Buying a beachfront or waterfront home may be your ultimate dream. There’s a lot to be said for a beach house. You can enjoy tranquility and natural beauty, a potentially appreciating asset, and it’s something that your entire family can enjoy.
You might be able to earn rental income that will cover your yearly expenses as well, so it’s a good investment in the short- and long-term in many cases.
At the same time, there are considerations when buying a beachfront property, especially one that’s waterfront. It’s a big decision, without a doubt.
The following are some of the things you should know before you buy beach property.
The Costs of Borrowing
To buy a beach house or one that’s on the water, particularly in a high-demand resort area, is going to be substantially more expensive than buying a home that’s similar in size and other features but is more inland.
Mortgage interest rates for a vacation home are typically more than they are for primary homes, and that can impact the quality of your investment quite a bit.
The difference can be hundreds of dollars each month.
You have to be realistic about your budget, and when it comes to a vacation home, start slow. Think about not just what you dream about having but what you can truly afford. Be realistic with yourself, and try to find locations that maybe are more reasonable in terms of cost.
For example, instead of a home in Destin, maybe you opt for somewhere close but less expensive, like Panama City Beach.
Energy Costs
In addition to your monthly payments consider the monthly cost of utilities including energy bills. Bigger houses will result in higher bills for heating and electricity. One way to reduce your energy costs is to add solar panels from a company like Blue Raven Solar.
Additional Maintenance
When you’re buying a home near the sea, you’re going to have to add the cost of additional maintenance to your budget.
Homes near the coastline are going to take a beating from winds, rainfall, humidity, and heat. The moisture can quickly cause damage to rental property as it is, and if it’s located beside the ocean, you can count on that being amplified.
Natural Disasters
If your property is right on the beach, the upside of this is that you’re going to have better resale values, plus you’re going to get the enjoyment from it, and renters will find it more appealing. The downside is that it’s going to be more affected by potential natural disasters.
You might also have to pay higher HOA and insurance fees.
If you think the additional cost is worth it to you, then maybe you do buy near the ocean—otherwise, moving just a few blocks away can still give you a great experience but will protect you a bit more from the elements.
Taxes
A lot of beach and resort towns have high property taxes, and the closer you are to water, the more you’re likely going to pay. Property taxes also go up over time. Even when your home value declines, you might still see your property taxes rising. Can you handle the increases? Will the local rental market offset the taxes going up over time?
Flooding
Along with wind damage, flooding is one of the main culprits of damage that occurs during storms and hurricanes. When you buy a beach house, assess the flood risk. Make sure the property is built with flood-resistant materials.
According to FEMA, materials should include concrete and wood that are naturally durable. Homes made of concrete are best able to withstand heavy rain and high winds.
The windows and roof should be strong and durable as well. For example, the windows should be high-impact.
Is the home located in a high-risk flood zone? Even if it’s not, you’re probably still going to need to buy flood insurance.
Ideally, the house is built on a hill or an elevated slope to protect against possible flooding.
Some properties will legally require you to have flood insurance, but even if you don’t have to, again, it’s a good idea. Nearly 20% of flood claims come from zones that aren’t in the risk areas.
Finally, if you’re buying a coastal home that you hope to rent out, there will be even more considerations to keep in mind. You have to calculate whether or not it will be a good return on your investment. In doing these calculations, think about maintenance fees, taxes, and property management fees.
If your house is in an HOA community, you have to ensure they’ll even allow you to rent. A lot of HOAs have very strict rules about renting out houses. Even if you’re technically allowed to rent it out, some renters might be scared away if there are strict regulations.
