Adding a swimming pool to an investment property can be an attractive way to increase its value and rental appeal. Whether you own a vacation rental, a multi-unit complex, or a luxury home, a pool can make your property stand out in a competitive market. However, financing a swimming pool for an investment property requires careful planning. Unlike personal residences, investment properties often face stricter lending requirements and higher pool loan rates. Understanding your financing options is essential to making a smart investment decision.
Why Consider a Swimming Pool for an Investment Property?
A well-designed swimming pool can significantly boost your property’s marketability. For vacation rentals, a pool can be a major selling point that attracts more bookings and allows you to charge higher nightly rates. In high-end residential rentals, it can serve as a luxury feature that increases property desirability and tenant retention. Even for multifamily units, a shared pool can enhance the overall appeal of the property, making it easier to fill vacancies. However, before committing to a pool installation, you should weigh the potential return on investment (ROI) against the costs involved.
Types of Swimming Pool Loans
Financing a swimming pool for an investment property is different from financing one for a primary residence. Here are a few loan options to consider:
- Home Equity Loans and HELOCs – If you own another property with substantial equity, you may be able to use a home equity loan or a home equity line of credit (HELOC) to fund the pool installation. These loans often come with lower interest rates, but they put your existing property at risk if you default.
- Personal Loans – Some investors opt for unsecured personal loans to finance a pool. While these loans don’t require collateral, they usually have higher interest rates and shorter repayment terms.
- Cash-Out Refinancing – If your investment property has appreciated in value, refinancing to pull out cash may be a viable option. However, this approach depends on current interest rates and your ability to qualify for a new mortgage.
- Construction or Pool Loans – Some lenders specialize in swimming pool financing and offer dedicated loans for construction projects. These may have structured payment plans based on project milestones.
- Business or Investment Property Loans – Investors with multiple properties may qualify for commercial loans tailored to real estate improvements, including pool installations.
Factors That Affect Loan Approval
Lenders evaluate several factors when approving loans for swimming pools on investment properties. Your credit score, debt-to-income ratio, and existing property equity all play a role in determining loan terms. Additionally, some lenders may be hesitant to finance a pool for an investment property due to perceived risks. Demonstrating a strong financial position and showing how the pool will increase the property’s value or income potential can improve your chances of securing a loan.
Costs and ROI Considerations
Installing a swimming pool is a significant expense. Costs vary depending on the type of pool, materials used, and landscaping requirements. A standard inground pool can range from $30,000 to $100,000 or more, depending on features such as heating, lighting, and decking. Beyond installation, maintenance costs—including cleaning, repairs, and insurance—must be factored into your budget. Before moving forward, analyze whether the added rental income or resale value will justify the investment.
Alternatives to Financing
If securing a loan proves difficult or costly, alternative financing options may be worth exploring. One approach is to partner with investors who are willing to contribute funds in exchange for shared profits from the property’s rental income. Another option is phasing the project, starting with a more affordable pool and upgrading later. Additionally, researching local grants or tax incentives for property improvements may provide financial relief.
Making Strategic Moves
Investing in a swimming pool for an investment property can be a smart move—but only when done strategically. Understanding loan options, assessing financial risks, and evaluating potential returns will help you make an informed decision. Whether you choose a traditional loan, a refinancing option, or an alternative financing method, careful planning will ensure that your investment enhances your property’s value and appeal. If executed wisely, a pool can be a worthwhile addition that attracts renters, boosts rental income, and increases your property’s long-term worth.
