It is a well-known fact among real estate investors that certain types of properties are much more sought-after than others. And in the luxury market, waterfront properties, such as lakeside or oceanview homes, command a much higher demand compared to inland properties.
But are these waterfront homes really a good investment? If so, what are the reasons for such high demand?
Let’s dive into this article and find out.
Top 5 Compelling Reasons to Invest in Waterfront Homes
Owning a lakeside or an oceanside home has long been considered one of the most secure forms of investment, and for very good reasons.
Whether you’re looking for a vacation home or a property with strong rental appraisals, this type of property should always be your top priority. That’s because these waterfront homes have many compelling benefits.
Here are the top 5 reasons why waterfront homes are seen as a smart investment:
1. The Allure of Scenic Views and Lifestyle Opportunities
Buying a waterfront home is much more than just buying a property.
You’re getting the unmatched, most breathtaking views money can buy. Some come with a panoramic view of the ocean or lakes, something that’s a far cry from the obstructed view of a suburban home.
Such a unique and mesmerizing aspect contributes to a higher quality of life for the residents.
Furthermore, there is a certain prestige that comes with owning a waterfront home. You get to be a part of a premium community, which offers certain exclusivity that other properties don’t.
There’s also a matter of privacy as most waterfront homes are usually tucked away from the nearby suburbs.
2. Higher Property Value Appreciation
Most real estate investors gravitate towards waterfront homes due to their exceptional resale value.
The reason for this is simple; supply and demand.
There’s barely any suitable lakeside/oceanside land for new development. This severely limits the inventory for waterfront properties.
Such scarcity drives up the value of waterfront properties over time, especially in popular areas. Whether you're considering selling or long-term ownership, a waterfront property is more likely to hold and even increase its value over time.
For example, the waterfront homes in West Palm Beach, FL saw a staggering price hike of 171%, going from $1.65 million to around $4.48 million on average. (Source: Realtor.com)
And since investors usually look for long-term value growth, purchasing a waterfront home is an ideal choice for a strong return on investment (ROI).
3. Strong Rental Demand
Vacationers have a special kind of attraction for properties with close proximity to water.
Moreover, people are often willing to pay a premium for access to beautiful views and a luxurious lifestyle experience. This provides a solid opportunity for property owners to generate substantial rental income.
Based on the data provided by Apartments.com, waterfront homes generate around 20-50% more rental income compared to inland properties.
Furthermore, many waterfront homeowners choose to rent out their properties during peak tourist seasons.
In some areas, like Palm Beach FL, waterfront homes can attract tourists year-round, which is a great opportunity to maximize the rental income.
4. Health Benefits and Personal Enjoyment
Many waterfront properties offer direct access to activities like boating, fishing, kayaking, or simply walking along the shore. This adds a whole another layer to the resident’s personal enjoyment during holidays or getaways.
Waking up to the serene view of a vast ocean! Hearing the sound of the water while you take a sip of your morning coffee! Life can’t get any better!
Not to mention, studies have shown if anyone want to be happier, living by water provides the calming effect of beach views can reduce stress and enhance mental well-being.
5. Tax Advantages
If you’re buying waterfront homes to set them as a rental during holidays, they will get classified as rental property. In that case, you’ll enjoy deduced tax for any repair or renovation compared to other homes.
And that’s not all!
Note: Tax regulations can differ significantly based on region. Please contact local lawyers to get a better idea of the real estate legalities in that area.
Best Locations in the US for Waterfront Homes
In short, waterfront properties are definitely a smart investment option, but only if you pick the right one. Certain oceanfront or lakefront homes aren’t simply worth the investment due to many reasons.
That being said, there are a few real estate locations where you can find suitable waterfront homes that tick all the right boxes. Such as:
1. Lake Geneva, WI
Just a short drive from both Chicago and Milwaukee, Geneva Lake offers a quintessential Midwestern lake town experience.
Located in Geneva, Wisconsin, this charming town surrounds an 8.5-square-mile lake.
Many of the homes in this area are located along the lake’s scenic shore path. As a result, these waterfront homes in Lake Geneva offer a breathtaking view of the crystal clear lake that feels like a million-dollar experience.
And the best part is, they mostly cost less than half a million dollars.
- Median Housing Price: $359,413; an increase of 2.3% from last year. (Source: Lake Geneva Area Realty)
In addition to the beautiful views, the neighborhood offers modern amenities for both families and tourists. This includes lakeside resorts, gift shops, and highly-rated restaurants.
2. Leavenworth, Washington
Leavenworth, a picturesque lakeside neighborhood in central Washington, is truly one-of-a-kind.
With its Bavarian-inspired architecture and stunning alpine scenery, this town looks like something straight out of a movie.
Not only that, the homes around Lake Wenatchee and the nearby Waterfront Park reflect the area's unique charm and premium appeal.
- Average Housing Cost: $685,693 (down 2.1% from last year according to Zillow)
While property prices have seen a slight dip, the overall market trend suggests a solid return on investment, mostly due to the shrinking inventory. This makes Leavenworth a strong contender for anyone looking to invest in lakeside real estate.
3. Lake Placid, New York
Nestled in New York’s expansive Adirondacks region, Lake Placid is a famous yet small town with big potential. It is renowned for its serene and scenic environment, making it a standout choice for tourists and homeowners alike.
The lakefront cabins and cottages here are perfectly suited for both families and vacationers, offering a cozy and tranquil escape.
- Average Home Cost: $271,332, up by 4.1% from last year. (Source: Zillow)
Not to mention, according to CrimeGate, this neighborhood has a 12% lower crime rate than the national average. Thus, it can be an ideal choice for a getaway location.
Combined with its peaceful atmosphere and an ever-growing demand for waterfront properties, Lake Placid is an ideal location for long-term investment opportunities.
Bottom Line
The waterfront properties aren’t just for stunning views and serene surroundings, they’re also a smart financial move. Humans have a natural affinity for living near water due to the unmatched lifestyle and benefits it offers.
Hence, if you ever choose to sell the beachfront home you purchased years ago, you can expect to secure a great price.
Anyway, that’s it for today. Hope this write-up has managed to answer all your queries.
Have a nice day!
