Rental House with a POOL

By Courtney S.

Hello there! I need some advice and quick!

I have a rental home in South Santa Clara County – California that has an ancient pool. The pool has given me serious headaches since I bought the property three years ago. Now the pool has black algae and after three different estimates on #1) remodel vs. #2) remove and fill it in – I have decided to FILL IT IN and be done with it. Bottom line is that the remodel has come down to REPLACEMENT of the entire pool due to it’s current condition. That estimate is around $17K. The fill-in estimate not including permit is $7K.

The property management company I use is saying that because the renter is in mid-contract with me I will have to reduce the rent quite a bit to compensate for the loss of the pool. The renters have been great and they have lived there two years, but have rarely used the pool because of all of the issues it has had. I have a regular pool maint. guy, I have approved all repairs that the renter has requested. I am “OK” with the prop. management company as they are nice, efficient and their monthly percentage charge is reasonable. But this issue is really bugging me now.

MY QUESTION IS: DO I REALLY HAVE TO REDUCE THE RENT AFTER PAYING $7K TO FILL IN THIS NASTY POOL?? AND IF I SHOULD, WHAT AMOUNT WOULD YOU RECOMMEND?  I AM THINKING $100.00/MO OR LESS, LIKE ZERO!

PLEASE RESPOND!!

Thank you so much,
Courtney S.
San Jose,CA

Edited on: Friday, November 13th, 2009 9:49 am

7 Responses to “Rental House with a POOL”

My response: (We welcome stories, examples, explanations, answers and a touch of your personality)
 

Scott

November 13th, 2009 12:24 pm

Hi Pool Troubles!
I understand the pool thing. My first property I bought was a unit in Salt Lake City that had a pool. Around these parts, pools are rare, so I loved the idea of owning one. After buying the property I ran into the same issues your are faced with. One, should I close the pool or Two, fork over the money to renovate the pool.
After getting several quotes, almost identical to what you’re saying above… (My pool was a 24,500 Gallon Gunite Pool.) I decided to renovate it myself. Which surprisingly wasn’t too intense, I sure learned a lot! Still cost me $12,000 in parts alone. I probably wouldn’t suggest doing that unless you are handy. Sorry, got off on a tangent. I bring that up because I had actually had the City Pool Inspector come out before I did any work. I asked him how I could close it. He said that there was nothing special other that knocking some big holes in the bottom so that rain water could drain and then filling it in with dirt, rocks, or whatever. (I quoted that and found that I could get a general contractor to do it for around $1500 to $2500.) So, before you bite the $7,000 bullet, you may want to call some local contractors– especially now, they are all so desperate for work!


Scott

November 13th, 2009 1:00 pm

Hi Pool Trouble!

Now, let me give you my advice about the rent decrease. If you advertised or included the pool amenities as part of the rental agreement, then you’re property management company is probably right that some type of rent decrease should be offered. BUT, big but here… That should only be offered as a last resort. You may have to get creative, but you could actually use this as an opportunity to show you tenants that you care about providing a quality rental and are also concerned about keeping rents low. So how do you do that, simple! Draft up a basic letter that says something like this:
————————————————————————————————————————————————————-
Dear Tenant,

In order to continue to provide you with a quality rental experience, I would like your input on a pressing matter I am faced with. It has come to my attention that the pool is needing some expensive repairs. The quotes to complete the project are extremely high and would force me to raise rents significantly. In this economy, I hate the thought of doing anything that might cause a burden on you as a tenant. Obviously the rent increase would only effect your next renewal, so please don’t panic, I have no plans to increase your current rate. However, I really would like your input.

What is more important to you:
O I would prefer that you fix the pool even if that means there will be a significant rent increase
O I would rather keep rents down to a minimum, I am okay with closing the pool.
O Other ideas?______________________________________________________________

Can you please provide me with your feedback by checking the option you would most like me to pursue. If you agree to closing the pool, I will agree to not increase your rent during your next lease renewal. This even includes general increase that was planned. Please send your response back in the self addressed prepaid envelope.

Thank you for your input, I appreciate your feed back.

Sincerely,

Landlord
————————————————————————————————————————————————————-

I would suggest sending out a letter like the one above. Don’t offer a rent decrease, but guarantee then that you will not increase their monthly rent on their renewal. That makes it win win. They will be happy to save money, and you will save money by providing your tenants with incentive to renew their contract, thus saving vacancy and marketing cost.

Remember, even if all of your tenants respond saying that they want the pool, the decision is totally up to you. If your tenants love the pool that much you could then consider doing a rent decrease. But first, feel them out to see how important the pool is to them.


Courtney S.

November 13th, 2009 1:21 pm

Dear Scott,
I tried to send you a lengthy reply a minute ago and it did not through! Drats! Bottom line is; THANK YOU very much for your expert advice and prompt response. I truly appreciate it. I hope I can be of some help to you or someone else on this website at some point in the future.
Cheers,
Courtney S.


Randy

November 13th, 2009 2:54 pm

Hey Scott…
Great advice, as usual. Hey, were you one of the lucky ones to test drive the new private landlord forum? I got an email from membership services telling me that I had been chosen to preview the new private landlord forum. When I login to the RPA Landlord Panel theres an option on the side panel. I love the idea of a private forum. The RPA has already created some threads that are so helpful. That forum is awesome! I guess it will only be accessible to members, but that’s fine with me. Did you get access to it? Do you know what the plans are for the public blog?
Love to hear your advice… sorry not meaning to hyjack the original poster’s post.


Scott

November 13th, 2009 4:35 pm

Thanks Courtney!

I’m glad you appreciated my suggestion. Let us know how it turns out! We’d love to hear about what you really decided to do. This blog is a good way to learn about different landlord topics and issues. I’ve grown quite fond of both this landlord blog and the renter blog. Hopefully, I’ll see you around the blog here. Good luck to you!

Randy!

What can I say… Yes, I love the private landlord forum. I just hope it doesn’t take me away from the public blogs. I still like to help people here publicly. But you’re right, its nice to invest some real time into a post and not just have it be spread around for free. I hope other landlord members take some time to provide valuable content on the private forum, that’s where it will really make sense. Landlords helping landlords. I’m sure the RPA will continue to keep the public blogs. According to the email I got concerning the private landlord blog, it said that they were testing the new private forum based on request from members. So, it sounds like its just another new great feature of being an RPA Approved landlord. Thanks RPA! Did you notice that you can add pictures, and upload files? That forum seems to be quite powerful! For example, on this blog post, I could have attached some actual word documents showing real letters– that would probably be much more effective than the standard text allowed here.


Larry G.

November 14th, 2009 11:33 pm

Courtney,
I was just going to ask you what kind of property management company you are using? Its a bit odd that they would jump to the end conclusion that you should provide some type of a discount. Like they guy earlier mentioned rent discount should be the last thing offered. I don’t know how big your rental property is? But you mentioned a discount of $100 or so per unit. With that kind of a discount it doesn’t take long to get real expensive! Even a two unit property would cost you $2400 a year in lost rent based upon the suggestion of your property management company. Aren’t they suppose to be earning as much money as possible for you? Here’s some quick numbers on how much your property mangers could have cost you, assuming you took their suggestion at face value… ($100 per unit times 2 units times 12 months) $2400 for two units, for four units $4800, for 5 $6000, for 10 units it would be $24,000 and so on. Now that’s real money! Its the kind of thing that can run your rental business into the red. And unfortunately, with the economy the way it is, its a lot harder for us landlords to run rental properties at cost or for a small profit. You used to be able to break even and within 5 years you’d start to earn a profit. But now, with rents decreasing, the only way to survive as a landlord is to have a healthy cash-flowing property.
I would also try to work with your tenants by doing something like the letter mentioned above, but if they are still unhappy… give them an option to get out of their lease. Make it simple. Tell them that you apologize that you can’t afford to keep the pool open based on the repair cost and are required to close it. If anyone give you any crap, tell them that due to the closure of the pool you are willing to allow them to end their lease early without penalty. Depending on your market, you could find a new renter before the old tenants move. Once again, you wouldn’t be losing any real money, unless of course it takes 60 days or so to fill a vacancy, if that’s the case you may not want to offer the early termination.
I’ve found that if I provide a direct link to my RPA Approved Landlord Risk Report, which by the way– is excellent! Not one complaint and 4 earned landlord certs! This credential seems to help me feel my vacancies fast. Since linking to the LRR I’ve never taken more than 2 weeks to fill a vacancy. I kind of got off on a tangent, but the idea is the same as above.. DON’T EVER OFFER A RENT DISCOUNT when other options are available!!! It doesn’t = good ROI.
Good Luck!
Larry :)


Kerrie

November 15th, 2009 1:51 am

Thought it was funny to find a 2nd question dealing about pools and rental properties. I was just reading some post on the “Renter Advice Blog” and saw a recent post by a tenant talking about how her landlord told her she could get out of the lease due to a broken pool that wasn’t going to be repaired… but then changed their mind after the tenants had found a place… Grrr… They sounded a bit upset! Here’s the link to the other post dealing with this same issue. The only difference is that it is set in the tone of a renter and not the landlord. http://www.rentalprotectionagency.com/blog/renter/?p=355
Too Funny! I wouldn’t think swimming pools would be such hot topic this time of year. All the advice given here has been dead on. Some good ideas about how to handle this situation, I wouldn’t have thought of some of the ideas and I’ve been doing this landlording for decades. Goes to show, you’re never too old to learn!


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