and find ways to save money together. Don't forget to track your progress and celebrate your 'wins.' 

19. Look for wallet-friendly entertainment alternatives

Going to happy hour after work or a movie on the weekend is certainly fun, but cutting back on extracurriculars is an easy way to pocket more cash. Instead of going out, opt for a fun movie night at home or invite friends over for a game night. 

Eating out often can also become an expensive habit. If you work out of an office, instead of buying lunch, try to bring your lunch to work. Grocery shopping and making your own lunch at home can be done cheaply, too. Find recipes for budget-friendly meals online. 

You won't be alone in your saving journey. According to a Zillow survey, about half (48%) of prospective buyers cut back on entertainment, including dining out, concerts, and movies, in order to save for a down payment. Want a bonus trick to spending less? Schedule spend-free weekends. For one weekend each month, try not to spend a single dollar. You might be surprised by how much you can save.

20. Take advantage of community resources

Believe it or not, there are free activities all around you, no matter where you live. Make a list or calendar filled with free or low-cost entertainment ideas. You don't need to spend money to have fun. Consider playing games at a local park, meet a friend for a walk or take a free yoga or exercise class.

21. Save your tax refund

It can be tempting to spend your tax refund right after you receive it. But consider saving it to go toward your home down payment. 

If you receive a refund when you file your income tax returns, add that lump sum to your savings. Alternatively, you can use it to make an extra payment toward your highest APR debt. The more you save, the more interest income you can earn. The more debt you eliminate, the less interest expense you'll pay.

As you're saving, research down payment assistance

Certain types of mortgages and home buyers qualify for down payment assistance programs. Local government agencies or nonprofits typically fund these programs, which can be grants or loans. Ask your real estate agent or mortgage lender for details, or search the Down Payment Resource Center.

Before you settle on a target amount to save for a home down payment, make an appointment to talk with a real estate agent and a home mortgage lender.

'Begin your conversations with a mortgage lender as early as possible,' says Shane Sideris, managing partner at Synchronous Wealth Advisors in Manhattan Beach and Santa Barbara, California. 'A lender will be able to tell you about different loan options, some of which may allow you to put very little or zero down if you qualify.'

While you're saving, continue to browse homes for sale online and update your needs, wants and wish lists. You may be able to find ' and buy ' the home of your dreams much sooner than you expect.