Financing your swimming pool

[South_Texas_Sun]

Both me and my wife are professionals so I really don't think we'll have to find a new job any time soon or if we do it'd be all that hard.......

Lol......famous last words. A house, yes, even the one you live in, is a commodity, no different than pork bellies (which you could, in theory, eat) but with one important difference. It's a LOT less liquid! (no pool pun intended )

I would imagine, since this is a pool forum, that most people here are professionals or at least self employed with enough net worth to own their own home. (otherwise, they'd be building a pool for the owner, right?)

So this cautionary thread applies to anyone who is cavalier enough to buy a pool, financed or not. The pool you build is a depreciating asset with monthly costs attached, not unlike an automobile which is also an investment, but a very poor one if you buy one with a bad resale value. (like say, a gas guzzler right now)

But this brings up an important point.

Projections of the future always assume that things will continue as they currently are. This is almost always a logical fallacy, and it's well worth your time to consider the opposite. For example, what happens if your professional job becomes worth less because of competition. And the housing market DROPS 25% instead of gaining, so you go to sell your house to move to a better location for work, and guess what? You're 25% in the hole, instead of in the black.

Instead of inflation, you get recession, deflation, or even depression. (not far fetched despite all the talk of "it's different this time".)

Please understand, I'm not wishing this for ANYONE, it's just that this current environment should raise some caution amongst borrowers. Don't EVER borrow money if you have the assets to pay in cash! It's the principal of the "magic of compounding interest", but working AGAINST you instead of FOR you!

I know, it sounds "fuddy-duddy-ish", but anyone who's ever gotten in financial trouble (or read enough history) has learned this lesson.

All that said, we're currently building a very nice pool, but paying cash and trying to pay off all debts, because I personally believe that the economy is going to be "off" for a period in the not-too-distant future and cash/hard money assets will be king.

With over 30 TRILLION dollars in dollar-denominated consumer debt in this country, do you really want to want to be a net-debtor? Have you heard the expression, "all in the same boat?"

Just something to think about.

[Jeffski]

I just wrote a long post and then deleted it because we're splitting hairs here. I agree with your advice to avoid debt, pay cash, and keep risk low. All good points. I just know I have personally benefited from the equity I've earned on more than one house so even though you should not treat it as an investment, it usually turns out to be a very good one.

Good debate.

[South_Texas_Sun]

I just wrote a long post and then deleted it because we're splitting hairs here. I agree with your advice to avoid debt, pay cash, and keep risk low. All good points. I just know I have personally benefited from the equity I've earned on more than one house so even though you should not treat it as an investment, it usually turns out to be a very good one.

Good debate.

Hi Jeff, Yes REI usually turns out very well. I bought my first property in Newport Beach, Calif. in the late '70's and all our properties have appreciated very well over the years.

However..... The people getting into "flipping" during the last couple of years are seeing massive returns in a very short time, so the temptation is to keep on buying and trying to flip. This is how the REI "boom" has driven up the prices so far, so fast.

People are quitting their day jobs to become "real estate investors", and that's the worrisome part. This is EXACTLY how the REI boom/bust cycle begins every time, except that THIS TIME, it's being enabled by the Fed raising the M2 money supply (originally to help prevent "Y2k" rifts) and resulting in the free money sloshing around in the form of easy-to-get, "no money down", qualify ANYONE,......CREDIT.

This is the game of "musical chairs" I was referring to, and I've thought seriously about liquidating all our REI assets in California, just for that reason.

Our basis cost is almost laughably low on some of these places, so I'm not afraid of getting hurt. But I do sense trouble in the making, and someone (just to get back on topic for the fun of it ) who's financing a pool with a second on their house BASED ON CURRENT HOUSING PRICES is underwater all ready, they just don't know it.

I usually don't have that much to say on these subjects, but there's several things about "this time around" that are very worrisome to me, and I hate to see people buying into the mania of everything going up all the time.

It doesn't. And one of the most notable examples of the "credit bubble" bursting was the 1929 crash and great depression.

Good discussion.....thanks

[GTakacs]

Both me and my wife are professionals so I really don't think we'll have to find a new job any time soon or if we do it'd be all that hard.......

Lol......famous last words.

Let me rephrase: Both me and my wife are professionals in the oil/gas/energy industry in TX so I don't think we'll have to find a new job any time soon.

BTW, when housing pricing goes down interest goes up so the average monthly payment for a house remains similar (it's probably the other way around, interest driving house prices not house pricing driving interest).

I figure if there is something similar to 1929 coming I'd be screwed either way 3rd mortgage or not so I try not o lose too much sleep over it.

Yes, good discussion BTW.

[South_Texas_Sun]

Let me rephrase: Both me and my wife are professionals in the oil/gas/energy industry in TX so I don't think we'll have to find a new job any time soon.

BTW, when housing pricing goes down interest goes up so the average monthly payment for a house remains similar (it's probably the other way around, interest driving house prices not house pricing driving interest).

I figure if there is something similar to 1929 coming I'd be screwed either way 3rd mortgage or not so I try not o lose too much sleep over it.

Yes, good discussion BTW.

Hi GT, yes, I agree with you. A global recession would sink all boats and Texas oil would be no exception. This is one of the things that worry me.... I constantly hear people talking about the "emerging markets" and how China and India are industrializing--> thus keeping the price of oil high.

We in the US don't suffer high oil prices because of low supply. There's actually a worldwide oil glut, but not enough refining capacity to process it.

If the US suffers an economic downturn (and I believe it's only a matter of time) then the rest of the world is going to "catch pneumonia", mixed metaphors not withstanding.

Who'll buy the output of industrializing China, when the western countries have economic problems? Hence my "global" concern.

Do you remember Texas oil miseries in the late '80's? Think it could happen again? Nobody seems to think so, and that usually means exactly the opposite will happen. This isn't my opinion. It's the way ALL traded markets work.

Give my regards to T. Boone!

[bobyoe]

Well, like I said, FOR ME, I wouldn't be comfortable financing 125% of my equity for anything---pool, car, house or otherwise. Heck, I wouldn't be comfortable fiancing more than 75%!!! If others are comfortable with that, that's ok for them.
B

[adillenal]

South Texas Sun- I for one certainly remember the late 80's and the oil bust. Not a pretty picture.
I worry about a repeat which can easily happen. I guess the older I get the more conservative I am becoming concerning economics.
BUT I love my pool and am very gald we built it but am also glad it has no connection with my mortgage. (Only have one)

[South_Texas_Sun]

South Texas Sun- I for one certainly remember the late 80's and the oil bust. Not a pretty picture.
I worry about a repeat which can easily happen. I guess the older I get the more conservative I am becoming concerning economics.
BUT I love my pool and am very gald we built it but am also glad it has no connection with my mortgage. (Only have one)

Hi Adillenal, I'm glad we're building our pool too and although it's pretty nice, we're still working within a budget.

If I had to choose between no pool and one that I couldn't afford, I'd get out there in a kiddie pool if I had to!

It's funny. I had a very similar discussion to this with our pool builder. He said that he was having trouble getting financing for some of his customers because they had minor credit problems and wanted a home-equity-based loan. His pools are beautiful, but not real cheap.

He (the PB) pines for the simple days of building fiberglass pools, which he said were really just as good as gunite pools and seemed to last longer than liner pools, but still weren't too expensive to "build" or upkeep.

I think I'd go for fiberglass if I were financing, but find a PB whose price was commensurate with the lower installation cost. (in other words, spend 20-25k, but not 40k in equity!)

In the beginning of our project, I got quotes from PB's that were all over the map, obviously intending to take advantage of homeowners' ignorance of what a pool should cost and the corners that could be cut in the process. We were also offered loan packages that obviously put loan "points" into the PB's pocket. It's a real battlezone out there for the unwary homeowner.

But we decided against financing, opting to pay for a nice IG pool, because we had been shopping for homes where the pool was the deciding factor AGAINST buying the place. It would invariably be low quality or need repair. Too small or built into a landfill that had been "slabbed" over and the slab was cracking.....and on and on.

We wanted a pool that would add value to the overall home, and I think we're getting it. We're nearly done and although July 4th isn't going to find us swimming, our PB assures us that we will be by the middle of July. I told him, "if we weren't, he would be, and without water!"....lol.

I don't know if you watch the "Accuweather.com" climate forecasts on the nightly news, but they're talking about 1930's "dust bowl' drought conditions for our midwest plains, possibly for a decade or more. Shades of depression era, eh?

[adillenal]

Oh great. Just what I need is more dust. I don't know what is worse, the blowing dust or hopping grasshoppers. I have to empty the skimmers twice a day because of the grasshoppers.
I am not real astute with economics but my husband teaches it so I have to listen to him sometimes. Since we are within 10 years of retirement, I think about money a lot more than I did years ago. Also have a teenager to get through college.
We may not have saved a lot from the poolbuilder quote we received (Only one builder in our area) but we got a lot more by building it ourselves. About twice as large and we still are able to add the things we want such as wider decking, fence, retaining wall, landscaping and now we have decided to add a waterfall outside the pool in the landscaping to include a koi pond. The basic pool ( using a pool builder) for the size we have with what we have added would have been twice what we have invested. Nothing fancy like some I see but we have what is compatible with our income. Trying to live within our means.
We started our pool the beginning of June 2005, and finished August 2005. Takes a long time when doing the labor yourself. Luckily husband is off most of the summer.
We DO NOT regret our investment and it is an investment to us in that we are enjoying our home (which we also consider an investment)and it keeps our teenager home a lot. BUT I am not sure if we would have built it if we would have had to take out a second mortgage or finanace through a finance company. Since we don't have any plans on moving, we really aren't concerned about raising or lowering the value of the home for resale purposes.
Everyone has to decide what they can afford and what their priorities are but to be aware of what could happen if employment ceased. We are in education, so are pretty secure as far as employment goes.
Good luck with your pool and hope you are swimming before long.