Why you should avoid buying property with a pool
Looking back to 2015 – we pulled out equity from our Sydney properties and were ready to go again. Looking for something more affordable, my partner and I decided to look into South-East Queensland as the capital investment was small but yield was high; it was easy to hold long term.
We’ve since found our Slacks Creek property – a highset with 3 bed, 1 bath upstairs and 1 rumpus and bathroom/toilet downstairs. Now, it comes with an additional feature – a pool.
Back when I was living in Auckland the first house dad bought was a house with a pool. We enjoyed dipping in for the first couple of days, and then that was it. It then started becoming a liability as we had to continuously clean up the falling leaves and put the pump on so the water doesn’t go stale and turn green.
Dad used to complain a lot about it as he was always the “lucky” one who ended up cleaning the pool despite the fact no one used the pool at all.
I thought I learnt something out of that. Well, what did I do? I went ahead and bought an investment property with a pool, factoring in a number of considerations after discussing with a property manager:
- A pool will make it more attractive for the South-East Queensland demographic as it’s relatively warm most of the year;
- Can charge an extra $10–15 per week rent to recoup back some of the cost; and
- Tenant pays for the chlorine, as landlord we just need to fork out the pool service cost.
All in all, it looked like we can pass over most of the cost by bumping up the rent.
So, what did I learn out of this purchase?
There is a lot more hidden maintenance cost which eats into the yield
For starters, there are a number of other costs which I was not aware of including pool compliance certificate (~$200 for 2 years), chlorinator replacement (~$1000), and if the property goes vacant for a couple of weeks the pool will turn green (couple hundred dollars to clean up every time there is a change of tenant)!
Every little bits add up, so those came in as a nasty surprise to my initial cashflow estimate when the property was going to be positive or gearing neutral from day one.
So, for an investment property with a pool, always budget more maintenance cost each year, or just avoid buying an investment property with a pool completely. But if I were to do it again, I would never want to purchase an investment property with pool. Less headache, less maintenance costs in general and more money into your own pocket.
Demographics play a big component for properties with a pool
Looking back, I would also say the house with pool would play out differently if it was in, say, Karina than in Slacks Creek. A more affluent demographics in general will look after the property better, with tenants moving less frequently.
Over the last two years, we’ve had two tenants; so that’s on average one tenant move per year, with about two to three weeks vacancy in between. This means every time they move out I need to do a clean and every little thing eventually adds up to the cost base.
The bottom line is: I would still avoid getting an investment property with a pool.
