Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Building A Pool - Loan Question
Old 05-31-2018, 12:13 PM   #1
Recycles dryer sheets
 
Join Date: Sep 2015
Location: Austin
Posts: 89
Building A Pool - Loan Question

Wife and I are putting in a pool and will most likely finance it.

- Rough cost $100k
- Balance on current mortgage about 298k
- If we were to sell our home today (without the pool being built) it would go for about 420k

What type of loan do you all suggest? One person said we'd need a 2nd lien for a home improvement loan since there's not enough equity. Would a HELOC be better?

Just looking for additional options here. Thanks!
__________________

dsp0725 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-31-2018, 02:21 PM   #2
Thinks s/he gets paid by the post
HNL Bill's Avatar
 
Join Date: Dec 2017
Posts: 1,601
With $122K equity in the home (not including closing and sale costs), I doubt a lender would provide a HELOC for $100K. Could you pay for the pool out-of-pocket, then refinance?
__________________

HNL Bill is offline   Reply With Quote
Old 05-31-2018, 02:24 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Jul 2015
Location: Beaverton
Posts: 1,202
Bad idea
__________________
Jump in, the water's warm.
Bir48die is offline   Reply With Quote
Old 05-31-2018, 02:27 PM   #4
Recycles dryer sheets
 
Join Date: Sep 2015
Location: Austin
Posts: 89
Quote:
Originally Posted by Bir48die View Post
Bad idea
What's a bad idea?
dsp0725 is offline   Reply With Quote
Old 05-31-2018, 02:36 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,184
The pool is a bad idea. It adds very little market value in most cases and you are spending almost 25 percent of the total value of the property to install this albatross. On top of that, you are trying to borrow out most of your equity in the house to make this financial mistake.
Another Reader is offline   Reply With Quote
Old 05-31-2018, 02:49 PM   #6
Recycles dryer sheets
 
Join Date: Sep 2015
Location: Austin
Posts: 89
How can you say that without knowing where in the country I live and how long I intend to be in this home?
dsp0725 is offline   Reply With Quote
Old 05-31-2018, 02:54 PM   #7
Thinks s/he gets paid by the post
HNL Bill's Avatar
 
Join Date: Dec 2017
Posts: 1,601
Quote:
Originally Posted by dsp0725 View Post
How can you say that without knowing where in the country I live and how long I intend to be in this home?
Austin, TX? Well, the point is that they're a bad FINANCIAL decision. That said, if you have a family, or swim daily for exercise, the cost in installation, maintenance, etc., may well be worth it for you. For most, it's not. My dad filled his in a made it into a flowerbed after the divorce!
HNL Bill is offline   Reply With Quote
Old 05-31-2018, 02:55 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 3,091
Quote:
Originally Posted by dsp0725 View Post
How can you say that without knowing where in the country I live and how long I intend to be in this home?
If you live in Austin and plan to enjoy it while you live there, than go for it, but financing it will be problematic without some substantial cash infusion on your part.
COcheesehead is offline   Reply With Quote
Old 05-31-2018, 02:59 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 21,825
It's a personal decision on whether the pool is "worth it" to you, but I agree with the financial info that has been posted. If that "rough cost" goes up to $120K (does it include landscaping, contingency costs, etc?), you've effectively got zero equity in your home.

-ERD50
ERD50 is offline   Reply With Quote
Old 05-31-2018, 03:06 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,184
How much market value does a pool add to a $420k house in Austin? Have you researched the market? Looked for paired sales of similar houses with and without pools? Talked to real estate agents that sell in your area?

It doesn't matter how long you think you are going to be in the house. If you find yourself selling for some reason, you will get less than 50 cents on the dollar, maybe 20 cents in a good area. If your neighborhood appeals to families with young children, a lot of those folks won't even look at your house because of the drowning danger.

Having to borrow out your equity to install an item that does not add materially to the property value means that if you do end up selling for some reason, you may walk away with nothing, or worse have to bring money to the table to sell.

In your shoes, if I wanted a pool, I would either buy a house with a pool that is already discounted to market value, or I would wait until I could write a check for something that is instantly depreciated by at least 50 percent and not be bothered by that.
Another Reader is offline   Reply With Quote
Old 05-31-2018, 03:11 PM   #11
Recycles dryer sheets
 
Join Date: Sep 2015
Location: Austin
Posts: 89
Let me add that I could pay for this pool with cash. But I figured why not finance for a month or so, then pay it off.

If there was an emergency, I'd rather still have the cash around.

I'm open to your opinions. Homes in my zip code with a pool are going for 600k to 800k and up.
dsp0725 is offline   Reply With Quote
Old 05-31-2018, 03:13 PM   #12
Thinks s/he gets paid by the post
ExFlyBoy5's Avatar
 
Join Date: May 2013
Location: Country Living
Posts: 3,502
To answer your question, it may be difficult to finance such a large "improvement".

And don't take this personally, but I would hope that banks would generally NOT loan $ that would suck up almost all of any perceived/assessed equity. I think RE is in a precarious situation now, and last thing the economy needs to having a bunch of 2nd or subsequent loans resulting in a whole bunch of houses that are upside down in value.
__________________
Retired in 2014 at the Ripe Age of 40
ExFlyBoy5 is offline   Reply With Quote
Old 05-31-2018, 03:19 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,184
Quote:
Originally Posted by dsp0725 View Post
Let me add that I could pay for this pool with cash. But I figured why not finance for a month or so, then pay it off.

If there was an emergency, I'd rather still have the cash around.

I'm open to your opinions. Homes in my zip code with a pool are going for 600k to 800k and up.
Houses similar to your $420k house in size, location and amenities other than the pool are going for $600-$800k with a pool? Or do bigger, nicer, better located houses with pools go for that much? Again, have you looked at paired sales?

Any Austin real estate agents want to express an opinion on the added market value of a $100k pool to a $420k house?
Another Reader is offline   Reply With Quote
Old 05-31-2018, 03:35 PM   #14
Thinks s/he gets paid by the post
HNL Bill's Avatar
 
Join Date: Dec 2017
Posts: 1,601
Quote:
Originally Posted by dsp0725 View Post
But I figured why not finance for a month or so, then pay it off. If there was an emergency, I'd rather still have the cash around.
This doesn't make sense to me. You're thinking of financing for a month? What kind of emergency do you anticipate in the month after you build your pool, that you don't anticipate in the second month after you build your pool? If you pay off in full, do you still have a 6-month emergency fund?
HNL Bill is offline   Reply With Quote
Old 05-31-2018, 03:42 PM   #15
Recycles dryer sheets
 
Join Date: May 2011
Location: Austin
Posts: 350
420K house is just a bit above median price of Austin. For such a house, most likely people will not look for a pool. When you want to sell in the future, you will get minimum return. But if you and the family really enjoy the pool, pay for it with cash.
HillCountry is offline   Reply With Quote
Old 05-31-2018, 03:46 PM   #16
Thinks s/he gets paid by the post
ExFlyBoy5's Avatar
 
Join Date: May 2013
Location: Country Living
Posts: 3,502
Quote:
Originally Posted by HillCountry View Post
420K house is just a bit above median price of Austin. For such a house, most likely people will not look for a pool. When you want to sell in the future, you will get minimum return. But if you and the family really enjoy the pool, pay for it with cash.
Especially for a $100K pool!
__________________
Retired in 2014 at the Ripe Age of 40
ExFlyBoy5 is offline   Reply With Quote
Old 05-31-2018, 04:34 PM   #17
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 4,529
Have you thought of looking for a house with a pool?

You owe 298

Pool 100K financed

398 owe on house and pool. ...house sells for 420 or something higher but not 100k higher...after closing and realtor fees you could be in the hole.... my 2 cents forgo the pool, buy a house with a pool, or put in a cheaper pool.How much in property tax and insurance and upkeep will this add to your expenses?
ivinsfan is offline   Reply With Quote
Old 05-31-2018, 04:38 PM   #18
Recycles dryer sheets
 
Join Date: Sep 2015
Location: Austin
Posts: 89
It's 420 without the pool. If i was to sell after the pool, landscapting, stone work, and back patio I'd sell it for 500k
dsp0725 is offline   Reply With Quote
Old 05-31-2018, 04:40 PM   #19
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 4,529
Quote:
Originally Posted by dsp0725 View Post
It's 420 without the pool. If i was to sell after the pool, landscapting, stone work, and back patio I'd sell it for 500k

So does that pool price include all of the above, because that's more then just a pool...in any case I would question the 80k uptick in value, who gave you that number.
ivinsfan is offline   Reply With Quote
Old 05-31-2018, 04:44 PM   #20
Thinks s/he gets paid by the post
HNL Bill's Avatar
 
Join Date: Dec 2017
Posts: 1,601
Quote:
Originally Posted by dsp0725 View Post
It's 420 without the pool. If i was to sell after the pool, landscapting, stone work, and back patio I'd sell it for 500k
If you're fine with paying cash, and are accepting that part of the costs will be 'sunk costs' you'll never recover, and you're economically stable/able to be fully ready for retirement when you want to retire then go for it! Otherwise, recognize this is a want, and not a need, as it won't help you retire any sooner. If you're still able to make your goal of 2025, then it's a go!
__________________

HNL Bill is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
house building question bow-tie Other topics 36 10-02-2011 06:24 AM
Found 15 acres, loan to buy land, loan to build... how is it done? jIMOh FIRE and Money 17 11-05-2010 01:18 PM
what cleans pool tile  best ? zuki Other topics 2 04-10-2005 10:04 PM
45 companies create insurance pool Al Smith FIRE and Money 1 05-11-2004 08:10 AM

» Quick Links

 
All times are GMT -6. The time now is 02:37 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
×