If you’ve been considering expanding your portfolio, you’ve heard about the advantages of adding real estate to your list of options. However, the category of “real estate” has many various possibilities under its umbrella.
The type that you should invest in depends on the goals you have for your property. Do you want to live there or rent it out? Is it intended to be a second home, or is it your primary residence? Would you prefer to invest in commercial buildings or residential property? All of the answers to these questions matter and can point you toward the best real estate for you to add to your portfolio.
For many wealthy people, waterfront property in coveted places like Camp Bay, Idaho, is the pinnacle of their portfolio. But when you have downsides like potential storms or higher insurance rates, what continues to attract people to homes on the water?
In this blog, we’ll explain the benefits of waterfront property and offer a general overview of why wealthy people consider this real estate the ultimate in homeownership.
First, What Is Waterfront Property, Anyway?
When you picture waterfront property, what do you see? By legal real estate and insurance definition, this type of land is near or close to any body of water (including rivers, ponds, lakes, and oceans). The property may or may not have buildings or a section of town on it.
Insurance companies often define waterfront property as land where the property line extends to the mean high-water mark of a body of water if tidal, or the ordinary high-water mark for water that doesn’t have a tidal body. In other words, the property must touch water at its highest typical level.
This definition is crucial because when you’re taking out insurance on your property, access to a body of water matters. If there’s direct water access, you have flood risk considerations. Waterfront property is considered high-risk, so you’ll likely need an additional flood insurance policy. Flood risk depends on the elevation level. Waterfront property owners can receive an elevation certificate that details the elevation in relation to the flood base. The higher the elevation, the lower the flood risk — and, usually, the lower the insurance premium.
Benefits of Waterfront Property
Why would anyone want to own property when the insurance premiums and dangers of flooding are so substantial? The answer lies in the many advantages to this scenic and often peaceful land.
In addition to the possible resale values of waterfront land, this type of real estate is highly coveted. Factors like the following advantages continue to place this property in high demand, despite the pitfalls.
● The scenery is often majestic. Depending on where the property is, views of the lake, ocean, or other body of water can be peaceful and beautiful. You might even see various wildlife in your backyard. Birds and fish are definite visitors, but your area could be prime for other animals.
● Property appreciation rises. Unlike other property values that can decrease quickly, waterfront land typically stays the same or rises.
● It’s good for your health. Living on the water has many health benefits, such as decreased blood pressure, improved rest, and better air quality.
The benefits that come with your waterfront property will depend on where it’s located, but no matter where you live, you can be sure that you’ll have scenic views and the opportunity for relaxation.
The Downsides of Owning Waterfront Property
Owning valuable objects coveted by others is something many wealthy people have in common, so it’s no wonder that waterfront property is on the list of must-have possessions.Yet, in addition to insurance premiums, there are a few other downsides to be aware of before choosing to invest in a home in close proximity to the water.
For instance, if you plan on using the body of water to indulge in recreational activities, you’ll want to check the water quality first. Is it safe for swimming, skiing, and kayaking? Are you permitted to use a boat on the water? Review those rules, and if your goal is to build a dock or store a boat on your property, you’ll need to check the regulations in your area. Permanent fixtures, such as docks, will likely increase your insurance policy.
If your home is on the ocean, you’ll want to consider how the seawall or bulkhead is situated. Without a barrier between your property and the waves, you’re at risk for damage from storms.
Know What You’re Getting Into Before You Buy
There’s a reason why waterfront property is usually reserved for the wealthy. In many cases, the expensive part about buying a home on the water isn’t the property. It’s the extra costs that come with it.
Waterfront property in coveted locations, particularly popular tourist destinations, is going to be pricier than a comparable piece of property in a lesser-known area. If you buy on a barrier island, you have the extra expense of needing to have an evacuation plan or shelter-in-place provisions, including a generator and excess fuel. You’ll also need a way to get to the mainland when you need to restock or want to go shopping or eat at a restaurant.
Other costs include maintenance for the waterline to keep your beach weed-free and ensure that regular erosion isn’t reducing the protection between your home and any barriers. You may need to replace your outdoor furniture frequently, and if you’re an activity lover, those paddleboards, kayaks, boats, skis, and other fun accessories aren’t cheap!
Pricey — But Worth It
Depending on the view and location, waterfront property may be worth the extra expense. However, you have to have the money to invest in the land, home, maintenance, and insurance. This hefty price tag is why homes on the water are usually reserved for the wealthy, and the fact that these houses are so coveted is why the wealthy want them and don’t mind paying for the extra expenses that come with their new waterfront homes.
Speak Your Mind