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Pools investments can bring big returns in the Hamptons

By: Oliver Peterson

Source: The East Hampton Press & The Southampton Press

5.2008

Even with the excitement of the roiling Atlantic Ocean to the south, and the stillness of the Peconic Bay to the north, homeowners in the Hamptons are wild about pools.

Once an uncommon luxury saved for only the most wealthy summer residents, swimming pools have become an essential component of any seasonal rental, investment property or vacation home. Real estate professionals point out that not only is the pool a place for families and friends to congregate, entertain and exercise, it will likely make the difference in whether or not a home is rented or sold.

And the return will almost surely exceed the investment.

Jim McLauchlen, a Southampton real estate broker and appraiser with nearly 50 years in the business, said the option to swim at home is very attractive, for parties on both sides of a pricey Hamptons rental.

"The addition of a swimming pool is an investment that can be recaptured in four to five years," Mr. McLauchlen said.

Brown Harris Stevens broker Mike Bruno, who works in the company's East Hampton office, agreed. "The properties that have the pools get rented immediately," he said, adding that renters expect a pool, and homes without them might remain vacant. "They don't want to even look at anything without a pool."

"It adds a lot of intrinsic value to a house out here," he said, although a pool still plays second fiddle to beach proximity.

"We're surrounded by water, and we've got the world's biggest swimming pool in the Atlantic Ocean, but even right on the ocean people want a pool," Hamptons Realty Group's Htun Han of Amagansett quipped.

Personally, Mr. Han said he's not a fan of pools, noting that such amenities have softened the population, but "from a business standpoint, it's a necessity."

Mr. Han noted the power of pools on the rental market, and he echoed Mr. Bruno's estimation that in areas away from the beach, such as the Northwest Woods in East Hampton, pools are especially important. He agreed that a rental investor will reclaim the money paid to add a pool and begin gaining profits within four or five years. Hamptons rule of thumb says a pool adds 20 to 25 percent to a rental property's value, Mr. Han added.

The sales market is a bit different, according to the brokers. Mr. McLauchlen acknowledged that in the South Fork vacation and leisure mecca, pools are one of the toys that are very important to seasonal residents. But for homes identical in every other way but for the inclusion of a pool, the appraised difference usually only comes down to the cost of construction of the added feature.

"I don't know that there's any added value other than time and aggravation," he said, explaining that if a house comes with a pool already installed, buyers might pay more than the actual value because of the headaches and delays of constructing one.

Luxury home buyers in the Hamptons are not often restricted by cost, Mr. Han said, noting that many will pay a premium to get as much as possible out of their second home. "At the very most, you can eke out a four-month season," the broker said, explaining that summer residents want quality pools, but they don't want to wait for construction or see their landscape disturbed.

In the past, spec houses would be presented and sold without completion of pools and landscaping, and contractors would build to suit the customer after the closing, Mr. Han explained. Now those properties are more alluring with the pool already in place and the grounds begin shaping up shortly after the foundation is dug, he said.

Mr. McLauchlen said that because of topography, zoning or environmental and deed restrictions, creating a pool may not be an option on every property. "The one that cannot have a pool, in my opinion, would suffer some diminishment in a vacation leisure area," he surmised, noting that the issue is much more pronounced in a region like the South Fork.

Mr. McLauchlen said he sold a house in Southampton for "well below expectation" because its proximity to wetlands prohibited construction of a pool.

John Tortorella, owner of J. Tortorella Swimming Pools in Southampton and Hampton Bays, said only 10 percent of his customers ever go to the beach. "People might not be as comfortable going in the ocean," he said, noting that waves and undertow are not for everyone.

"People are looking to do more cocooning," Mr. Tortorella said, quoting motivational author Faith Popcorn. The more his clients stay home, the more elaborate the pools seem to become, he said, noting that his high-end business is growing, either because there are more wealthy clients or because they've become more creative.