What's a pool worth in rent?

Question

I'm analyzing a 10-unit nestled among other big complexes. Buildings are identical however, but the bigger complexes have a pool and some kind of clubhouse/internet common area. What would you guys value these amenities at rent-wise?

Max T. · Answer

a lot of maintenance and a more expensive insurance policy...

Omar Khan · Answer

@Max Tanenbaum Lol'd when I saw your comment. You read my mind!

@Edward Barnes

You are on the right track by comparing the property against comparables. The biggest questions you have to ask yourself are:

• What class if the property? 
• Is this a value-add or stabilized property?

In a B-/C property, there will not be enough meat on the bone for you to add a pool. This situation flips if this is a Class A property. In that case, comparable amenities - pool - would make a difference. If this is a value-add deal, it might not be worth your while to add a pool (you want to maximize cash flows). Plus, a pool comes with additional insurance and liability (not to mention the need to hire a dedicated pool service technician).

I would also consider your marketing angle as well. For instance, if this is a desirable location you could market it under "near bars/restaurants" or as this is nestled between bigger complexes you could market it under "cozy/intimate setting". The way you market can (not always) determine the type of renter your attract.

At the end of the day, if this is your first (or one of the first) deals, I wouldn't worry too much about adding features. Analyze the #s as is to see if it makes sense. If it does, go for it!

Joe Hughis · Answer

@Edward I believe property amenities that are outside of the unit are subject to location and the surrounding properties.  For instance, if the property is located in an area that has predominately colder weather, having a pool and club house maybe isn't a high selling point for a potential renter.  Also, if there are other public pools or recreational bodies of water near by, having a pool might not be that important.  Of course, in both scenarios the reverse might likely be true.  For instance, in AZ, having a pool is a huge selling point for renters.

Regardless, if the neighboring properties of the same class without a pool/clubhouse are charging a range of "x" dollars for rents, it would be hard to properly market your units for significantly more because of the existence of a pool and clubhouse.  Not all renters utilize those amenities and at the end of the day a potential renter is still cost conscious.  But having in-unit amenities, such as a washer and dryer, central air/heat, hardwood floors and marble countertops - are a different story.  :)   What is certain though, is having a pool and clubhouse in your property will increase your expense line.

Kim Meredith Hampton · Answer

Edward,

I think this depends on your area and what are comparable properties "extras". If it is a C or D property and there is no room for value add in that market, I would fill it in and move on, they are more trouble than they are worth

What's a pool worth in rent?

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