I am still waiting for some additional repairs to be completed in my rental property from last year before I talk about the financials of that investment. However, there is another investment that I would like to talk about. Early in this year, perhaps chewing off too much, I also explored an investment in a tiny home hotel in Austin, Texas through Tumbleweed Tiny House Company. The model is that Tumbleweed builds a custom tiny home for you as an investment and you are guaranteed with a lease from a separate lessor. That lessor also manages the property as a vacation rental. The numbers seemed very promising in their pro-forma so I went down the road of trying to buy a home. If you are ready for a cautionary tale, here’s what happened (quoted from my BBB complaint)….
An investor and I placed a large refundable deposit on a Tumbleweed Tiny House on March 13, 2017 for a tiny home hotel opportunity in Austin, Texas. We based our investment on the lease terms and loan terms advertised by Tumbleweed. The deposit and sale were clearly specified to be contingent on mutually agreeable lease terms with the lessor as well as financing at a rate of 5% of less.
Approximately 2 weeks after placing the deposit, we finally received the lease terms and they were significantly different from what was advertised. A projected return of positive 30% went to negative 37%. In addition, Tumbleweed was not able to secure a loan for the other investor and me. As a result, we requested that Tumbleweed resolve these items so that we could get the advertised lease and financing.
After discussing with Tumbleweed, on April 5, 2017, it became apparent that we would not be able to get the lease and loan to work. As a result, I requested and was approved for a full refund of our initial deposit on that day.
It is now May 10, 2017 and we still have not received a refund. In fact, we have been told that Tumbleweed cannot even provide a timeframe on when we could expect to receive a refund. The Director of Sales is in charge of the refund and she will not even take my calls unless I call from other phone numbers. Every time I have talked to her, she has promised to call me back later in the day with a firm date that I would receive the refund. Not once has she ever called me back or called me at all. Over a month out, I still do not have a refund or even any timeframe on when I could expect one.
Tumbleweed has effectively stolen my money. I have no idea if or when they intend to send me a refund. I never met any of the individuals at Tumbleweed or saw any of their products. At this point, I am very concerned this entire operation is a fraud.
Obviously this is a terrible story for myself and my investing partner. All we want is our money back. My learning experience from this is, do not trust a company with even a deposit until you are absolutely confident in both the investment and the company. While I still think there is money to be made in the tiny home space, take it from me and do not trust Tumbleweed Tiny House company with your money. They cannot be taken at their word. I do not know if this is a fraud, but if there is a legal case or criminal complaint – I will share that information as I am legally allowed to.
By the way, I was completely open with Tumbleweed that I would be filing a BBB complaint and taking further action if they didn’t get back to me by today. Not only did they not contact me since, they wouldn’t even take my call today. They are a great example of poor business management (or excellent fraud management, I suppose).