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Reasons to Invest in a Waterfront Property

Scenic photograph of a lake house with mountains in the background surrounded by green grass and a lake

Investing in a waterfront property isn't just about purchasing real estate; it's about buying into a lifestyle. One of the primary reasons to consider such an investment is the unparalleled access to water activities. Whether you enjoy boating, fishing, swimming, or simply the calming effect of water, living on the waterfront offers limitless opportunities for leisure and recreational activities right at your doorstep. Similarly, properties situated by the water often come with a premium view and a great sense of community, contributing not only to daily enjoyment and well-being but also to the property's resale value. The aesthetic appeal of living by the water, combined with the potential for an active outdoor lifestyle, makes waterfront properties a desirable option for many.

Financially, waterfront properties can be a great investment because they are an appreciating asset that can also provide property owners with the opportunity to generate income through lease opportunities. In this resource, we will explore the various benefits of investing in a waterfront property.

1) Scenic Beauty & Personal Enjoyment

The appeal of waterfront properties lies not only in their aesthetic charm but also in the unique lifestyle they offer. The opportunity to wake up to panoramic water views and experience nature's captivating beauty up close is a privilege that few can resist. But beyond the idyllic scenery, waterfront living presents several benefits that enhance the quality of life:

  • Privacy: Given their unique locations, many waterfront properties provide a private sanctuary away from busy city life. With fewer neighbors and expansive views, property owners can enjoy a sense of solitude, while still being part of a community.

  • Picturesque Views: One of the most captivating aspects of waterfront living undoubtedly lies in its stunning views. From the dramatic hues of an ocean sunset to the tranquil beauty of a lake at dawn, or the winding path of a river through the landscape, the ever-changing vistas offered by nature are truly invaluable.

  • Community: Waterfront communities are vibrant hubs of social interaction, cultivating a robust sense of camaraderie among residents. These areas typically buzz with a range of social events and activities, from community fishing tournaments and lake clean-up initiatives to friendly boat rides with neighbors. The abundance of opportunities for engagement strengthens the communal bonds, making these environments rich in connection and unity.

At its core, the charm of waterfront living goes well beyond natural beauty—it represents a lifestyle that melds outdoor living, tranquility, privacy, and a sense of community into a uniquely enriching living experience unparalleled by other property types.

2) Long-term Investment Potential

Waterfront properties are more valuable than the average single-family home. When you compare two houses with the same layout, features, and assets, the one located on water will be worth more. Living beside a lake instantly enhances the value of your property. The idyllic lifestyle of living on a waterfront property holds more allure than a traditional home situated in dense suburbia, where the proximity of homes allows you to observe your neighbor's dinner preparations.

When it comes to investing in real estate, waterfront properties often stand out as high-reward long-term investments. This potential is driven by several key factors:

  • Limited Supply: Waterfront properties are naturally scarce because of geographic limitations. While it's possible to construct additional houses, expanding coastlines or lakefronts is beyond our capabilities. This inherent scarcity typically drives up property values, leading to potentially higher returns on investment.

  • High Demand: The allure of living on a waterfront property results in higher demand for such properties. Combining the limited supply of waterfront properties with their high demand presents a lucrative opportunity for investors to profit from waterfront properties long-term.

  • Market Resilience: Real estate markets are cyclical, and while they may experience dips and fluctuations, waterfront properties tend to be more resilient during economic downturns. This resilience is primarily due to their scarcity and high demand, meaning that waterfront properties can maintain their value even when other property types are struggling.

3) Property Appreciation Potential

Historically, waterfront properties have demonstrated strong price appreciation due to their unique allure and limited availability. This scarcity often results in notable long-term price escalations, yielding considerable capital gains upon sale. Most importantly, waterfront properties are often more resilient than other types of real estate investments during market downturns. The unique appeal of waterfront properties helps to maintain high demand and property values, even when the broader real estate market is struggling.

4) Income Generation Opportunities

Waterfront properties, with their stunning views, relaxing ambiance, and potential for recreational activities, are often at the top of the list for vacationers and tourists, resulting in high rental demand. The charm of a waterfront view combined with various recreational activities such as swimming, boating, and fishing, make these properties attractive vacation destinations. Over 83% of the US population lives in urban areas, so the concept of getting fresh air with access to water is highly attractive.

Waterfront property owners have the opportunity to generate income year-round. While summer months typically experience the highest demand, waterfront properties can attract renters in the cooler months as well. Winter activities, like ice fishing or lakeside ice skating, can appeal to winter and spring vacationers. In general, the tranquil environment that waterfront properties provide can draw people looking to rent a peaceful retreat at any time of the year.

Compared to other types of real estate, waterfront properties can typically generate higher lease rates due to their unique features and high demand. This is especially true for properties located near popular tourist destinations.

5) Tax Advantages

Owning waterfront properties not only offers financial benefits but may also provide potential tax advantages. Consider the following key aspects:

  • Rental Income: If you rent out your waterfront property for more than 15 days per year, you can classify it as a rental property. Any expenses that you incur, such as repairs, cleaning, and insurance, may become tax deductible.

  • 1031 Exchange: If you're selling one investment property to purchase another, you may be able to defer capital gains taxes by utilizing a 1031 exchange, which allows you to swap one investment property for another without immediately incurring a capital gains tax liability.

  • Property Tax Deduction: Homeowners could potentially deduct their property taxes, providing a substantial benefit, particularly for those with waterfront properties in regions characterized by elevated property tax rates.

Please be aware that tax regulations are intricate and can differ based on your specific situation and geographical area. Consequently, seeking advice from a tax consultant or a real estate lawyer is advisable to comprehensively grasp the tax ramifications associated with the ownership and sale of waterfront properties.

How to Purchase Waterfront Property

There are many benefits to buying waterfront properties. Interested in finding waterfront properties for sale? Check out LandGate's marketplace! At no cost, you can find waterfront properties for sale nationwide, filtering by size, location, budget, and more. Each listing comes with LandGate’s proprietary value and risk indexes to help you conduct due diligence:

Do you own a waterfront property? Property owners can list their waterfront and recreational properties for lease for free on LandGate to connect with a wide range of prospective lessees, realtors, investors, and more. Listing is free, and you are under no obligation to accept any offers that you receive through a listing.


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