It may just be the small solution to one of New Zealand's big problems, and it can cost as little as $50,000.

For two Rotorua families however, one Tiny House has solved a number of large problems much closer to home.

Father of four Ash Pari and his partner were struggling to find a rental property and found themselves having to take a house Pari admits was "pretty disgusting".

He said the place reeked of ammonia - cat pee suspected as the main culprit - and it was causing allergic reactions among his children.

For Pari's Sawmill employers, also owners of Aria's Farm Holiday Homes, Chris and Kerris Browne, the situation was becoming intolerable so they stepped in.

They housed Pari and family in one of their empty rentals, shifting the family around vacant properties on the site of their Farmstay, until Kerris decided to investigate the new phenomenon of 'tiny houses'.

That took her to Katikati and Tiny House Builders' operations manager Peter Bartlett.

"All the [Tiny] houses I'd seen could cope with a couple, maybe one kid too, but we had six people," she said.

Kerris then got to work designing her own Tiny House, showing her plans to Bartlett.

"Peter said I've looked at your plans and I can't see anything wrong with them," she said.

By August Kerris had her very own 'Tiny House' installed at their Farmstay with Pari and family taking up residence.

Pari said that while Tiny House living comes with its challenges - he is 6 foot one inch tall - it's changed their lives for the better - and opened up a brighter future.

"The hardest part is getting rid of things, you have to downsize," he said.

"But you don't need 50 cups."

He said the amount of money they will save on rent will enable them to look at buying their own home in two years time.

"Before this we weren't even going to consider it," he said.

It's been better for the kids too.

He said the behaviour issues their ammonia soaked rental, and the subsequent uncertainty, caused have vanished.

"We're settled now," he said.

"The kids are better now they have a home."

Their Tiny Home includes a washing machine, dish washer, oven and all the typical mod cons you'd expect in a larger home, including a full size shower.

There's a dining room and screened deck that can double as a living room, and the master bedroom is downstaris.

Upstairs the mezzanine comfortably holds four kids beds and cubby holes for storage.

Kerris said their plan is to rent to the Pari's for two years in total before the property becomes an Airbnb rental.

She said the finances around Tiny Houses make sense for owners as well as renters.

She said a typical rental property costing $350,000 would generate the owner $350 a week, a five percent return on investment.

Their new Tiny House - which cost $122,500 - is generating a nine percent return and saving the Pari's $100 a week.

"It allows the tenant to get out of the hole and the owner to make more money."

Their notification for Friday's open home viewing of the property - to showcase Bartlett's work - attracted 1500 people wanting to come, something Kerris said blew her away.

Bartlett, however, was less surprised.

He said he entered the Tiny House building market after his daughter asked him to make her one.

A spur of the moment decision to show the house at the Tauranga Home Show convinced him he was onto something.

"We had 1000 people in a day go through over three days. It was unbelievable. Two people wanted to drive away with it there and then, and it's snowballed from there."

It's taken off to such an extent Bartlett is trying to recruit extra staff to keep up with demand.

He said he can build a Tiny House in two-and-a-half months for as little as $50,000, and when they're small enough to fit on wheels they sidestep the majority of the Building Code requirements - and expenses.

"Nothing to do with council, which is a blessing," Bartlett said.