Hypothesis: Prove that it is MUCH CHEAPER to buy a pre-existing home that already has a pool, instead of buying a home then adding the pool. Especially in the winter!
First off... How much does a new pool cost?
Well, I found a local company on Google that has an online calculator for quotes. I stayed away from Angies's List, Home Advisor, etc who had pricing guides that were wildly inaccurate. But based on the estimator at Custom Outdoor Trends in Rockwall, an average pool with a spa costs 50-70k based on the different choices I made pretending to be a pool shopper. Let's use 60k as our verified plug and play number for the purposes of this exercise.
The Buying Options We Tested:
- Fixer-upper that already has a great pool. (A Cinderella Story)
- Average, move-in ready home that already has a pool. ("Minimal Updates Required")
- GREAT home, ADD the pool as part of the purchase price. (Awesome Home with a Big, Ugly Backyard)
In comparing these options, let's assume our needs/wants are around 3,000 square feet, 2.5 baths, game room, pool and located in a good school district within an hour of Dallas.
1. A Cinderella Story
The fixer upper that turns into the BEST HOME EVER is no fairy tale! This option represents the cheapest path to get a custom home with a pool. Especially since buyers can roll the cost of renovations into their home loan from the start! (Check out our page on home loans to find out even more.)
Fixer Upper Example A
1101 Wedge Hill Road in Mckinney (see listing)
Great neighborhood, corner lot, walkout porch overlooking pool...this is a really great example! If you can appreciate this unique floor plan, then it's a pretty simple renovation to complete. At this price we could even open the flow of the home with structural beams or well placed/ design integrated posts. If renovations completed for 50k (including converting extra space to a 4th bedroom), then this options puts us under 380,000 dollars. Maybe take an additional 10k of the savings to update the front of the home to increase curb appeal. Value: The unique attributes of the floor plan make this tougher to estimate but on the low end this could be worth around 410k with our design/REbuild guidance and coordination.
Fixer Upper Example B
203 Glenn Avenue in Rockwall (see listing)
1101 Wedge Hill Road in Mckinney (see listing)
Great neighborhood, corner lot, walkout porch overlooking pool...this is a really great example! If you can appreciate this unique floor plan, then it's a pretty simple renovation to complete. At this price we could even open the flow of the home with structural beams or well placed/ design integrated posts. If renovations completed for 50k (including converting extra space to a 4th bedroom), then this options puts us under 380,000 dollars. Maybe take an additional 10k of the savings to update the front of the home to increase curb appeal. Value: The unique attributes of the floor plan make this tougher to estimate but on the low end this could be worth around 410k with our design/REbuild guidance and coordination.
Fixer Upper Example B
203 Glenn Avenue in Rockwall (see listing)
Most folks think country suburbs like Rockwall have substandard schools, but that just isn't true! Elementary is rated a "9" on the GreatSchools.org website, Middle is a "7" and the High School is an "8". Aside from that, the lot is on higher ground which allows for great views of western sky that can be seen each evening at sunset. The house needs higher ceilings, whole area transformations and better finish out materials. The cosmetic finish out upgrades in and around the house would cost approx. 40,000 dollars, and re-engineering the structure to support higher ceilings would cost approx. 70,000 dollars. Add 20,000 for contingencies (major component repairs/ material replacements) and we would be all-in at $130,000 to make a forever home that is modern and beautiful. If purchased for 245k (it sold for that this month), the total home loan amount would be $375,000 dollars on the nose. Assuming an end value of 410,000 dollars, that would be a 35k savings over appraised price.
Fixer Upper Example C
532 Melody Lane in Richardson (see listing)
Drive time buyers would love this home, AFTER the REbuild! Big lot, nice neighborhood and has older homes being torn down with new homes built (one example is just a few doors down). This home could have tremendous value with upper end area comparables reaching 500k and beyond. Assuming our renovations will cost 90k, the total investment will be around 410k. This would include vaulting family room ceiling, restructuring the floor plan and upgrades all around. "Middle of the Road" Value: A well balanced renovation plan would yield an estimated value of 450,000 dollars.
2. "Minimal Updates Required" Purchase with a Pool
A boring, bland home with a pool is still a great opportunity to save money on an undervalued home. The "competition tax" paid would be less as well since there will be fewer competing offers compared to a much nicer move-in ready home. It's a great compromise between full-on renovation and still being able to make the space yours.
Almost Move-In Ready Example A
The process of taking a fixer upper to a Custom Perfect Home takes time and energy, but it's worth it. By saving around 50k (if not more), it's like getting a free pool when compared directly to the cost of buying a beautiful home and then paying to add the pool. Other options exist that require much less time/energy but still some savings, like buying a boring/bland home with a pool and using the discount to add upgrades. Just like the mom who bakes a birthday cake versus buying one at the store, it all boils down to convenience. The one thing everyone has in common is there love of nice spaces to live and play! Paying extra for a complete dream package off the shelf or saving money by being a part of every step towards making one.
In any case, please allow us to work with you on a strategy that meets your budget and end product goals. Buying a home is an opportunity to be EXTREMELY intentional about crafting a forever home that is designed around how you live. We are excited to help you build or REbuild!
A few takeaways...
Suggestions for our Real Estate Science Series? Email them to timothy@timothyhenley.com.
We are also available to you to answer any questions, so feel free call me personally at 972-805-6601.
All information contained in the post is for educational purposes. Market values are subject to change from neighborhood to neighborhood, which can be confusing. Apply all information from this post under the supervision of an experienced real estate professional to ensure the best possible outcome.
Fixer Upper Example C
532 Melody Lane in Richardson (see listing)
Drive time buyers would love this home, AFTER the REbuild! Big lot, nice neighborhood and has older homes being torn down with new homes built (one example is just a few doors down). This home could have tremendous value with upper end area comparables reaching 500k and beyond. Assuming our renovations will cost 90k, the total investment will be around 410k. This would include vaulting family room ceiling, restructuring the floor plan and upgrades all around. "Middle of the Road" Value: A well balanced renovation plan would yield an estimated value of 450,000 dollars.
2. "Minimal Updates Required" Purchase with a Pool
A boring, bland home with a pool is still a great opportunity to save money on an undervalued home. The "competition tax" paid would be less as well since there will be fewer competing offers compared to a much nicer move-in ready home. It's a great compromise between full-on renovation and still being able to make the space yours.
Almost Move-In Ready Example A
It's a remodeled home from 1991 with a "less than open" floor plan. Good backyard feel, the trees along the back property line make it feel more secluded. It just hit the market, so it's hard to tell how the market will value this home. Let's assume its worth 360k based on the neighborhood. Located minutes from 121 or 75, there is value in a great location.
Almost Move-In Ready Example B
1332 Hillcrest Drive in Allen (see listing)
This home is a great compromise between floor plan flow and being somewhat updated. Good size yard, nice looking pool and a decent neighborhood. Let's assume it would be worth around 370k with average updates that provide a fresher, cleaner look while staying under a 20k budget. This sold for 325k in it's current condition in October, which still provides for some great equity.
Almost Move-In Ready Example C
10340 Cedar Lake in Providence Village (see listing)
Rare large lot in this niche subdivision located just north of Little Elm by 380. Cape Cod style homes with walk out balconies and classic front porches with rocking chairs. Very unique but this property has an unfinished feeling, with some areas updated but other spaces needing serious updates. Homes like this leave buyers thinking of the negatives (they set true market prices after all), so the value deduction would allow a buyer to get a nice discount. Especially since many of the cosmetic objections would be relatively inexpensive to remedy/renovate. Most buyers want move-in ready, so homes like this are great way to save money on a house that can be turned into a dream home in 3 weeks or less.
3. Awesome Home with a Big Ugly Backyard
Instead of flipping the house, FLIP THE BACKYARD...Buy the house and finance the pool into the home loan. It's that easy! Finding the perfect home with the perfect pool is easy if your budget is over 460k, because 'unicorn' combo packages like this are in short supply/ high demand. Take a beautiful home you purchase for 375,000 dollars that has a seriously neglected backyard - no covered patio, worn out fence but big enough to be a pool oasis. Just by adding a pergola and new fencing, this would increase the value of this home to around 390,000. Add the dream pool to this backyard amenity package and it's immediately worth 420-440k. These values are important to note since the purchase price + backyard pool oasis total cost needs to at least equal the end value (lender requirement).
What Did We Learn?
Almost Move-In Ready Example B
1332 Hillcrest Drive in Allen (see listing)
This home is a great compromise between floor plan flow and being somewhat updated. Good size yard, nice looking pool and a decent neighborhood. Let's assume it would be worth around 370k with average updates that provide a fresher, cleaner look while staying under a 20k budget. This sold for 325k in it's current condition in October, which still provides for some great equity.
Almost Move-In Ready Example C
10340 Cedar Lake in Providence Village (see listing)
Rare large lot in this niche subdivision located just north of Little Elm by 380. Cape Cod style homes with walk out balconies and classic front porches with rocking chairs. Very unique but this property has an unfinished feeling, with some areas updated but other spaces needing serious updates. Homes like this leave buyers thinking of the negatives (they set true market prices after all), so the value deduction would allow a buyer to get a nice discount. Especially since many of the cosmetic objections would be relatively inexpensive to remedy/renovate. Most buyers want move-in ready, so homes like this are great way to save money on a house that can be turned into a dream home in 3 weeks or less.
3. Awesome Home with a Big Ugly Backyard
Instead of flipping the house, FLIP THE BACKYARD...Buy the house and finance the pool into the home loan. It's that easy! Finding the perfect home with the perfect pool is easy if your budget is over 460k, because 'unicorn' combo packages like this are in short supply/ high demand. Take a beautiful home you purchase for 375,000 dollars that has a seriously neglected backyard - no covered patio, worn out fence but big enough to be a pool oasis. Just by adding a pergola and new fencing, this would increase the value of this home to around 390,000. Add the dream pool to this backyard amenity package and it's immediately worth 420-440k. These values are important to note since the purchase price + backyard pool oasis total cost needs to at least equal the end value (lender requirement).
What Did We Learn?
The process of taking a fixer upper to a Custom Perfect Home takes time and energy, but it's worth it. By saving around 50k (if not more), it's like getting a free pool when compared directly to the cost of buying a beautiful home and then paying to add the pool. Other options exist that require much less time/energy but still some savings, like buying a boring/bland home with a pool and using the discount to add upgrades. Just like the mom who bakes a birthday cake versus buying one at the store, it all boils down to convenience. The one thing everyone has in common is there love of nice spaces to live and play! Paying extra for a complete dream package off the shelf or saving money by being a part of every step towards making one.
In any case, please allow us to work with you on a strategy that meets your budget and end product goals. Buying a home is an opportunity to be EXTREMELY intentional about crafting a forever home that is designed around how you live. We are excited to help you build or REbuild!
A few takeaways...
- Cheapest Option - Fixer upper folks get a better deal by buying low on a home that already has a pool and using the savings to make their new home a 90% match on needs/wants. Here is a link to a pre-defined search for homes like these.
- Pretty Good Deal - Buy a boring, bland home with a pool and save 10k or more. This option lets you to choose flooring, paint and other finish out items.
- The Easiest - Buy a great home AND THEN add the pool as part of your home loan. No savings here, but a MUST if you want to design an amazing backyard pool area. This program works best if buyer has a down payment of 10% or more.
Suggestions for our Real Estate Science Series? Email them to timothy@timothyhenley.com.
We are also available to you to answer any questions, so feel free call me personally at 972-805-6601.
All information contained in the post is for educational purposes. Market values are subject to change from neighborhood to neighborhood, which can be confusing. Apply all information from this post under the supervision of an experienced real estate professional to ensure the best possible outcome.
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