Everything to Know Before Buying a Waterfront Home

Posted by Dave Kotler on Wednesday, April 5th, 2023 at 1:26pm.

Tips for First-Time Waterfront Buyers

Buying a waterfront home is no doubt an exciting prospect. After all, many waterfront homes guarantee spectacular vistas and seamless access to picturesque beaches.

There are many questions to ask before buying a waterfront home. Keep reading to find professional tips for first-time waterfront property buyers.

Forecast Your Maintenance Needs

A waterfront home means an almost infinite amount of recreational opportunities and waking up to tranquil views every day. That said, easier access to nature comes with more exposure to natural elements. Before buying a waterfront home, make your best estimate about how much you'll spend on maintenance.

For example, humidity is naturally higher in waterfront areas, meaning you'll need to perform regular floor preventative maintenance for all wooden features of the home. It may also be wise to invest in water-resistant home building materials to save on the cost of care over time.

When renting a waterfront home, your property manager arranges and covers the costs of repair. But when you buy one, these repair costs automatically become your responsibility. Schedule these repairs for the off-season when contractors are less busy and willing to offer better deals. That way, your waterfront home will be free for you to use or rent out all summer long.

Find the Right Insurance

Waterfront Homes on Lake Okanagan in KelownaAnother extra cost to anticipate when buying a waterfront home is insurance. Generally, the cost of home insurance for a waterfront property is higher than for non-waterfront homes. This is due to the augmented risk of storm and flood damage and increased exposure to weather elements such as humidity. Additionally, you may have to get separate insurance for structures on the property, such as the boat dock, since not all policies cover these. By performing thorough research and comparing rates, you can get complete peace of mind without overspending.

Local laws, waterfront homeowners associations, and in some instances, even insurance and mortgage lenders will require you to have a separate flood insurance policy. However, you can reduce the insurance premiums by providing a down payment of 20% or more on your waterfront property.

To keep premium expenses down, you can also consider increasing the deductible rates for natural elements that don't cause property damage as severely in your area. This requires additional research, though. For example, if you find that wind damage is unlikely, you can increase your deductible for wind damage insurance and reap the savings from the lower monthly premiums.

You may also consider bundling your insurance policies under one carrier to get discounts or replace the property's HVAC system, plumbing, or electrical wiring since having these up-to-date will earn you favourable rates.

Research Insurance, Taxes, and HOA Fees

Property taxes are usually based on a property's market value. Because waterfront homes are typically more expensive and categorized as high-value properties, they are often assessed at a higher rate and lead to higher taxes. Also note, the waterfront home's location also matters because the home's assessed value will often be multiplied by the area's tax rate.

On the bright side, those who use their waterfront property as a primary residence may receive provincial residential tax credits, cutting their tax bills. But this may only apply to specific provinces, so ensure you research the tax history of a waterfront property first before you close the deal. You can do this with the help of a local property tax assessor.

Some waterfront home communities are usually run by a homeowners association or a lake association. Community volunteers elected by other homeowners often manage these associations and, in some instances, large property management firms.

They oversee shared amenities, investigate and resolve community conflicts, and enforce community rules regarding home maintenance, parking rules, pets, and trash. In return, HOAs charge a mandatory monthly membership fee, so it's crucial to research the value of the benefits before committing to an HOA. Also, utilities such as water and power to waterfront homes might be higher than in other areas.

Choose a Property that Fits your Lifestyle

When it comes to buying waterfront property, your lifestyle matters. Are you looking for a vacation home to use and enjoy during the summer months? Or are you looking for a permanent residence that allows for year-round living with opportunities for recreational activities like fishing, boating, swimming, or other water sports? Knowing how you plan to use the property and what activities you’ll be taking advantage of will help narrow down your options. 

Before you put in an offer on a waterfront home, you will want to look into water usage rules in the area. Some lakes may not allow motorized boats or swimming, so this is something you will want to be aware of if you had planned for those activities. Additionally, if you plan on putting in a dock or utilizing the waterfront for other activities, you should check local regulations to ensure you are in compliance. 

Buying a Waterfront Home Can Be Easy for First-Timers

Besides magnificent views, a waterfront property has a tremendous appreciation rate and makes a good source of passive income since you can easily rent it out. But it also comes with extra costs you need to anticipate when you move in, such as homeowner insurance costs and other extra amenities for waterfront homes. Learning about these costs before you buy a waterfront home is of the essence, so you can plan or find ways to keep them down.

Dave Kotler

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