Of course, lakefront homeownership does not come without its challenges. Here are a few of the biggest setbacks that we see. When you live on the water, there’s very little blocking your home from the elements. The humidity from the water may break down the materials your home is made of, and people tracking in sand and water often may cause damage to the interior. Additionally, a house within proximity to a body of water is more exposed to storms, mist and natural disasters. If you’re purchasing a property, be sure to have your inspector keep a keen eye out for the wear and tear that comes with lakefront properties.Wear-And-Tear Expenses
You’ll likely have to put more work into maintaining a waterfront property than one that’s inland too. It’s important to note that this will likely mean additional expenses and time that you’ll have to dedicate to home maintenance and upkeep. For example, you might have docks or retaining walls on your waterfront realty that need regular maintenance.
Higher Insurance And Other Costs
When purchasing a house on a lake, it’s important to keep in mind that there will be unique costs associated with your home. For example, some lakefront properties have specific requirements for flood insurance. There may be organizations that not only restrict what you can do with your property, but also require that you pay a fee each year. Because lakefront homes are typically not found in concentrated urban areas, utility expenses can often add up quickly.
Additionally, insurance is typically much higher for lakefront properties because of the risk of injury to residents or the home. Local laws or even a lender may mandate the type of coverage you need. Regardless, you can’t go wrong with flood insurance. The best-case scenario is that you’re never seriously inconvenienced. If you have the option to opt out of flood insurance, that peaceful energy you’ve been chasing can be easily clouded by the anxiety of impending financial catastrophe.
There are two types of flood insurance:
- FEMA backed National Flood Insurance Program (NFIP): With a $250,000 coverage limit, NFIP is only available to certain qualified communities. Something to keep in mind is that NFIP won’t cover expenses incurred from staying in short-term housing until your home is safe to live in again. It also won’t cover property damage that is not attached to your home, including boat decks, hot tubs, septic systems and so on.
- Private insurance: By law, private insurance must provide coverage as broad as NFIP. Private insurance allows you to insure beyond the NFIP’s $250,000 coverage limit. If rebuilding your dream lake home will cost more, private flood insurance may be the way to go.
Lack Of Privacy
Although your lakefront home may feel like a great outdoors retreat, you may want to anticipate more visitors when you move there. Usually, the local, state or federal government will own the lake itself, designating the lake as public land. Recreational users beyond the neighborhood will want to access the water as well, so you may see more visitors to your waterfront neighborhood than you did when living inland. This may cause issues with parking, privacy and even the use of your personal property.
Leasing Land
Don’t be surprised if the house you’re interested in comes with a lease. Power companies as well as municipal and federal entities such as the U.S. Army Corp of Engineers, and other players may own the lake itself, which means they may lease the shoreline land that lake houses are built on.
When you buy a house, you may inherit the remaining term of a 100-year lease of the land itself. If the lease is nearing the end of its term, you may want to do some research on how lease renegotiation went for other homes in the area. The rental agreement is likely to rise exponentially to account for inflation and market value. Even if you have plenty of time left on the lease, be aware that future buyers and their real estate agents will have this in mind.
The upside to buying a home on leased land is that you won’t have to pay any property taxes. Be sure to compare the costs of the property taxes versus the cost of the land lease, as both can vary widely.
Mortgage lenders may require that a certain amount of time remain on the land lease. In these circ*mstances, a Home Loan Expert is a great resource for gathering additional information about land leasing.
