< Pool & Spa Guides

Should You Invest In A Property With A Pool?

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Source: Unsplash

If you’re a property investor, you’re probably wondering if buying a house with a pool is worth it. After all, you want to get the best return on your investment – and a sparkling pool in the right neighbourhood could be just the ticket. But if you’ve never owned a pool or you’re new to property investment, here are seven things to consider before taking the plunge.

 

1. Pool condition

The first thing you need to check is the condition of the pool. Does it look new? Is the water clean? Are the surfaces intact? If the pool has signs of algae, stains, cloudy water, chipped tiles or faded equipment, think twice. A pool renovation could cost you thousands, and you may not recoup those costs straight away – if at all. To avoid surprises, book a professional pool inspection to find out the age of the pool, hidden problems and how much servicing will be required. This will allow you to budget for repairs or look for a different property. 

 

2. Local climate

Climate is important when it comes to buying a property with a pool. If your target market is in Canberra or Hobart, tenants may only swim for a few weeks a year, which means you’ll spend hundreds on maintenance for an unused pool. Even if the pool is used, you’ll need to keep it heated all year round. Not only can this skyrocket your energy bills, but it can also overwork your heater and increase the risk of algae (it thrives in heat!).

However, if your property is in a warm or tropical climate, a pool can provide welcome relief when the mercury rises (which is pretty much all year round!), so it’ll give your property a competitive edge. Having said that, some tropical areas may be prone to wet seasons or wild weather, which can increase water levels and wreak havoc on your pool. If that happens, make sure you use a cover, close your pool during the wet season or budget for extra maintenance. 

 

3. Location

Where are you planning to buy your property? Is it in a coastal suburb with lots of beaches, or inland? Generally, the further you are from the coast, the hotter it gets, making a pool more desirable. Another important factor is the demographic. Suburbs with professional couples or growing families are more likely to want a pool than retirees or students – and they’ll have a higher budget too. To find out if pools are in demand in your area, check with your local real estate agent.

 

4. Position

Where your pool is positioned is just as important as its condition or suburban location. If it takes up the whole backyard, it may not appeal to tenants who want extra space to play sports or entertain. If it’s too close to trees or garden beds, it may attract leaf litter or dirt, increasing your maintenance costs. 

Ideally, a pool shouldn’t take up more than 25–30 per cent of the backyard – and there should be plenty of space around it for fencing, garden access and recreation. It should also be positioned away from deciduous trees (look out for Jacarandas!) and close enough to the property to allow for supervision.

 

5. Compliance and safety

If you rent a house with a pool – either as a homeowner or investor – you’ll need a compliance certificate. (In most states, you’ll need to attach a certificate of compliance and certificate of registration to the rental agreement.) This applies to all in-ground, above-ground and portable pools (including spas) that are filled with more than 30 centimetres of water. 

To make a pool compliant, the pool fencing needs to meet safety guidelines for your state or territory, such as being a certain height and distance from the property and having a gate that opens outwards (with a self-closing latch). Some states also require a CPR sign to be displayed. These measures ensure that children, pets and other swimmers are safe around your pool area.

Having said that, a house can still be sold if a pool is non-compliant, as long as a non-compliance certificate is attached. If this happens, ask the vendor what needs to be done so you can cost the repairs and include them in your offer. After the purchase, you’ll be given time to fix the non-compliance issues. However, if you don’t do this before the deadline, you could pay a non-compliance fine of up to $5,500.

 

Note: A compliance certificate is only valid for 1–3 years, depending on your state or territory, which means your pool needs to be re-inspected and re-certified regularly.

 

6. Insurance costs

Every rental property needs to be insured, but properties with pools have a higher risk of accidents, which means you’ll be paying a higher premium for your building and contents insurance. When taking out a policy, make sure your pool, equipment and accessories are covered, keeping in mind that an inground pool is covered under building insurance and an above-ground pool under contents insurance. 

Also, check the limit and whether you need additional cover. This will ensure you won’t be out of pocket if the pool or equipment is damaged by a tenant. (Note: Home and contents insurance won’t cover normal wear and tear or damage due to neglect.)

Your home insurance policy will also have liability cover. This means your insurance will pay for damages if someone is injured or gets sick after using your pool. Most liability cover ranges from $10 million to $20 million, depending on the insurer, but you may want more, particularly if the pool is in an apartment complex. Seek advice from your insurance provider to find the best cover for your pool. 

 

7. Maintenance costs

Depending on the age and condition of the pool, you’ll need to budget for running costs. According to hipages, maintenance costs for a pool can be anywhere between $600 and $2,000 a year. This includes energy costs from running equipment, water loss from evaporation and backwashing, and chemical costs from balancing your pool water. There could also be unforeseen expenses when equipment is replaced or the decking/tiling needs to be repaired. 

If your rental agreement states that tenants are responsible for pool maintenance, such as skimming leaves, running the filtration system, cleaning the pool and balancing the water chemistry, you’ll save on monthly servicing costs. However, some tenants may not have the time or skill to do this, so factor it into your maintenance budget or weekly rent. 

 

Can a pool increase the rental value of your property?

This depends on the condition of the pool, your climate and whether pools are in demand in your area. If you’re renting a luxury property, tenants are going to expect a pool – and you’ll get a higher return as a result. 

Sometimes demand can increase due to unusual circumstances. For example, during the lockdowns of 2020/21, when pools were closed and distance limits imposed, the demand for properties with pools increased – and so did their rental value. 

While demand has dropped slightly since then, new factors are starting to drive demand, such as the cost of living crisis and high interest rates. This means that staycations are becoming more appealing, making properties with pools popular again. Having said that, it’s best to check with your real estate agent to make sure there’s a demand for pools in your area.

 

Is your pool tax deductible?

While the running costs of a pool can be high, you can claim them at tax time – as long as you meet the eligibility criteria. You can also get a depreciation deduction for items like pool equipment and outdoor furniture. For more advice, contact the Australian Tax Office (ATO) or your tax accountant. 

 

How much does it cost to remove a pool?

If you don’t want the hassle of maintaining a pool, consider getting it removed. Depending on the size, pool type, site access and whether it’s a full or partial removal, this can cost anywhere between $3,200–$18,000. 

Generally, an above-ground pool is faster and cheaper to remove, particularly if it doesn’t have decking. In-ground pools are trickier, but you can choose from a full or partial removal, based on your budget and needs. With a partial removal, the debris is placed inside the shell, minimising rubbish removal and excavation. However, partial removals are not recommended if you plan to build on the area in the future. 

Top tip: If you want to remove an in-ground pool before renting out a property, factor in the price of its removal – as well as turfing or paving – before making an offer. If it’s an above-ground pool, negotiate a price with the seller that includes removal before sale.  

 

Do you need a permit to remove a pool?

If you buy an investment property and decide to remove the pool later – either because it’s too expensive or tenants don’t use it – you’ll need a permit from your local council. Once this has been approved, you can hire a company to undertake a pool removal. 

 

Summing up

Purchasing an investment property is a big decision – and if the property has a pool, it can make the decision even harder. On one hand, a pool can attract high-paying tenants and even increase the value of your property. On the other, it can be a hassle to maintain and lead to expensive repairs. If you’re undecided, here’s a quick guide on whether a house with a pool is worth it or not.

Choose a rental property with a pool if:

  • buyers in your area are looking for a swimming pool 
  • you’re buying a property in an affluent market
  • the property is located in a temperate or tropical zone
  • the pool is new or in peak condition
  • you plan to move into the property at a later date (and use the pool).

Avoid a rental property with a pool if:

  • buyers in your area aren’t looking for a pool
  • you’re buying a property in a less affluent market
  • the property is located in a cool or cold region
  • the pool is old, damaged or poorly maintained
  • you don’t have the budget to maintain the pool.

If you decide to purchase a property with a pool, remember to factor in compliance, insurance and maintenance fees – and don’t forget to claim maintenance costs and depreciation deductions at tax time. Lastly, find out everything you can about pool maintenance. This can help you troubleshoot problems quickly, minimise your running costs and save money on maintenance services in the future. To find out more about pool maintenance, browse our Pool and Spa Guides or chat to one of our approved dealers.