Are Barndominiums a Good Investment?

A barndominium, often shortened to “barndo,” blends a barn-style structure with comfortable living spaces. These buildings typically feature metal siding and a barn-like exterior, with the interior designed as a furnished home. The term originated from combining “barn” and “condominium,” evolving from equestrian-focused developments to describe metal homes used as primary residences. This innovative housing option, whether converted from agricultural structures or newly built, combines rustic charm with modern amenities. This article will explore the financial aspects of evaluating a barndominium as an investment.

Initial Cost Considerations

Upfront expenses for building a barndominium begin with land acquisition. Site preparation, including clearing, grading, and drainage, is a significant initial cost. The foundation, typically a concrete slab, costs $6 to $14 per square foot, with more complex foundations increasing costs.

The barndominium shell structure, including exterior walls, roof trusses, metal siding, roofing, and trim, ranges from $20 to $35 per square foot for materials. The total cost to build averages $65 to $160 per square foot, or $130,000 to $320,000 for a 2,000 square foot home. This cost is influenced by size, materials, and customization.

Interior finishing accounts for $40 to $100 per square foot, or $80,000 to $200,000 for a 2,000 square foot unit. This includes insulation, drywall, flooring, cabinetry, plumbing, and electrical work. High-end finishes like hardwood floors or custom cabinetry increase these costs. Utility connections for water, electricity, and sewer systems are also upfront expenses.

Permits and architectural/engineering fees are necessary before construction. Stock plans cost $1,300 to $2,000, while custom designs range from $4,500 to $6,000 or more. Construction loans are common, with some lenders offering specialized programs that convert to a permanent mortgage. USDA construction loans can offer 100% financing for eligible rural properties, transitioning to a 30-year mortgage.

Long-Term Financial Implications

Owning a barndominium involves ongoing financial considerations. Maintenance and repair expenses are generally lower than traditional homes due to durable metal construction, which resists rot, decay, pests, and fire. Metal roofs, common on barndominiums, offer longevity and minimal upkeep.

Utility costs can be a benefit, as these structures are energy-efficient when properly constructed. Strategic insulation, like spray foam, and thicker insulation due to wider wall cavities, help maintain consistent indoor temperatures. Metal roofs reflect heat, and energy-efficient windows reduce heating and cooling demands. Some barndominiums also incorporate solar panels on their large metal roofs.

Insurance for barndominiums can present unique aspects, though specific challenges or premium structures vary. Property taxes are assessed similarly to traditional real estate, based on local market rates. However, if appraised at a lower value or qualifying for agricultural exemptions in rural areas, property taxes might be reduced. Assessors may consider heated versus unheated square footage, and attached workshops or garages can influence assessed value.

For those considering a barndominium as an investment, there is potential for rental income. The spacious, customizable layouts, often with open floor plans and large workshop areas, appeal to various tenants. Design flexibility allows for configurations suitable for short-term or long-term leasing.

Market Value and Resale Potential

The market value and resale ease of a barndominium are influenced by several factors. Location is significant, with rural areas often more receptive due to their aesthetic and agricultural potential. Zoning regulations are crucial, as agricultural and rural residential zones offer more flexibility than traditional residential areas.

The unique architectural appeal, characterized by open floor plans, high ceilings, and customizable interiors, attracts a specific buyer demographic. Quality of finishes and construction directly impacts marketability and value, with well-built barndominiums attracting discerning buyers. These properties can offer unique features like integrated workshops, large garages, or indoor pools, appealing to those seeking versatile spaces.

While barndominiums are a newer housing trend, their appreciation rates can be impressive, though historical data is less extensive than for traditional homes. The buyer pool can be niche compared to conventional homes, potentially impacting liquidity in some markets. However, younger buyers, including millennials and Gen Z, show interest due to their unique, sustainable nature and affordability. Individuals seeking rural living, customization, and durability are also drawn to them.

Appraisers and real estate agents typically value barndominiums by considering comparable properties. Assessment often focuses on heated living space, though some assessors might include unheated areas like workshops for tax purposes. As awareness and acceptance grow, their marketability is likely to increase, positioning them as a distinct architectural category.