Every homeowner who looks for a way of increasing the value of their rental properties considers installing a pool. An in-ground swimming pool offers a private space to relax and is often believed to drastically increase the value of a home. Tenants will likely enjoy this, but will a pool be a good investment for your rental home in the long-term, or will the maintenance costs become a liability?
It is fairly safe to say that in most cases a pool will add value to your home in terms of increasing the worth of your home, as well as an increase in personal value. However, pools aren't always a sound financial investment.
Derek from www.DawsonPropertyManagement.com talked about the issue, so keep reading to find out whether a pool will increase the value of your property.
The pros of having a pool on your rental property
If your backyard space and your budget allow it, building a pool has several benefits:
- The value of your property increases
- You can attract better tenants
- It offers a reliable long-term investment
- It enhances the appeal of your property
The cons of installing a pool on your rental property
If you are new to the real estate business and have limited capital, installing a pool on your rental property can lead to:
- Expensive installment prices
- High maintenance costs
- Liability for household accidents
- Longer ROI
Installing a pool on your rental property is much more complex than digging a hole and filling it up with water. This project will require a large capital, commitment, and patience.
You will need to consider the site of the pool and whether your property really is suited for one. If your yard is small, the pool will take up most of the space, affecting the property’s value, while if it is indoors, a pool could take away from living space.
One of the biggest factors when considering adding a pool is where you live. If you live in a mild to warm climate where you'll likely get many months of use from your pool or even rely on summertime swims to stay cool, then installing your own pool makes sense.
The cost of installing a pool on your rental property may range anywhere between $35,000 and $80,000 depending on the size, design and again, the location of your home. Take the final cost of the construction into account together with the mortgage fees and the tax on passive income before starting to dig. This way, you can calculate the return on investment (ROI) and whether it will be profitable to you in the long run.
Financing your pool installation
Now that you know the cost of installing a pool on your rental property, and have figured out how to obtain a return of your investment, you can proceed to the next step: financing the pool installment.
A loan is probably the best financing solution. Talk to your bank to reach an agreement for a long-term option for your project. Additionally, reach out to real estate agents to find out the average rental cost of a house with a pool in your area. You will also need to determine if a good share of the loan can be covered by the tenant’s monthly payments.
You will also have to check with a contractor to find out how long it will take to build a pool. You will likely not be able to rent the property while the pool installation takes place, which means that you will have to endure a couple of months with zero income.
Having a nice pool installed is only the beginning. Like many purchases in life, a pool's initial cost is actually the least expensive, especially if you fall into the category of wanting to keep your home for the long-term before selling.
A pool requires weekly if not daily maintenance, and the costs of its upkeep may rise to as much as $2,000 per year. It may not seem much at first, but when you break it down in monthly payments and take it out of the tenant’s rent, you might see your passive income decrease considerably.
Heating, cooling, chemical cleaners, vacuums, and eventual resurfacing are just a few of the upkeep costs to think about. You can get a realistic maintenance quote from a contractor, by doing some thorough calculations in your research, or you could even ask a neighbor who has a pool.
You will most likely have to hire a professional firm for pool maintenance. These professionals will perform weekly checkups, treat the water and ensure that it is not harmful to people who swim in it. They will also clear and repair the filtering system and prepare the pool for the cold season. All of these services can take as much as $150-180 every month.
Installing a pool will increase the value of your rental property, but you will have to ensure that your finances can sustain the installation and the long-term maintenance costs for a pool to become a significant asset for your property. When designing your swimming pool with value adding in mind, plan to include a swimming pool that integrates the home with outdoor entertaining areas. Designs that are in clear view of the main entertaining areas of the home act as an extension of living areas. It will attract better tenants, and it can be a convenient amenity for you and your family if you ever decide to stop leasing.