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The pros and cons of buying a waterfront home

Boat on the water in Jupiter Florida
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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.

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,” says Robin Kencel, a real estate agent in Greenwich, Connecticut.

Other positives about buying a waterfront home include:

  • Strong potential for appreciation – “Waterfront properties are typically those that see the highest appreciation,” says Kencel, who notes that the same holds true in her local market. “In 2020, five waterfront properties sold for over $17 million: four on-market and one off-market. Waterfront continues to be in the highest demand.”
  • Investment potential – In the Airbnb and self-rental environment, waterfront homes have higher rental potential than homes without a water view, notes California real estate investor Cornelius Charles of Dream Home Property Solutions, LLC. 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. “The rule in New York City is, unless you’re on the water or a park, you can’t count on a view forever,” says James McGrath, co-founder of New York City real estate broker Yoreevo.

Buying a waterfront home: Cons

A lot of the extra cost of a waterfront home is in the dirt itself — the lot you buy, says Penny Lehmann, a real estate agent with Coldwell Banker in Cape Coral, Florida. 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,” Charles says.
  • Less privacy – Waterfront homes are sometimes in areas that attract a lot of visitors. “This could increase traffic or lead to strangers being around your property a lot more than in a regular neighborhood,” says Charles. Often, waterfront properties extend to the mean high water mark, so during low tide, your beach could actually be considered public property, open to boaters or walkers, for instance.
  • Climate change concerns – There is growing concern about the potential impact of rising water levels on waterfront communities, McGrath points out. Bodies of water also naturally shift due to tidal action, rain or snowfall and other factors, which can change the landscape of your property and increase flood risk.
  • 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 Minnesota won’t have the same insurance premiums as an oceanfront home in Florida, 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, explains Fiona Dogan, a Realtor with Julia B. Fee Sotheby’s International Realty in Westchester County, New York. “If you’re financing the purchase, it may kill the deal,” Dogan says. If your lender requires flood insurance and you’re unable to obtain coverage from an insurer, your mortgage application will be rejected. When shopping for flood insurance, understand what the policy actually covers — it generally only protects the basement and/or ground level, and not personal property.
  • Expensive repairs – Some waterfront homes might need a special exterior finish to protect against salt and sand damage, as well as storm proofing, such as impact windows, which can be pricey. Should the waterfront area experience a bad storm, there might also be the need for extensive — and expensive — repairs.

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. If you’re buying a home on a barrier island, for example, you’ll need to consider your evacuation plan and how you’ll maintain a generator and sufficient fuel.

Likewise, “some boaters are interested in deep-water fishing while others are interested in off-shore fishing near their home or going to waterside restaurants,” Lehmann says. “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.

The bottom line: While waterfront views and access may be well worth it, the costs can add up quickly.

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Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson writes expert content on personal finance, credit cards, loyalty and insurance topics. In addition to writing for Bankrate and, Johnson does ongoing work for clients that include CNN, Forbes Advisor, LendingTree, Time Magazine and more.
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