In Ground Pool - liability or not?

Question

I am looking to purchase a SFR or a small multi-family in the San Diego area within the year to house hack, and I was wondering if a property with an in ground swimming pool is a bad investment due to the maintenance of the pool. I was wondering if the pool itself as an amenity will be valuable enough to be worth the maintenance costs (if tenants are willing to pay higher rents).

This is also the San Diego market, so I'm not sure how many people would still like a pool if the ocean is accessible within 15-20 mins. Just curious what others' opinions are on the pool!

When looking at properties, do you typically pass on properties with a pool?

Nicole Holcomb · Answer

I think for your current investing goals a property without a pool would be a better fit. If you were looking to buy now and rent the entire property out I would say go for the pool. Rentals with pools are in extra high demand currently due to COVID and everyone staying home. Like you said, you are going to be living there and most likely renting to other young professionals. Things like pools, spas and elaborate landscaping are additional monthly costs eating away at your cash flow.

Adam Dailey · Answer

I think it depends on who you are renting it to. A decent pool in San Diego is $50k. So how long will you take to break even?People want the pool (even though the beach is close). We put in our pool for just under $100k (with water slide/hot tub, etc.) and we rent it out in the summers as an STR. We can make significantly more with our pool/yard...the delta would literally pay for itself within 3 years or so.I don't think you'd see an ROI if it's not a STR

Mindy Jensen · Answer

I live in Colorado where a pool is definitely NOT a plus. I actually got a $100,000 discount on my home because literally no one else wanted to buy a house with a pool here. In California, a pool is a bonus, even with the ocean. Unless you're ON the beach, I'd be looking at houses with pools.

Dan H. · Answer

My rent surveys are only LTR (long term rentals). I suspect SFH STR (short term rentals) rentals in Poway and escondido have a rent delta for having a pool.Our STRs have professional PM (the PM sets the rent), but our LTRs are self managed. We have a Poway SFH that we are trying to decide what we are going to do with it. So I recently did my first Poway rent survey. The cash flow compared to value for our SFH is horrendous. Rent maybe $3500 for ~$850k value which would be far worse than any of our other rentals. So sell seems to make sense but our tax basis is in the low $500k. It has sat mostly empty (except guests) for ~6 months. Not an easy decision for us. I lean to keep it, but extract some of the equity. As for Escondido, that is where most of our rentals are. So I do thorough rent surveys when placing new tenants and less thorough rent surveys when raising the rents. I do rent surveys at least a couple times a year for Escondido.

Cathy S. · Answer

@Nicole Holcomb Totally agree with you. I feel like for my first rental property, I should be on the more minimalist side of things and refrain from unnecessary expenses. A pool is only worth it if I can consistently get increased rent that offsets the ongoing pool maintenance and repairs, which it doesn't seem to do. @Dan Heuschele That's interesting that you do rent surveys regularly to decipher what qualities in a property are correlated to increased/decreased rent. It makes sense for an apartment complex to charge more for rent if there's a communal pool people can use. I'm not sure why a pool in a townhouse might warrant a rent delta. My guess would be that SFHs in desirable (very close to the ocean) areas might see a rent delta for the pool, especially if they are vacation rentals for most of the year, for those out of state visitors who are willing to pay a premium (compared to farther inland places like Poway and Escondido) but that's just my guess.

Dan H. · Answer

I recently did a rent survey for Poway (higher end area for a house with ~$850k value). I could not discern any rent delta for having a pool for homes in Poway. I do rent surveys regularly for SFH in Escondido (working class city). Few SFH rentals in Escondido have pools. It is not a big enough sample to have a strong opinion but I suspect that there is no rent delta for SFH with pools. However there seems to be a rent delta for apartments/townhouses with pools, but the apartments with pools often have other extras and seem to often be newer or at least appear newer. Based primarily on just those two markets, I would conclude a pool will not get enough LTR rent increase to justify the maintenance costs even if it were a little less than the $130/month.

Adam Dailey · Answer

I have a big pool and it's $130 a month for the pool guy to come once a week and maintain it. As far as cash flow, I can't imagine you not making that much more on ANY property in rent. Again, as a tenant --- would you choice a house with a pool or not? No brainer for me, esp. during COVID times

Mindy Jensen · Answer

@Cathy Song, there are people who would, in my opinion. Also, you have to check the chemicals every day to make sure everything's cool, but it's about a 2-minute commitment, plus vacuuming once a week. Find a roommate who wants to take care of it for you!

Cathy S. · Answer

Thanks everyone for the insights! @Adam Dailey I can see how amenities like a nice pool and hot tub can be very attractive for STR. Definitely folks who come here to vacation or even Airbnb would be drawn towards these features and will pay a premium. For a normal house that I plan to live in though, I'm not sure if I want to be taking out the several hundred(?) per month out of my cash flow to pay for maintenance of the pool. It's difficult to even find properties that cash flow positive, and I see that pool as an additional unnecessary expense tacked onto the list of other monthly expenses. @Andy Eakes I was looking more in the Clairemont/Bay Park area, not really too far east. I'm looking specifically at properties west of the 15 and plan to live there myself, so don't want to move too far away. Similar to my above comment to Adam, I don't really see how a pool can help with creating good cashflow. Ideally I want a property that generates positive cashflow, and I see the pool maintenance as another monthly expense. What do you think? @Mindy Jensen Great point on the effect of location and weather on the attractiveness of a pool as a feature. My main goal right now is to get a property to house hack in, and rent out the other rooms. I'm not planning to rent out the entire house as a short term rental or Airbnb, so I'm just not sure if financially it makes sense to pay the recurring monthly expenses on maintaining the pool. I guess it could work out if there are tenants who are willing to pay a premium on their rent to have a pool as an amenity? Personally, if I were looking to rent, I wouldn't really be drawn to a pool and wouldn't want to pay more rent to have one.

Andy Eakes · Answer

@Cathy Song Hey Cathy! Hope you're doing well. Glad to hear you're about to pull the trigger on a property! I think a pool is a total upside. Some people may say it is a liability, but I'd say that unless there are kids, you're going to be okay. And I think even though the beach is as popular as it is, you said that the beach is 15-20 minutes away meaning that its probably something in the eastern part of San Diego? Meaning that the temperatures are going to be brutal, especially late summer early fall, and a pool makes a lot of sense and makes it an even more attractive property for renters.