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Purchasing a home next to a beautiful lake or your favorite beach with stunning views may seem like a dream come true. However, your slice of paradise will come with added costs — some that can be difficult to anticipate or plan for.

Penny Lehmann of Coldwell Banker in Cape Coral, Florida, says that, in her state, much of the added cost is in the dirt itself — as in, the lot you buy. The more prime the location, the more you’ll pay.

Also, don’t forget that homeowners insurance premiums can be higher on the water, 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 along the Florida panhandle where hurricanes are prevalent and the risk of wind-related damage is higher.

Fiona Dogan, a top-producing realtor with Julia B. Fee Sotheby’s International Realty in Westchester County, New York, also warns that homeowners in some areas must often carry flood Insurance, which can be extremely expensive or not available.

“If you’re financing the purchase, it may kill the deal,” she said. If the lender requires flood insurance and you’re unable to obtain coverage from an insurer, your mortgage application will be rejected.

Some waterfront homes may also need special finishes and storm proofing, such as impact windows, which can be also be pricey, she added. And should the waterfront area experience a significant storm, homes may need extensive — and expensive — repairs.

The cons of buying a waterfront home

But cost isn’t the only downside of buying a waterfront property. There are other potential pitfalls to be aware of as well, many of which you won’t fully understand until it’s too late. For example:

  • Added regulations: Cornelius Charles of Dream Home Property Solutions, LLC says that 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,” he said.
  • Lack of privacy: Waterfront homes are normally 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.
  • Climate change worries: James McGrath, founder of real estate resource Yoreevo, says that many consumers are starting to worry about the potential impacts on waterfront property if water levels rise.

The pros of buying a waterfront home

Despite any potential downsides, homeowners still covet waterfront properties for a multitude of reasons. For many, it all boils down to enjoyment, lifestyle and amazing views.

Robin Kencel, a top broker at Compass in Greenwich, Connecticut, says that hardly anyone would argue with the fact that living on the water is relaxing.

“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,” she said.

Other benefits include:

  • Strong potential for appreciation: “Waterfront properties are typically those that see the highest appreciation,” said Kencel. “This is certainly true in Greenwich where our highest sale of 2019 was a waterfront home that sold for $48 million.”
  • Investment potential: Charles noted that, in today’s Airbnb and self-rental environment, waterfront homes have stronger rental potential than homes without a water view. Rents can also be significantly higher, making it easy to cover your holding costs and even turn a profit.
  • Permanent views: When you buy a home in an area still under development, you may not know what your view will be in 5, 10 or even 20 years. However, waterfront homes get a premium because their views are about as permanent as they get, said McGrath. “The rule in New York City is  unless you’re on the water or a park, you can’t count on a view forever,” he said.

Tips for buying a waterfront home

There’s no right or wrong decision when it comes to buying a home along the water, but experts say there are a few additional factors to consider that aren’t a problem when you buy a landlocked home.

Location is important regardless, but it becomes “more specific” when searching for waterfront property, says Coldwell Banker’s Lehmann.

“Some boaters are interested in deep-water fishing while others are interested in off-shore fishing near their home or going to waterside restaurants,” she said. “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 price of the waterfront property you plan to bid for is only the beginning. You’ll need to research insurance costs, if the property is in a flood zone that will add to your costs. Other types of maintenance required for waterfront homes may also be costly.

Finally, don’t underestimate how much you might wind up spending on toys to enjoy your new waterfront home — and we’re not just talking about boats. Plan on spending a pretty penny for outdoor furniture that lets you soak up the fresh air and views, water toys like jet skis for visiting neighbors, grandchildren and friends, as well as tools for entertaining. Your waterfront views may be well worth it, but the costs will add up in a hurry.