Waterfront homes in France.

Everything You Need To Know About Buying A Lake House, Or Any Waterfront Property

Scott Steinberg8-Minute Read
October 07, 2021

Buying a lake house can be one of the most rewarding real estate and vacation home investments that you can ever expect to make. Potential financial upside notwithstanding, purchasing a waterfront home can help provide you with a perfect leisure time getaway for the entire family, and serene space right in your backyard.

What is a waterfront property ultimately worth to your household, though? Should you buy a lake house? And what questions do you need to ask when buying waterfront real estate? These are all valid questions to consider when buying a lake house and, luckily, we have the answers.

When is Property Considered Waterfront?

What is a waterfront property? It’s an important first question to ask when buying a lake house – and one with answers you should be aware of before deciding whether it makes sense to pay a premium for a vacation property such as a waterfront home.

To keep things simple, it may help to know that a waterfront property is a real estate holding that sits on land that rests at the edge of a body of water. However, while waterfront homes often come with many perks – like easy access to a beach or lake, beautiful scenery and the ability to enjoy myriad aquatic activities from swimming to boating – not all are created equal.

For example, beachfront property refers to land that you’ll find located on or next to a beach. But you also have to ask yourself: Is it a quiet and serene private beach that you’ll be accessing, or will your home be sitting adjacent to a louder and more crowded public beach locale? Does your soon-to-be backyard back up right onto soft, powdery patches of warm sand, or might you be looking at a back porch that quickly gives way to a rugged expanse of rocks, shells and seaweed instead? Likewise, if you’re wondering if you should buy a lake house (which sits adjacent to a lake, naturally), you’ll also want to consider if the water is suitable for swimming or choked with weeds. Of course, in either case, if you plan on getting out on the water, you’ll also want to consider if there’s a suitable space and room to dock a boat, park your jet skis, and otherwise house supporting equipment.

In other words, although it’s a great start, simply because a piece of real estate qualifies as waterfront property doesn’t mean that it’s going to be the right fit for you straight off the bat. As ever, it pays to do your research.

Along similar lines, it’s also important to note: For purposes of reference, the waterfront area of a town or city is the area that sits alongside a body of water, such as a nearby river. But while waterfront property is often met with higher demand (and often commands higher fees) in the real estate industry, again – not all waterfront districts are as well-kept or desirable as others. A little upfront planning and on-site touring can help you get a feel for both the property and surrounding area, and is well worth engaging in.

Is a Lake House a Good Investment?

Is buying a lake house a smart investment? It all depends on why you’re looking to acquire the real estate, and to what use you plan to put your waterfront property to. By way of example, regardless of how much financial value such a home stands to accrue over the years, remember this: if you plan to make it a regular hangout that helps alleviate stress and fight off burnout, or it leads to countless family memories and lazy weekends spent by the water, then its value may be considerably more in the eyes of your household.

That said, the short answer is that waterfront properties generally tend to appreciate in value over time more than houses that sit on drier land. If you manage to find a good deal on one and purchase a lake or beach house at a good price, odds are you’ll stand a fine chance of turning a profit later when you choose to sell. Because of their general desirability and picturesque scenery, waterfront properties also tend to command higher prices at rental. In effect, even if you only choose to live in a waterfront home part time and rent it out to tenants (whether on an overnight, monthly or annual basis) for the rest, you stand to come out ahead.

After all, real estate property value is heavily influenced by location, and waterfront homes (which may frequently be considered luxury purchases) are typically situated in enviable locations. So if you’re ultimately asking should you buy a lake house, especially one that’s situated in a prime location, for investment purposes, it may not be a bad idea. Of course, this is as long as you can afford the mortgage payments, keep up with your expenses and meet the minimum credit score, debt-to-income (DTI) ratio, and down payment requirements associated with obtaining a home loan.

Mind you: As with any form of real estate purchase, an investment in waterfront property comes with no financial guarantees attached. On the flip side, as it often does come with a great location and view, buying a lake house or beach house generally offers greater opportunity for profit when compared with investing in more landlocked residences.

Are Waterfront Homes More Expensive?

Yes, typically. Between offering an array of amenities and perks, and being situated at prime leisure locales, waterfront properties are generally in higher demand amongst buyers, and therefore tend to command a higher purchase price overall. This may mean having to pay a higher price to buy a beach home or lake house if you decide to add one to your real estate portfolio. In fact, it may even mean having to outbid other prospective homeowners to secure one, with more and more people nowadays looking to move to scenic escapes following the rise of the COVID-19 pandemic.

Costs associated with maintenance and upkeep of waterfront properties can also be higher to boot. In addition to weathering greater wear and tear due to natural conditions, their proximity to water and moisture may also render them prone to the need for added monitoring or repair. Buying a lake house or beach house may likewise also require you to take out additional insurance policies, such as wind insurance, water insurance, and general hazard insurance, or policies which cover the threat of flooding. It’s not uncommon for waterfront properties – especially beachfront properties, which may take the form of condos and apartments – to come with monthly homeowners association (HOA) dues attached as well.

Note that HOA members must also adhere to specific rules and regulations that, in addition to those imposed by government agencies, may also mandate what you can and cannot do with your waterfront property. Costs and requirements associated with obtaining a home loan on a waterfront property may additionally be larger, given the heightened risks that they present in the eyes of financial lenders. Before buying a beach or lake house, be sure to study up on all fronts so that you can get a better sense of any costs associated with owning a waterfront property, and any restrictions that you may be operating under.

Pro tip: If you’re buying a lake home or beach house as a vacation home, financing may come with more stringent requirements attached as well. For example, it’s not uncommon for second home purchases to require a larger down payment than primary residences, including up to 30% down upfront depending on your credit history and DTI ratio.

What Should You Consider Before Buying or Selling a Lake House?

Owning a lake house or beachfront property isn’t like owning a home in a city or suburb. In addition to typical maintenance and upkeep needs, you also need to account for any additional upkeep that may be needed due to heightened elemental exposure, and any travel time associated with visiting these often somewhat-remote locales.

For Home Buyers

If you’re considering buying a waterfront or lake home, you’ll want to start by considering what’s most important to you. For instance: Are you looking for a waterfront property that offers spectacular views, relaxing spaces to sun yourself or swim in or a move-in ready home or pad that comes with a built-in boat dock?

Lakes and beaches aren’t always the easiest spots to get to, or ones that are most surrounded by the trappings of civilization either. Bearing this in mind, you also need to consider how far out you may need to travel, how easy your general access to supplies and stores will be, and how frequently you might visit your property.

In addition, you’ll want to think about how much more you’re willing to pay for the privilege of being on the water, especially given skyrocketing demand for beachfront and lakefront holdings. That means also having to think about how to finance the purchase; what type of loan term, interest rate and mortgage type you’d prefer; and how much you can afford to offer a potential seller, especially in the case of a bidding war.

Don’t forget to factor in hidden costs such as heightened maintenance or insurance expenses when considering a purchase here. You may also incur added costs if your waterfront property is a second home that must be looked after by a caretaker in your absence during extended periods throughout the year.

For Home Sellers

If you’re considering selling a lake house, it’s important to be aware of what price homes of similar size and stature have sold for over the last 6 – 12 months in your area. In addition to making sure you’re properly priced to stay competitive, it’s also important to stage and present the property well and know what time of year is best to put the property on the market. If you’re uncertain about any of these topics, speak with local REALTORS® and homeowners in the area to find out more or reference popular online home rental and sale websites for additional information.

What’s more, when marketing your property, keep in mind that it’s important to put the best aspects of the home on display. That likely means having to stage your beach or lake house to accentuate the best parts of owning a waterfront home. For instance, not only will you want to showcase the property using high-definition photos and videos that capture breathtaking sunsets, lapping waves and boats at sail, you’ll also want to setup deck chairs, kayaks, boats, fire pits, outdoor tables and any other useful touches or accessories (like a bottle of wine and drinking glasses) that help accentuate the property’s overall atmosphere. In effect, you’re selling a lifestyle as much as an actual residence – and that means promoting added curb appeal.

If you have a boat dock on your property, it’s important to make sure that it’s clear and well-maintained, as are any pathways leading to it. Similarly, you may also wish to clean up front or back lawn areas, prune any bushes, pull weeds and tidy up any beach areas prior to showings.

The Bottom Line

Can’t wait to enjoy the sound of waves lapping while you kick back on a deck chair and recline with a glass of wine in hand? Ready to hoist your sails and set off for a day of sun, fun and adventure? Now that you have a better idea of what to look for and consider when buying a waterfront property, you’re well on your way to buying the lake house or beachfront home of your dreams.

To start your search for the perfect place to rest your flip-flops, you can begin browsing the many houses for sale listed at Rocket Homes®. It won’t be long before you find the right spot – and distant friends and family members “mysteriously” start getting back in touch. Which, depending on how you look at it, is just another perk (or hidden cost) of buying a house on the water.

Scott Steinberg

Hailed as The Master of Innovation by Fortune magazine, and World’s Leading Business Strategist, award-winning professional speaker Scott Steinberg is among today’s best-known trends experts and futurists. He’s the bestselling author of 14 books including Make Change Work for You and FAST >> FORWARD.