Your guide to buying waterfront property

Buying a home on the waterfront is a dream for many. Whether it's a lake house after you retire, a holiday home next to the beach, or a rural family home with a large pond, living close to the water can improve your quality of life and add value to your property portfolio. Before you dive into the deep end, however, it's important to realize that not all waterfront properties are the same. While this might sound obvious, where you buy will have a huge impact on your mortgage, your budget, your equity, and your lifestyle.   

While purchasing a waterfront home is similar in most ways to other forms of housing, there are some key considerations that need to be addressed. From legal and budget considerations through to construction materials and flood insurance, waterfront properties provide a range of opportunities and present a number of challenges. Let's take a detailed look at the different types of waterfront properties available across North America, and give you some tips on how to buy and look after your new home.

Types of waterfront property

The term 'waterfront’ refers to any property that has a direct connection to a body of water. This can be an ocean, a sea, a lake, a river, or a stream. In some cases, the term is even used to describe rural properties with large ponds or dams. Waterfront homes present a number of unique challenges, so it’s important to do your homework and get your facts aligned so you can make an informed decision.

Beach house

When many people think of a waterfront property, a beach house is the first thing that comes to mind. While actual seafront property can be quite rare and expensive in North America, there are lots of examples of beach houses on the Atlantic and Pacific coasts.

A beach house makes for an ideal holiday home, with people often renting out their property to holiday makers or visiting sporadically throughout the year. With the coastline getting busier all the time, buying a beach house in a quieter location can also be a great way to build equity for the future.  

Apartment on the ocean

If a house on the sand dunes seems a little far fetched for your budget, there's always the option of buying an apartment next to the ocean. Condos exist up and down the American coastline, with Florida and California the two most obvious hot spots. While you can always rent a holiday apartment, buying a condo provides you with complete control over your investment and an opportunity to build equity for the future.

Condos on the beach are incredibly popular with young people and retirees, with communities often designed for a particular market demographic. While you always need to account for monthly fees to the homeowners association (HOA), living in a condo allows you to access a range of amenities and live your entire life like it's a vacation.    

Lake house

A house on a lake is the dream of many, with this gentle and beautiful way of life especially popular in the United States and Canada. While lakeside homes are often purchased by people after they retire, there's an increasing trend for young families and couples to move out of the city and enjoy a simpler and slower pace of life.

There are fantastic lakes across North America, from Lake Lanier in Georgia through to Lake Pend Oreille in Idaho and Lake Chelan in Washington. Many of these lakes are up north, with the Great Lakes on the Canada–United States border making up 20 percent of the Earth's available surface fresh water.

Rural house with water

Whether it's a family home with a running stream, a farm with a working dam, or a house with a pond, buying a rural property with access to water can be a great way to improve your lifestyle. Homes in rural locations are often considerably cheaper than those in cities, which means you have extra money to spend on renovations, vacations, and hobbies. Not all waterways are created equal, however, so make sure you find a place with fresh, clean, and safe water where you can swim, paddle, and enjoy yourself.

10 tips on buying waterfront property

1. Choosing the right kind of water

While it might sound obvious, choosing the right body of water is the first, and most important, decision that you'll have to make. Living next to the ocean is completely different to living next to a lake, with each person needing to weigh up their own personal preferences with the costs and restrictions involved. Just because you love the beach one week a year doesn't mean you'll be happy sweeping sand from your floors for the rest of your life.   

2. Research the water body

Whether you're buying a lake house or a beach hut, buying close to a water body opens you up to a number of potential dangers and unwanted expenses. Shorelines can change dramatically when storms hit, water and dirt don't always mix in constructive ways, and rising water levels can make your entire home disappear through sand erosion. Always research the history of the water body in question, factor in climate change, and be extra careful when you're dealing with new properties.

3. Lifestyle and the weather

Location should play a critical role in every real estate decision, not just because it influences costs but also because it has a huge effect on your lifestyle. The weather in each location should be a key concern, especially if you're thinking about buying property in a far flung location. While the sunny weather of Florida and Southern California may be great for a holiday, not everyone will be able to manage the heat and humidity on a full-time basis.   

4. Look at the property, not just the home

Perhaps more than any other type of home, it's important to look into the property along with the house itself. When you're buying close to water, the land itself often has more value than the bricks and mortar that rest on it. Whether you're looking for a new home, a way to generate rental income, or a way to build equity for the future, focus on the property itself and the surrounding area. While you can always fix a broken home, you can't change the block itself.   

5. Building materials and restrictions

When you're buying close to water, it's particularly important to consider the building materials used during construction. Salty sea air can cause major problems if you're not careful, as can mildew and mold issues from moisture in the air. You should also look into possible building restrictions, with many waterfront properties residing in communities with regulations or subject to legal restrictions which prevent further development.

6. Get help from the experts

When it comes to real estate, you should never try to do everything yourself. This is especially true when it comes to waterfront properties, which are a niche field which benefits from local knowledge and expert advice. A real estate agent who specializes in waterfront homes and land will be able to help you with title issues, structural issues, and how the property has reacted to wider economic trends. Due to the legal complexities of waterfront properties, it's also a good idea to consult a lawyer before making a purchase.

7. Understanding supply and demand

Having a basic understanding of property growth in relation to supply and demand should be a prerequisite for any property deal. This is especially true for waterfront properties, which often move with a slightly different rhythm to the rest of the market. While you still have to look into historic growth rates, time on market, auction clearance rates, and housing supply levels, you should also be analyzing supply and demand in relation to waterfront properties and specific waterfront locations.

8. Look into insurance

As you might expect, waterfront properties often have an increased risk of flood damage, with additional insurance coverage often needed. Some beachfront homes are also at a much greater risk of storm damage, hurricanes, or even earthquake damage, so you need to do your homework and factor insurance costs into your final decision. In extreme cases which involve erosion or severe flood risk, standard home insurance may be cost prohibitive or completely unavailable.   

9. Consider any hidden costs

When you're living on the water, there are other hidden costs to look into other than insurance. If the home has a dock, make sure the dock has a permit and find out how much it's going to cost you. Boat dock and lift fees can be very expensive in some communities, with water and sewer rates also more expensive compared to standard homes. Lake properties and other waterfront homes may also be subject to higher property taxes, so don't forget to research local laws and tax rates or consult with an accountant.

10. Check your mortgage options

While it might go without saying, getting a mortgage is often the most difficult part of buying a new home. Waterfront properties come with additional challenges when it comes to finance, with many lake homes involving a leased lot rather than a standard purchase agreement, some condo communities providing financing challenges, and waterfront properties often on the high end of the price spectrum. If you want to buy property away from your present location, it's also important to research lenders and mortgage requirements in the area.

Talk to a specialist realtor

If you're thinking about buying a place next to water, you need to consult with someone who has experience with waterfront properties. If you're moving to a lifestyle hot spot such as Florida or one of the popular Great Lakes, this can be surprisingly easy. If you're thinking about moving to a less popular location, it may be necessary to visit multiple agents or speak with the locals to get recommendations.  

Many real estate agents in popular sea-change and tree-change areas will specialize in waterfront properties. An online search can also help to connect you with the experts, with some high end agencies servicing multiple locations and able to help you with a nationwide search. Not only will they be able to find appropriate properties for you, they can also help you with legal issues, structural issues, and advise you about the state of the local market.

Talk to the neighbors

As helpful as the experts can be, sometimes the best advice and information comes a lot closer to home. Before purchasing a home or even creating a short list, it's important to spend some time on the ground and speak with the locals. Whether it's the people in the surrounding streets or the people directly next door, your neighbors are likely to have important insights into the community, the water body, the property values, and lots of other issues that may affect your decision.

With so many waterfront homes existing in condos or gated communities, it's very important to research the rules, regulations, and costs of the HOA. While meeting the board is a good way to learn quickly, talking to the neighbors can be a great way to get unbiased information and advice about the wider community. Are the amenities being maintained? Is the lake healthy and being looked after? Is the shoreline suffering from significant erosion or storm damage? Asking a few important questions early in the process can help you make the right decision for you and your family.

Construction considerations

Whether you're buying an apartment, a small shack, or a large house, construction issues are always important when it comes to waterfront properties. From the materials used through to restrictions on renovations and ongoing maintenance costs, there are lots of factors to consider. Best building practices for waterfront homes include the use of waterproof materials on the exterior of the building, the installation of correct roofing materials to handle extreme weather, and the use of high-end fittings to avoid rust.

Dedicated equipment is needed to ensure safe and effective construction, including water resistant wraps, tapes, and caulks for susceptible areas to ensure the home is safe from damage. If you're thinking about buying a lake home, learn about aquatic invasive species (AIS) and whether they are relevant to your location. Has an AIS has been identified on your lake or waterbody? Has the existence of this AIS been accounted for during the construction process?

Beachside homes require extra attention to limit the damage caused by salt water and salty sea air, including extra protection for the windows, the use of galvanized metals on the building exterior, and the architectural design of homes to limit exposure from high winds. While there are lots of things you can do to look after your home once you've moved in, if the home wasn't designed for the waterfront in question, it will always be an uphill battle.  

Building restrictions

Many waterfront homes will come with restrictions, including practical building restrictions and regulatory restrictions related to the proximity to the waterway. This is particularly true for homes in existing condo communities, where any alterations to the exterior of the home may need to be approved by the HOA. Whether it's a simple renovation or an additional structure on the property, it's best to be aware of all possible building restrictions before you sign a contract.

For example, you may not be able to build the dock or seawall that you imagined, or conduct detailed landscaping down to the water's edge. Building restrictions can have a negative impact in multiple ways, not just stopping you from using your property how you envisaged but also leaving you with expensive fines and legal costs if you're not careful. You can go to your local government website to look into permit information, and visit your local HOA to check their rules and regulations.

Maintenance costs

Waterfront properties require more maintenance than standard homes, with hard work and money both needed to keep them fresh and safe. This can be a considerable issue for many people, especially if they've moved into a waterfront home after retirement to enjoy a slow and relaxed pace of life. At the very least, you will need to spend additional time and money drying and storing your property, sealing your decks and outdoor furniture, cleaning your windows, and dealing with issues like corrosion and mould.

Hidden costs and considerations

Leased lots

Lake homes and other waterfront properties often involve non-traditional purchase arrangements, with leased lots common even when a standard mortgage is taken out. In this situation, the local or national government retain ownership over the lake itself, with the property owner actually purchasing a long-term lease which gives them the right to use the land for a set period of time. Depending on the location and property in question, a leased lot can range anywhere from $200 to $500 or more per month.

Property taxes and legalities

Property taxes can also be different for waterfront homes, especially if the house is going to be used as a second home. Property tax rates vary considerably between states, so don't forget to do your homework. If you rent out your lake or beach house, you may be subject to income tax on all the money generated through rent.

Other than property tax, there are other important legal issues to address, including zoning, riparian rights, and public access. In many lake homes, your property will not go all the way to the water's edge, with a zone left for possible public access, a promenade, or even a future roadway. You need to be aware of these issues before you sign a contract.

Insurance

Due to the challenges and potential dangers of waterfront living, insurance can also be a considerable expense. Rather than relying on a standard homeowners policy, it's important to get your property assessed and take out detailed coverage for accidents and injuries, public liability, and flood insurance. Whether it's damage from storms, high winds, floods, or boating accidents, it's important to cover yourself against all of the increased risks associated with waterfront homes and water-based activities. According to FEMA, floods cost Americans about $8.2 billion each year.

Utilities and boat docks

Many waterfront homes are located in rural and secluded locations, which means you often end up paying extra for utilities. While this is unlikely to affect people living in condos, it is likely to affect people living in lake homes and out-of-the-way beachside locations. Many people who have moved from a city to a waterfront home are surprised at just how expensive it is to connect the water, power, and cable.

Ongoing bills can also be much more expensive, especially for things like heating during the winter and air conditioning during the summer. Boat docks are another important consideration for lake folks, with the average homeowner spending almost $3,500 in dock construction.

HOA fees

If your new waterfront home is part of a condo community, it's also important that you account for monthly HOA fees. While not all lake homes and waterfront properties are part of a community, this type of ownership arrangement is becoming more common all the time.

Condo fees are due monthly and designed to cover maintenance of the common areas and assets of the wider community. While it might seem like a burden paying regular monthly fees in addition to your mortgage, condo fees allow you to enjoy your new lifestyle without the significant costs and time expenses typically associated with property maintenance.

Waterfront prices: Atlantic vs Pacific vs Inland  

There are a number of key differences between lakeside and seaside properties, and a number of variations between seaside properties on the Atlantic or Pacific coasts. Before you find your perfect waterfront home, you should sit down and weigh up the pros and cons of multiple locations. Prices vary considerably based on location, as does the weather, the culture, and pretty much everything else.

The Atlantic and the Gulf Coast

Waterfront homes exist up and down the Atlantic and the Gulf Coast, with Florida the obvious hot spot and nearby states also popular. Generally speaking, waterfront homes are more affordable on the Eastern side of the United States, thanks mostly to the large number of options available. According to figures from Realtor.com, the most affordable beach town in America is Atlantic City in New Jersey at $117,500, followed by Keansburg in New Jersey at $125,000 and Gulfport in Mississippi at $154,700. In fact, all of the locations in the top ten were on the East and Gulf Coasts, with multiple locations in Florida, Texas, and South Carolina.

The North Atlantic Coast of Canada is also popular with people who’re looking for a sea-change, with beach towns in Northern Canada generally more affordable, and much colder, than those in the US. Popular hot spots on the more habitable end of the Canadian East Coast include Cavendish on Prince Edward Island, Peggy's Cove on Nova Scotia, and the UNESCO World Heritage Site of Lunenburg in Nova Scotia. The median house price in Nova Scotia is just C$244,400.

The Pacific

The West Coast of the United States features some stunning coastline, which is part of the reason why it's the more expensive option. As you might expect, the cheapest options are up north where the weather is not quite so good, with Port Angeles in Washington recording a median home price of $188,300 and Coos Bay in Oregon recording $166,200. While California is also full of fantastic coastline, it can be cost prohibitive for many. The town of Oxnard is among the cheapest in the state for waterfront living, with this fantastic location between Los Angeles and Santa Barbara practical and relatively affordable at $499,000.

Up north, Tofino is one of Canada's most famous coastal towns, with its captivating scenery and world class surfing destinations popular with land lovers and sea lovers alike. It’s hardly the cheapest location in Canada, however, with an average house in Tofino costing $599,000. Vancouver is the obvious hot spot in British Columbia, with house prices in the City of Vancouver falling substantially over recent years to an average of C$1,756,000 and condos rising to C$740,000.   

Inland lakes

Just like seaside properties, waterfront properties on lakes vary considerably in terms of price. According to the figures from Realtor.com, which were based on home price appreciation from June 2015 to May 2018, the most affordable lake town in the country is Branson, MO, with a median home price of $217,500. Baraboo, WI was second on the list with a median home price of $234,950, followed by Brainerd, MN at $289,950, Traverse City, MI at $327,050, and Gardnerville Ranchos, NV at $575,000.    

Canada has more lakes than anywhere else in the world, with over two million and counting. While many of these water bodies are up north in very cold places, the Great Lakes of North America do extend into Canada. Grand Bend, Ontario, is a fantastic location on the shoreline of Lake Huron, with other popular lake towns including Long Point, Ontario, and the longest freshwater beach in the world at Wasaga Beach. These places can be very beautiful and are often cheaper than their US equivalent.

Regardless of where you want to live, it’s always important to create a short list and compare multiple properties based on the criteria that’s important to you. People have vastly different needs from a property purchase, with some wanting a family home, some wanting a vacation property, and others looking for a way to build equity for the future. While waterfront properties can be challenging and are not ideal for everyone, there are multiple water bodies across North America where you can get inspired, improve your quality of life, and manifest your dreams for the future.