How Real Estate Investors Can Protect Themselves From Scams
By Tarek El Moussa
Pools are a real mixed blessing for flippers. When you see a house with a pool, you think about how much more buyers are willing to pay for that kind of luxury. It seems like an automatic win, but if you flip houses for very long at all, you’re going to learn quickly just how much a pool can cost you when it hasn’t been taken care of. So, if you have a flip with a pool, take a close look before you sink a bunch of money into rehabbing it. While they can be great assets, pools can turn into big flipping mistakes that can ruin a real estate investor’s day.
Don’t Just Look
I love getting properties that have pools because the added value usually more than makes up for the cost of rehab. That said, we haven’t been able to keep all of the pools at the houses we’ve bought. Sometimes the cost is too great or the pool area isn’t up to code and can’t be fixed, and you just have to eat the loss, fill it in, and try to make the backyard as attractive as possible.
If you get the chance to inspect a house before you buy it, always take it! And be as thorough with your inspection as possible. In our first season shooting Flip or Flop, Christina got really excited about a pool, but it was too much to rehab it, so we had to fill it in. Then, I tried to cut corners and found out the hard way that filling in a pool the right way is expensive; you can’t just fill it with rubble if you want to sell your house.
While I feel like we’ve both gotten a lot smarter about our flips with pools, I recently made a mistake with one that could’ve been a nightmare. We were all set to move forward rehabbing a house and replastering the pool, when I stepped outside and took a step into the empty pool. It was all fiberglass, no plaster, and it was cracking and coming apart right under my feet. It was a lot more expensive to fix than we initially anticipated, and it could’ve been a major issue for our flip.
If I’d taken a step into that pool when we first looked at the house, I would’ve had a better idea what we were up against. In this case, it didn’t change our minds about flipping the house or about keeping the pool, but we could’ve been more prepared going in.
Do the Math
When it comes down to it, deciding what to do with your pool is all about the numbers. You need to know what the pool adds to the property, and you need to know the cost of both rehabbing it and filling it in. So how do you figure it out?
Start by looking at the comps in the area, with and without pools. This will tell you how much value a rehabbed pool will add. Then get estimates from trusted contractors for rehabbing it and for filling it in and landscaping the yard. And don’t forget that last part. People often think that it’ll be cheaper to just fill a pool in, but they forget that you can’t just leave a bare dirt backyard if you want to sell the house at a good price.
As a real estate investor, you should love pools, but not unconditionally. When you flip houses with pools, do all of the math and see what’s going to cost you money and what’s going to make you profits. If you do this right, you can avoid making any flipping mistakes with your pool.
About the author
Tarek and Christina El Moussa have over a decade of professional real estate experience and have been featured in national print publications, online media outlets, and HGTV’s Flip or Flop. Tarek is known for his determination to get the job done and doing it right.
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