We all dream of living peacefully in a quaint, but luxurious house by the lake, but is this a good idea for a real estate investor? The short answer is yes – a certain percentage of buyers are very interested in purchasing a second property away from the noise of the city and they have the funds for it too. More than 50% of the top 1% homeowners intend to purchase secondary property in the following 12 months, so if this is your target demographic, now is the time to act. Waterfront properties seem to enjoy the highest popularity in the US, Canada and Northern Europe, which have a high number of lakes and although they represent a niche market, they aren’t as prone to fluctuations in value. However, as it is the case with all real estate investments, you need to analyze a few aspects in advance, because details such as the location of your waterfront property and the existence of a few home additions can drastically change your return on investment.
Let’s start with the basics: why are waterfront properties profitable?
Waterfront properties combine two of the best things that one could ever look for in a home: views and lifestyle. Usually sought after by people in their early retirement years who have worked their entire lives in executive positions, waterfront properties offer peace and quiet. Located right next to dreamy landscapes that reduce stress and can have a number of health benefits, they are a much-needed respite from the hustle and bustle of city life. What’s more, waterfront properties are associated with safe, exclusive family-friendly communities, which is something that many buyers are looking for their retirement years.
Apart from stable demand, high value is another reason why a waterfront property investment would be a good idea. Unlike conventional properties, whose value tends to fluctuate, luxury lakeside properties have been holding up since 2008 and they’re not expected to go down. They’re up to double the price of normal real estate and some of them, located in high-end locations such as Laguna Beach, can reach up to $10 million. Most importantly, these kinds of properties hold their value much better.
Most lakefront houses are sold in the United States and these are also the most expensive: The Hamptons of Long Island, Martha’s Vineyard and Nantucket, Malibu, Newport, Corona del Mar, the San Francisco Bay area, Palm Beach and Naples.
Some affordable options can be found in Englewood, Florida or Downe Township, New Jersey or in gated communities in Auburn, California. However, keep in mind that a successful waterfront property purchase doesn’t need to be in the US. For a variety of reasons, more and more Americans choose to move to Canada: the lifestyle is a little more relaxed, the employment rate is higher and Canadians get more annual vacation days. And what better location to start a new life and enjoy nature than if not near Canada’s stunning lakes? The most properties are situated next to Lake Ontario, but you can also find reasonable priced lakeside cottages in the Lake Winnipeg, Lake Superior and Lake Erie area. Actually, if you want to specialize in the waterfront properties market, then Canada is a great location, because they have an extremely large number of lakes.
The practical challenges of waterfront properties
As a whole, the waterfront real estate market is quite lucrative, but unfortunately that doesn’t mean every investment is a successful one. To increase your chances of success, here are some things you should look at:
- . Distance from a major city center. The preference of the modern homeowner for peace and quiet doesn’t mean that they want to be completely isolated from the world. Your property should still be within a one-hour drive from a city center with grocery stores and modern healthcare.
- . Distance from the airport. Some people can buy a lakeside property as a secondary home, to go there at the weekends or on vacation. Properties that are within a three-hour drive from the airport do better than those that don’t have an airport nearby.
- . Closed, family-friendly communities. People who want to buy a lakefront property value family life and safety.
Last, but not least, because affluent clients don’t want to buy a secondary home just for the sake of the location, it’s very important to make sure the house is structurally sound and has all the necessary improvements for comfort and energy efficiency:
- Waterfront properties are more susceptible to flood damage, which is why you should check the sturdiness of the foundation and safeguard the house.
- Humidity is higher near lakes and other bodies of water, which could lead to paint cracking. Both interior and exterior paint should be water-resistant.
- Energy-efficiency is very important. Just because a family wants to live farther away from the city doesn’t mean that they want to pay more on bills on deal with the problems of a poorly insulated home. Make sure you add storm window retrofits, change the doors and invest in complete home insulation. That should include not just the exterior walls, but also the roof and the basement, because leaks can occur there. Besides, if your lakeside property is in a colder climate, the insulation will maintain a constant temperature inside, reduce heat exchange and reduce energy bills.