Taking A Bath On Your Pool

From Yahoo! Finance:

You're probably getting a lot of use out of it this sweltering summer. But how much is it really costing you?

If you don't have one you may be wondering -- are they worth the expense or is a pool just a money pit with floating chairs?

"It's definitely not an investment," argues Jim Holtzman, financial planner at Legend Financial Advisors in Pittsburgh. "It's a big liability, if anything."

Elaine Scoggins, a financial adviser with Merriman investment advisers in Seattle, agrees and thinks people tend to underestimate the long-term costs. "They think about a house as a potential money pit, but they may not think about the pool," she says. "I'm not saying don't own a pool, but go into it with your eyes open."

Let's do the math.

First, there's the initial cost. Although this will vary depending on where you live and how big a pool you want, you should probably budget maybe $25,000 to $50,000 for an in-ground pool, say financial advisers.

The "extras" mount up, from the concrete skirt around the pool to the lockable fence. In some states the fence is a legal requirement. Even where it isn't, it makes good sense. (Every year we hear of tragedies involving small children.) There may be landscaping and other work as well.

Even if you maintain the pool yourself and buy your supplies from a discount supply company like Leisure Living's poolsupplies.com, it's going to cost you. Sales director Sean Corrigan says chemicals may run to $500 a year. Dave Cook, group vice-president at Supplies Company Pool Corp. in Covington, La., says it's typically "a range from $500 to $800," but if you live in a northern state and need to open and close the pool at the start and end of each summer, both men said, that may cost you at least another $500.

Then there's the cost of your time and all the hassle of dealing with the pool.

When I was growing up, several of our family friends had swimming pools in their backyard. It always seemed incredibly glamorous. I could never understand why my father refused to get one.

But then I noticed that our friends' pools were almost never in use. "We gotta replace the filters," they'd say, with a shrug. Or: "The pump's broken." I think I saw them spend more time raking leaves out of the water than swimming in it. When we wanted to swim, we'd go to the lake.

Many people save on effort by hiring a pool service company. But then the costs go -- far -- north.

The electric bill for the pumps, heater and so on may cost $100 a month. You may spend thousands of dollars every so often replacing things like the liner and the covers or repairing cracks or leaks.

And you need to check that your household liability insurance covers the additional risks. If neighborhood kids break in when you're away for the weekend and have an accident, you're in trouble.

All in? The financial advisers I spoke to all said that, through long experience, they had learned that pools ended up costing a lot more year to year than you usually expect. Susan Elser, a certified financial planner in Indianapolis ("and a former pool owner," she adds), suggests the ongoing costs can easily run to $3,000 a year, or about 10% of the initial cost. If you hire a pool service company, she says, make that 15%. Jim Miller at Woodward Financial Advisers in Chapel Hill, N.C., says the annual costs can run as high as $5,000 a year.

You may figure that you'll make a lot of this back when you come to sell your home. Advisers doubt it. "I question whether it adds anything to the [sale price]," says Ed Rose, a financial planner at Bayside Wealth Management in Pensacola, Fla. "It may contribute something, but you'll never get your money out of it on the resale." One of his clients recently bought a home with a pool and paid extra to have it filled in. "Many people don't want to buy a house with a pool because they don't want the responsibility," says Jim Miller at Woodward.

Sure, that's going to vary. If you live in the south or southwest, or you are selling a luxury home, some of your potential purchasers may expect a pool. Overall, you should be wary about relying on making some money back on the pool when you sell the home.

Bottom line? If your pool costs $30,000 to install, say $3,000 a year in total running, maintenance and repairs, and you don't get much back when you sell it, how much has it really cost you? Remember you could have invested that $30,000 and earned a return on the money. If you borrowed it, you have to pay interest.

Even if the rate of return is only 5%, that $30,000 pool would actually cost about $4,500 a year in total.

Is it worth it? A pool can be great fun in summer, and maybe it's worth the cost -- if you use it a lot. Up here in the northeast, for example, the summers really aren't reliable enough. Few are like this year. I'm amazed at how many people have an in-ground pool anyway. They could probably make better use of that money. As several advisers pointed out, it may cost a lot less to join a local club with a pool.

In many cases, people get a pool when they have small children, figuring the children will use it. It may not be the right move. "A lot of my neighbors built the pool for the kids," says Elaine Scoggins. "But the kids end up wanting to go to the community pool, because there are more kids there."