Buying a home with stunning views of the ocean or a beautiful lake is a dream for many, but a slice of paradise comes with costs that can be difficult to anticipate or plan for. Here are some of the upsides and downsides of purchasing a waterfront home.
What is considered waterfront property?
Simply put, waterfront property pertains to any land on the edge of a body of water. While that may seem simple, the variables on the quality, quantity and usability of the water are seemingly endless. Beachfront property for example, describes land that is located on or adjacent to a beach. So, the two terms are not synonymous, meaning not all waterfront property is considered beachfront property. Does the backyard of the property lead to a soft and sandy beach? Or are there jagged rocks and cliffs the moment you leave the porch? Is the water crystal clear and perfect for swimming? Or are the weeds so high in the shallows that getting a boat from your dock to the channel is nearly impossible? These are just a few of the characteristics to think about when deciding what you’re looking for. Having the moniker of “waterfront” does not necessarily mean you’ve found the waterfront home that’s right for you.
Is waterfront property a good investment?
It sure can be. Waterfront properties tend to appreciate more than landlocked houses, so if you find one for a good price, chances are you’ll be cashing in if and when you decide to sell. In addition, rental rates for waterfront properties tend to be higher and they’re always in high demand. With the traditional barriers to renting coming down due to companies like Airbnb, the potential to bring in passive income while also enjoying the lake or beach life is ever more attainable. Even more than most real estate, waterfront property is all about location and demand. So, while no investment is ever guaranteed, an investment with a view is usually a safer bet than an investment without one.
Buying a waterfront home: Pros
Waterfront properties are highly desirable for a multitude of reasons. Who can argue that living on the water isn’t a relaxing, uplifting experience? Anyone who has sat on a beach or stayed in a waterfront house can attest to the near medicinal effects of the sound of lapping waves and seagulls.
- Strong potential for appreciation – Waterfront properties are typically those that see the highest appreciation
- Investment potential – In the Airbnb and self-rental environment, waterfront homes have higher rental potential than homes without a water view. Rents can also be significantly higher, making it easier for investors to cover their ownership costs and even turn a profit.
- Permanent views – When you buy a home in an area still under development, you can’t be sure what your view will look like in five, 10 or even 20 years. Waterfront homes are premium because their views are about as permanent as it can get.
Buying a waterfront home: Cons
A lot of the extra cost of a waterfront home is in the dirt itself — the lot you buy. The more prime the location, the more you’ll pay.
Cost isn’t the only downside of buying a waterfront property. There are other potential pitfalls, some of which you might not be aware of until it’s too late. For example:
- Added regulations – Many new waterfront homeowners don’t realize that they’re going to be subject to specific rules. Depending on your area, there may be a coastal commission or other organization that may restrict what you can and cannot do to the house in terms of increasing the size of the home or renovating it.
- Climate change concerns – Many are starting to worry about the potential impact of rising water levels on waterfront communities.
- Homeowners insurance costs – Homeowners insurance for waterfront properties can be more expensive, but it depends on the type of water you live on. For example, a lakefront home in Sugar Land, Texas won’t have the same insurance premiums as a home in The Woodlands, Texas, where hurricanes are not uncommon and the risk of wind damage is higher.
- Flood insurance – Waterfront homeowners in some areas must carry flood insurance, which can be expensive, and sometimes isn’t available in the area at all. If you’re financing the purchase, it may kill the deal. If your lender requires flood insurance and you’re unable to obtain coverage from an insurer, your mortgage application will be rejected.
Tips for buying a waterfront home
There are a few additional factors to weigh when considering purchasing a waterfront home that aren’t an issue when you buy a landlocked home. Location is important regardless of where you buy, but it becomes more specific when searching for waterfront property.
Some boaters are interested in deep-water fishing while others are interested in off-shore fishing near their home or going to waterside restaurants. Therefore, the distance to the channel and length of a cruise to the destination is something important to consider. You’ll also need to remember that the purchase price of the waterfront property is only the beginning. You’ll need to research homeowners insurance costs, and if the property is in a flood zone, that will add to your expense. Special maintenance that’s necessary for waterfront homes could also be costly. Finally, don’t underestimate how much you could wind up spending on furniture and other extras to enhance your enjoyment of your waterfront home. Plan on spending a tidy sum for outdoor furniture that lets you soak up the fresh air and views, water toys such as Jet Skis and other extras.
Why are waterfront properties more expensive?
For many of the same reasons waterfront properties tend to be better investments, the cost of purchasing tends to be higher. They’re in higher demand, so there are more people willing to pay more for them and their locations are usually premium ones. This can result in you having to outbid other potential buyers to get them. In addition to these real estate tenants of location and demand, there are some additional costs associated with waterfront property that can make buying them more expensive. For example, there are often different types of insurance required when buying on the water like wind insurance, water insurance and general hazard insurance, to name a few.
They also often have a homeowners association (HOA), which means monthly dues need to be entered into the equation. In addition, HOAs as well as government agencies can regulate what you can and can’t do with properties, especially on the waterfront, so future costs associated with these rules and regulations need to be accounted for as well. Costs associated with your mortgage can be different as well, so research that in the beginning before you fall in love with that beautiful lake house.
How Do I Sell My Waterfront Property?
Many of the key factors in selling any property like presenting it well, pricing it right, understanding the best time of year to sell and selecting the right agent also apply to waterfront properties. However, there are a few elements to pay closer attention to when selling on the water. Here are a few of them:
- Accentuate the views: Quality photos and videos are critical to selling any property, but even more so with waterfront. Make sure to include those breathtaking sunsets and boats spotted across the bay when listing your home.
- Pay attention to the staging: Whether doing it yourself or hiring a professional staging company, make sure the fun and exciting parts of owning a waterfront home are on display. Put some wine glasses next to those deck chairs and sprinkle a few kayaks on the beach. With waterfront, you are selling a lifestyle, not just a home.
- Make the shoreline or dock accessible: When thinking about buying a waterfront home, people like to envision themselves meandering from the house down to the water. Make sure the path is clear and clean so potential buyers can make this trek during a showing.
- Massive curb appeal: Curb appeal is critical to selling any home, but with waterfront properties, you have a 360-degree curb appeal that goes as far as the eye can see. In addition to making the front look inviting as you would with any home, make sure the back is just as pristine and maybe even consider doing some beach combing and cleaning before showings.
Now that you know what to look for and the right things to consider, you can contact our Realtors searching for that waterfront property of your dreams and putting the right mortgage in place to snatch it up. Before long you’ll be firing up that Jet Ski, putting on that snorkel, raising those sails or just sliding into that deck chair with a drink and book in hand.
Find other housing types:
- Condominium – Condos appeal to those looking for a lower-maintenance living, home with a sense of security, opportunities to be social with neighbors, among other factors
- Townhouse – Townhouses are a particularly good option for first-time homebuyers or other budget-minded home buyers who want more space than typically afforded in a condo
- Single Family Home – Single-family homes are best for families who prefer a huge yard and plenty of room to spread out. Others still prefer a low-maintenance condo or townhome that includes benefits like landscaping, snow removal and exterior maintenance.
- Multi Family Home – Multi-family homes are best for those who are interested in getting into real estate investing and are comfortable with the added responsibility and time commitment that comes with being a landlord.
- Patio Home – Typically capped at one-and-a-half stories and part of a larger association, patio homes are best for homeowners who don’t want to deal with stairs or maintenance.
- Waterfront Home – Waterfront means the area of water which is immediately capable of use from the land, together with the area of land adjacent to the water, which is necessary to allow use of the above area of water