Fast forward to 2015 – we’ve pulled out equity from our Sydney properties and are now ready to go again. Being priced out of Sydney with some crazy offers being thrown around, me and my partner decided to start looking at SE QLD in particular the Logan market, as the capital investment is small but yield is high so 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 uses the pool at all.
And I thought I learnt something out of that. Well what did I do? I went ahead and bought an IP with a pool factoring in a number of considerations after discussing with PM:
- A pool will make it more attractive for the SE QLD demographics 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
- Tenant pays for the chlorine, as landlord we just need to fork out the pool service cost
All in all, it looks 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 dollar to clean up everytime 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 1.
So for IP with a pool – always budget more maintenance cost each year, or just avoid buying IP with a pool completely. But if I was to do it again, I would never want to purchase an IP with pool. Less headache, less maintenance costs in general and more money into your own pocket.
- Demographics play a big component for properties with pool
Looking back, I would also say the house with pool would play out differently it if was in say Karina, than in Slacks Creek today. A more affluent demographics in general will look after the property better and tenant moves less frequently. Over the last 2 years we’ve had 2 tenant so that’s on average one tenant move per year, with about 2-3 weeks vacancy in between. This means everytime they move out I need to do a clean and every little thing eventually adds up to the cost base.
But bottom line I would still avoid get an IP with a pool
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