Boulder CO Real Estate

If you add a hot tub to your rental property, will it pay off or will it turn out to be a liability?  At first the answer seems to be an emphatic YES!  Property with a hot tub is going to attract a renter with the ability and the pocketbook to enjoy the finer things in life – especially in Boulder – where the outdoor activities are endless, and nothing could be better than a quick soak in the tub at the end of the day.  But hold back Nellie, while we look at the whole picture.

First, what type will you install? The basic hot tub can be a unit that’s built-in inside the rental unit, it can be a portable spa, or perhaps you’re choosing a self-contained hot-tub unit.  You can choose fiberglass hot tubs that are generally no larger than a bath tub.  There are also models with side pieces that you can assemble within your basement.

Whirlpool tubs are available to fit readily into the space for your current bath tub.  You probably need something about 5.5 feet long and at least 3.5 feet wide.

Here is a key point: It must remain a moveable piece of property.  There is no doubt that a hot tub will increase your deductible expense for depreciation come tax time as long as the hot tub or spa is portable.  Once it’s fastened forever into the property, it loses its qualification as moveable property-also known as chattel.  The difference is this:  The cost of the property can be depreciated over the course of 27.5 years.  Moveable components to the property can be depreciated over the course of five to seven years, which gives you a much higher deductible depreciation.

This tax deduction plus the higher rent potential might make it seem worthwhile.  But there are expenses and associated risks.  Here are the questions you must ask yourself:

First of all, is it your intention to let your tenant use a hot tub?  There have been cases in which a hot tub or spa was available on a piece of rental property.  The landlord did not intend for his tenants to use it.  However, when it was not specifically excluded in the lease, the landlord had to allow the tenants full access.

Second, what are you paying for the hot tub?  Determine whether its purchase price and associated expenses are exceeded by the extra rent you can charge for having it available to your tenants.

Third, be certain that you rent to people who will take care of the hot tub.  Just because they can afford to pay higher rent doesn’t mean that they will be respect its value.  You’ve got to put language into the lease concerning the renter’s commitment to its care.  Perhaps you should consider an additional deposit for its use.

What is the position of your insurance company?  Find out how much your insurance rates will increase if you let the tenants, whom you cannot supervise, use the hot tub.  Ask your agent for the language you must use for safe use of the tub by your tenant and his guests, including children and pets.   And what will you do if you have careless tenants that overflow the hot tub and damage the surrounding area?

Can your floor support the weight of a hot tub filled with water and people?  Fiberglass models are quite lightweight, but others can weaken and destroy the flooring.  You should also look at how many gallons of water will be in the tub to calculate the weight your floor will have to accept.

Do you have to update your electric to accommodate the hot tub?  Smaller units run off 110 volts, but the larger ones require 220 volts.  Either way, you have to have a plug with a ground fault interruptor (GFI plug).

Who is paying for the water and electricity?  If your tenant doesn’t pay utilities, you have to make that renovation, and then you’re back to square one.