The Surprising Cost Of Converting A Shed Into A House

Four years ago we opted out of the retail housing market. Our goal: to build our own home and live mortgage-free. Here’s the surprising cost of converting a shed into a house per our experience.

Article Table of Contents

    Living Small is a Growing Trend

    The Tiny House Movement began longer ago than many people realize. But now the trend is clear: many people are willing to “live smaller” for the sake of greater financial freedom.

    Tiny houses and shed to house conversions allow people to become more self-sufficient and live mortgage-free.

    Small-scale living is not for everyone, of course. It does, however, offer vital housing options for those priced out of traditional markets.

    Living smaller also appeals to people who, like us, don’t want to pay a bank for 30 years before legally owning their home.

    Pursuing a Simpler Life

    Our dream of leading a simpler life started taking shape back in 2014. We were living just north of Tampa, Florida in an area exploding with growth. We were eager to leave the traffic, crowds, HOA restrictions, and steamy weather behind.

    The only thing we knew at first was that we wanted to live in the mountains and become more self-sufficient. That meant we didn’t want to carry a traditional mortgage if we could avoid it. So we started thinking outside the box.

    We investigated a number of options before deciding a shed-to-house conversion would work best for us. Standard tiny houses were a bit too small for our tastes, and the up-front costs of SIPs construction posed a financial challenge.

    The cost of converting a shed into a house, however, was something we could more easily control. We could finance the building and use our savings for the conversion. And we could save even more by doing most of the work ourselves at our own pace.

    In the end, we decided we wanted to experience the satisfaction of creating our home ourselves by converting a shed into a house.

    Searching for Unrestricted Land

    Once we decided we wanted to go the route of a shed-to-home conversion, we knew finding unrestricted land was the key to making our dream a reality.

    We tried searching for land ourselves but didn’t have much luck. Eventually we sought help from a company called Country Places.

    Country Places specializes in unrestricted properties, mainly in the southeast. They offer financing options that make purchasing raw land affordable for most people.

    Country Places listened to our needs and showed us a number of lots. In the summer of 2015, we signed a contract for a few acres of unrestricted mountain property in rural Tennessee.

    We could now start planning the details of our planned shed to house conversion.

    The Importance of Checking Building Codes

    If you’re looking for property for a shed conversion home, be sure to check building code requirements before you purchase land. These kinds of homes are not allowed everywhere.

    Building codes exist to keep dwellings safe, and they will vary between regions. As a general rule, you’ll have better luck with any type of unconventional housing in rural areas. The denser the population, the greater the number of building codes.

    If you’re not sure how to check building codes, you can read more about the process we followed here: A Place To Call Home – How We Found Our Homestead Property.

    The Surprising Cost of Converting A Shed Into A House

    We purchased our Tennessee land in 2015 but, due to family obligations, knew we wouldn’t be leaving Florida until at least 2018. Now, of course, we realize how fortunate we were to have started our conversion journey in 2018 and completed most of the work before the Coronavirus pandemic hit in 2020.

    Unfortunately, pre-fabricated buildings as well as the materials to convert them cost much more since the pandemic. Plus there are supply-chain shortages these days that we did not have to deal with a few years ago. Please keep these facts in mind when considering the current cost of converting a shed into a house.

    A Few Notes About Our Cost Charts

    In preparing for this article, we have broken down our costs of converting a shed into a house into basic projects such as Land Preparation and Indoor Electrical. For each project, we have created a table that includes all costs we’ve incurred to date.

    As you review the cost tables, please keep in mind we have worked on our conversion for over four years. This means the costs listed in each chart were often spread out over many years because one of our goals was not to incur debt while creating our home.

    We started with the basic necessities – running water, electricity, insulation – and kept improving things a little at a time. This means, using the Bathroom chart as an example, that the toilet and bathroom vanity were paid for long before the decorative ceiling tiles. We do our best to explain the general progression of expenses in each section.

    Land Preparation

    Once we had our property, we had to take care of some preliminary steps to ensure the success of our conversion project.

    Perc Test and An Official Address

    First, we scheduled a perc test and obtained our septic permit. This let us know where on the property the septic tank and drain field would need to be located.

    Next, we requested an official address from the 911 Center in the county where our new land was located. Then we registered that address with the U.S. Post Office.

    Finally, since we were dealing with forested land, we looked into getting it cleared and running utilities to the building site. We made two trips to Tennessee in the summer of 2017 to oversee these projects.

    Land Clearing and Septic Installation

    We lucked out finding a land-clearing company that was also a licensed septic system installer. To our amazement, Tucker Farms LLC completed both tasks for us in a single day, helping us keep labor costs in check.

    Tucker Farms also worked on our behalf to schedule all the local parties needed to bring electric to the property. This meant, once again, that all the work was completed in a single day during our second trip to TN, and helped keep our costs down.

    Utilities

    In town, we signed up for water service at the local utility, and their crew installed a water meter on our property near the road.

    We brought electricity onto our property via an RV pedestal installed, as required, by a licensed electrician. Although going with RV Service required an extra up-front deposit, it meant our electric installation was inspected and approved well before we were ready to start our conversion.

    Land Preparation Cost Chart

    The table below lists all the costs associated with clearing the property and setting up our utility services. All charges were incurred in the summer of 2017 except the driveway gravel which was purchased in January 2018.

    Shed Purchase

    Near the end of 2017, with our move on the horizon, we finally got serious about ordering our building.

    We had planned to purchase a 14 x 40 foot pre-fabricated building. However, a building that wide cost an additional $750 to deliver because it had to have an escort. Therefore, we opted to go with a 12 x 40 foot building instead. We lost a bit of living space, but we have never regretted this decision.

    cost of converting a shed into a house building delivery

    The “Financing Versus Buying” Cost of Converting a Shed into a House

    A pre-fabricated building will always cost less if you have the means to purchase it outright.

    In our case, however, we had enough money saved to either buy a building or pay for the finishing materials, not both. Financing the shed was our only option to make this process work for our situation.

    We chose the longest financing scheduled offered (60 months) in order to keep as much money available for the conversion as possible. This made the monthly payments very affordable, especially when compared to traditional rent and mortgage rates.

    gray shed with porch being delivered

    Once the conversion was completed, we had planned to increase our monthly payments to take title of our building before the 60 months allowed. However, we ended up doing a second shed conversion in early 2020 so a family member could live on our property during the pandemic. That’s not part of our reported costs in this article, but it did alter our original plans and, ultimately, means we’re paying the highest, fully-financed price for our building.

    As it stands now, we will complete our payments and take full title of our building in January 2023.

    The takeaway here: if you have the means to pay for a building in full or can finance for a shorter term, you can save a lot compared to what we’ve paid for our building. If not, you can, like us, take comfort in knowing that financing a building for your conversion even for the maximum five years still saves you thousands over most traditional home mortgages. It’s all an investment in your future.

    Steps and Skirting

    Once our cabin was in place, we installed the front steps:

    And once we’d completed all the plumbing and wiring, we skirted the building. We used roofing metal purchased from a nearby Amish community at a cost significantly less than we found at building supply stores.

    roofing metal skirting cost of converting a shed into a house

    Shed Purchase and Set-Up Cost Chart

    The table below shows the grand total we will have paid for our building when we make the final payment early next year.

    Indoor Plumbing

    We designed the interior space of our building to keep the finishing process as quick and easy as possible.

    To that end, we installed all interior plumbing along the single wall of the building closest to the septic tank.

    Interior Layout for Converting Our Shed Into A House

    Below is a rough (not to scale) layout of the interior of our converted shed home.

    interior layout drawing of 12' x 40' conversion of shed into a house

    We ran the water line into the house through the lower left corner of the back wall of the cabin.

    Interior PEX Plumbing

    Then we ran PEX plumbing along the designated wall of the building where the bathroom and kitchen are located.

    We purchased a PEX Plumbing Kit that was so convenient we now offer it in our Homestead Store. The kit comes with everything needed to plumb a shed to house conversion, small cabin, or tiny house.

    You can read our PEX Plumbing Kit Review to learn more about plumbing with PEX.

    We set the manifolds from the PEX Plumbing kit into the interior wall between the bathroom and kitchen areas and ran the lines as needed from there. We later covered this area inside the bathroom with a small hinged door to keep the shut-off valves hidden but still accessible.

    Although it took up precious interior space, we opted for a tanked water heater because it better fit our budget. The deal we found at a local rural hardware store was too good to pass up. However, you can read about our more recent Heatworks Tankless Water Heater experience if that’s of interest to you.

    For ease of access, we opened up the floor in the bathroom to run the necessary drain lines to the septic tank.

    Indoor Plumbing Cost Chart

    Here are the costs we incurred for our indoor plumbing essentials:

    *Parts and Pieces include connection lines, toilet flange, shower and drain pipes (3-4″), valves, PEX fittings, Sharkbite parts, crimps, & copper tubing.

    Indoor Electrical

    As previously noted, we brought electricity to our property via an electrician-installed RV Service pedestal when we prepared our land. This installation – from pole to pedestal – was inspected and approved by the State Electrical Inspector. We could now run the indoor electrical wiring ourselves.

    Safety First

    PLEASE NOTE: We did this work ourselves only because of extensive prior electrical wiring experience. We also carefully consulted wiring manuals as we went. Wiring mistakes can cause electrical shock and/or fire that can lead to property damage, injury, and/or death. Therefore, IF YOU DO NOT HAVE ELECTRICAL EXPERIENCE, PLEASE HIRE A LICENSED ELECTRICIAN.

    Having 200 amp service at the main panel allowed us 100 amp service for our building. We dug a trench and ran two 30-foot heavy gauge #2/0 wires from the main pedestal panel to our 100 amp indoor subpanel using 2″ PVC conduit.

    electrical conduit in trench adds to cost of converting a shed into a house

    In the image below, the larger conduit on the left holds the cable from the power pole to the panel. The smaller conduit on the right feeds the #2 wire to the back wall of the building approximately 12′ from the pedestal.

    We ran the wires through the conduit to the back wall of our building, filled in the trench, and then capped it off for finishing.

    Inside, we mounted the electrical box securely between the wall studs and pulled the wire through. The wires were then run throughout the building for light fixtures, appliances, and wall plugs.

    indoor electrical wiring costs of converting a shed into a house

    Indoor Electrical Cost Chart

    The following chart lists the materials we used for the indoor electrical wiring for our 12′ x 40′ building.

    *Electrical Parts and Pieces include: Breakers, Switches, Receptacles, Work Boxes, and High Voltage Parts

    Interior Framing and Finishing

    The only interior framing we did was for the bathroom. The dividing wall between the bedroom and bathroom was framed under the edge of the loft.

    Initial Projects

    Our early finishing projects focused on the necessities: insulation, sheetrock, and flooring.

    Insulation
    Sheetrock
    Laminate Flooring and Underlayment

    We also designed and built an open closet with shelves for the bedroom. This has given us ample storage space for our clothes and shoes. The lowest bins act as laundry baskets, holding items waiting to be washed.

    Besides the closet, the bedroom didn’t require much work or additional expense.

    Later Projects

    During our second year living in our shed conversion, we finally finished the ceiling with corrugate metal.

    corrugated metal sheets covering shed ceiling

    We also upgraded the original shed windows by installing energy-efficient double-paned windows.

    Interior Framing and Finishing Cost Chart

    The costs below were all incurred early in our conversion except for the corrugated metal for the ceiling and the double-paned windows. The ceiling and upgraded windows were projects we tackled in the second year of living in our converted shed home.

    Heating and Cooling

    We moved into our cabin on April 29, 2018 and were fortunate to experience mild weather for the first few months. This was especially lucky because we were still getting the last of our ceiling insulation installed!

    Once summer hit, though, we picked up a window air conditioning unit at Walmart for just under $200 (note: we forgot to add this item to the cost chart). This was a temporary solution only.

    Before winter arrived, we ordered and installed a mini split system that took care of both our heating and cooling needs. We happily removed the window a/c unit to reclaim our view and the emergency egress the larger bedroom window offers.

    AUX Mini Split

    Since we have less than 500 square feet of living space. we chose the AUX 12000 BTU Mini Split System which will heat and cool up to 600 Square feet.

    We poured a concrete pad outside the shed where we bolted down the mini split compressor. A line set cover hides all the wires and drain line running up the wall.

    We situated the air handler inside the same wall near the compressor, mounting it where the interior wall meets the ceiling.

    Mini Split Air Handler

    Propane Heat for Backup

    A few months later, we installed a propane wall heater as an emergency backup heat source in case of a power outage.

    propane wall heater

    Heating and Cooling Cost Chart

    Below are the costs for our basic heating/cooling needs and our back-up propane heater. As noted, we inadvertently left off the cost of the temporary window a/c unit we used before installing the AUX unit. The window a/c unit was just under $200.

    Bathroom

    As noted in the Indoor Plumbing section above, we ran plumbing lines on only one side of our building. The image below shows the final arrangement of our bathroom.

    bathroom set up cost of converting a shed into a house

    PEX lines were run through the bedroom/bathroom wall on the left to supply the bathroom sink. The manifolds were placed in the bathroom/kitchen wall on the right behind the water heater. We use a hinged panel to hide the shut-off valves but keep them accessible for emergencies and maintenance.

    Bathroom Details

    You’ll notice from the picture above that we used corrugated metal for the shower walls.

    We used concrete backer board under the shower base to protect against leaks should they ever occur. Then we finished the floor with self-stick vinyl tiles.

    In keeping with our “rustic industrial” theme, we used galvanized pipe and fittings to make a sturdy shower rod. We used the same material to make a matching toilet tissue holder.

    We built and installed a sliding barn door for the bathroom.

    sliding barn style door

    Finally, a few years later, we finished the bathroom ceiling with decorative metal tiles.

    Bathroom Cost Chart

    Below are the costs for finishing our bathroom. Except for the decorative ceiling tiles, all these expenses were incurred very early in our conversion process.

    Kitchen

    After we’d finished with the essential projects listed in the previous sections, we found we’d used most of the money saved for our conversion. Still, we were determined not to take on debt if we could help it.

    This meant we took a long time to finish our kitchen. A couple years, in fact.

    In truth, the kitchen ended up being the least-glamorous part of our conversion. We didn’t share pictures of this phase previously simply because it was unfinished and unattractive. But we’ll share them now as proof that good things can come to those who wait.

    Because we now have a finished kitchen we love.

    Using a Free Kitchen Cabinet and Sink to Start

    The owner of Tucker Farms, the company that cleared our property, mentioned to us that he had an old kitchen cabinet and sink we could have for free. He warned us it wasn’t in good shape, but the price was definitely right at that point of our journey.

    It turns out the unit was in worse shape than we’d expected (no drawers or back), but the sink was functional and that was key. So we scrubbed everything thoroughly, added a cheap faucet, and made do.

    For the first year and a half, we got by using just a microwave, slow cooker, and toaster oven for preparing meals. We used book shelves, folding tray tables, and a buffet table to hold our dishes and food. It was not pretty, but it was functional.

    And there was a plus side!

    Not rushing to finish our kitchen meant we had plenty of time to figure out a design that would work best for us. For example, we quickly realized placing the refrigerator near the front door worked best. That wasn’t our original thought!

    We moved things around quite a bit those first few months while considering the features we wanted for our final kitchen layout. This made a huge difference in helping us create the simple but highly-functional space we now enjoy.

    Our Dream Kitchen

    We lived in our shed conversion for more than a year and a half before we were finally able to afford the kitchen we wanted without taking on debt.

    The first item we purchased was a stove. We found an apartment-sized Danby model at a local furniture store. It was the only one they had, so we snatched it up.

    Installation was a breeze because we’d already wired for it when we ran the initial electrical through the building. And although it’s narrower than traditional ovens, it fits all our bakeware without a problem and even holds our cast iron Dutch oven.

    Once we finalized our design and took measurements, the first thing we did was order custom countertops from a local wood worker. We chose red oak counters with a live-edge finish that we would stain, seal, and install ourselves.

    Unfortunately, by the time the countertops were ready for pickup, the Coronavirus pandemic had begun. This set us back a few months as we stayed close to home during lockdown. Eventually, however, we braved a few masked trips to Lowe’s to pick up our cabinets.

    We divided the work into three sections starting with the sink area. We ordered a deep stainless steel sink online and picked up the faucet at Lowe’s.

    Once we had the cabinets in place, we created brackets for our open shelving out of galvanized pipe and fittings.

    After adding the finishing touches of handles and kickplates, we finally had a kitchen worth showing off:

    Kitchen Cost Chart

    Nearly all of the kitchen costs listed were incurred two years into our conversion, though we installed the light fixture early in our process. We brought a refrigerator with us from our prior home so did not have to buy one for our shed home.

    Extras

    Throughout our conversion, we have incurred a wide range of miscellaneous expenses that don’t fit readily into the previous categories.

    Grill, Decks, and Laundry

    Some of the “extra” costs, like the porch light, have been minimal. Others, such as the purchase of a propane grill and the covered “grill deck” to hold it, were more substantial. We purchased a grill with a side burner when we did not yet have a stove. The grill expanded our cooking options and also served as a backup cooking source during power outages.

    The porch extension and addition of the washer/dryer combo were both prompted by the pandemic.

    The porch was a “something to do” home improvement project during lockdown that expanded our outdoor living area.

    The washer/dryer combo was purchased so we wouldn’t have to visit laundromats during the pandemic. By the time we started looking, appliances in general were becoming scarce. We could not find any new washer/dryer units small enough for our space or that fit our budget.

    In the end we found a used one at a local furniture store. The scuffed beige finish isn’t much to look at, but it works just fine and the price was definitely right!

    From the picture below, you can see we extended the water line towards the front door to accommodate the washer. We vented the dryer through a hole in the wall that opens to the covered grill deck.

    We wired the washer/dryer unit off the 220v designated for the stove. This means we can’t run both appliances at once, but that’s never been a problem. It’s certainly far less inconvenient than trudging to the laundromat!

    Extras Cost Chart

    While many of the “extras” listed here may be considered optional, they have all helped turn a shed into the place we now call home. Except for the porch light and U-Haul rental (to move items we’d had in storage before our building was ready), all of these expenses came about a year or so into our conversion process.

    Emergency Back Up

    In late summer of 2021, nearly 3 1/2 years after first moving into our converted shed home, we were finally able to invest in some peace of mind: an emergency backup generator. We’d learned the hard way the prior winter that our tiny propane heater wasn’t much help during a power outage in 10-degree weather.

    Predator 9000 Watt Generator

    We purchased this particular generator due to the great reviews and price. At 9000 watts, it will power most 12v, 120v, and 230v appliances needed during a power outage.

    Since purchasing the generator, we’ve installed a designated receptacle that connects directly to the generator with a heavy-duty extension cord. This will run basic 110/120v items like a lamp, coffee maker, or refrigerator. It will also run the portable electric heater or AUX portable a/c unit we purchased for backup comfort during any season.

    We also installed an Automatic Transfer Switch at our outdoor electrical panel. This gives us the option of powering this main panel with our generator. The Transfer Switch prevents power produced by the generator from back-feeding into the electrical lines which could harm linemen working at the power poles.

    Emergency Backup Power Cost Chart

    The chart here lists the costs involved in establishing an emergency backup power system to see us through short-term electrical grid power outages.

    Grand Total Cost of Converting a Shed into a House

    This table brings together the total cost of each project category for converting a financed 12′ x 40′ shed into a home:

    We’ll admit to being surprised when we finally added up all our receipts. We hadn’t realized we’d spent as much as we had. But that’s because, spread out over a number of years, it never felt like an overwhelming financial burden.

    Miscellaneous Expenses

    After completing the cost tables, we realized there were a number of incidental costs we missed:

    • Caulk
    • Paint
    • Window Blinds
    • Bathroom Mirror
    • Interior Shelving

    We’ve also had a few major expenses not directly related to the conversion itself but necessary for property maintenance:

    • Chainsaw
    • Lawn Mower
    • Storage Shed

    We also purchased some specific pieces of furniture for our smaller living space:

    • Dining Table
    • Two Computer Desks
    • Craft Desk
    Cheri’s Office and Craft Area

    All other furnishings came with us from our prior home.

    Future Projects

    Although we now consider our shed to home conversion finished, we’ll probably never be completely done. In fact, we have a few large projects we hope to tackle once affordable supplies are more readily available:

    • Carport
    • Roof and Screen the Deck
    • Room Addition – Sitting Room with Wood Stove
    • Greenhouse

    We added barn doors to the side of our building originally thinking we’d open them up to a deck area.

    The new plan is for those doors to open into a large sitting room where we’ll install, at last, a small wood stove we bought before we even had our building. It will not only be a cozy spot but an additional backup heat source in an emergency situation.

    Final Pictures of Our Home Conversion

    We’ve worked hard the past few years and now have a cozy little space to call home.

    If you’re interested in doing your own shed to house conversion, we invite you to join our Facebook Group Shed to House Conversions: A to Z. It’s an active group with nearly 18,000 helpful members offering advice and support to make everyone’s conversion a little easier.