Buying Waterfront Property: 5 Due Diligence Tasks Before Pulling The Trigger

Buying a home is a dream come true for many.

To purchase that property with river, lake, or oceanfront access may top the list for many individual’s American Dream.

From personal relaxation, giving your family all that waterfront property has to offer, and the possibility of major returns on investment, it’s hard not for the pros to outweigh the cons.

But before plunging into buying your dream house, just take a few minutes to consider these challenges surrounding the purchase of waterfront property.

Observe the Property Closely

When it comes to buying a waterfront property, the most important thing to consider is the land  and not the house or structures currently on it. Altering the structure is easy, but the possibilities of altering the land itself is much more complex.

The land itself can have many impeding factors for existing or future development, so don’t hesitate to hire talented engineering, ecological or soil experts to evaluate your potential purchase.

In addition to the land itself, make an effort to learn more about the surrounding areas tourist activity, potential neighbors’ use of the land and water, and any future development. The last thing you want after a waterfront land purchase is to find out your plans and investment are hindered by factors out of your control.

Check Insurance Requirements

Unlike normal land or homes, waterfront properties often come with their own set of insurance requirements. Some factors mentioned above can have outsized effects on your homeowner insurance premiums, as well as additional flood insurance costs.

You can get more details from the National Flood Insurance program here.

Even though the amount may vary, it is always better to be covered when a massive flood causes thousands of dollars damage to your home.

Another type of insurance that you might be wise in investing in is wind insurance. Your properties geography and the makeup of the surrounding land mass may cause increases in wind speeds.

All of these insurance requirements can be estimated with early due diligence on your potential waterfront investment, so begin diving into pricing them out as early as you can.

Check Legal Factors & Requirements

Waterfront property often comes with additional legal factors to consider, depending on your planned use or activities on the land. Understanding these legal factors will save you time and headaches, so don’t neglect this due diligence task.

Your State government will have guidelines and laws around building additional structures like docs, sea walls, boat houses and even guest houses.

Hiring a reputable real estate lawyer will give you give you piece of mind and help guide you while planning for this investment.

Assess The Value Of The Waterfront Property

Although this might be the first thing you consider before investing in a piece of waterfront property, you might do well to check on the first three tips first. Each may have a significant effect on the value of the property, which will help you decide whether to purchase the land or even provide you with additional information for price negotiation.

Oftentimes the value can depend on the availability of water sports activities, proximity to the waterfront, and even distance from municipalities, stores, schools, etc…

Put major effort into assessing the value of your potential waterfront land, the existing structures, and the surrounding property values and you’ll save yourself from losing money on the investment.

Hire a Real Estate Agent                                                                         

The right real estate agent can provide intangible knowledge and support during the entire investment process, so don’t balk at finding the right help.

Local knowledge, connections, and even friendly repartee amongst the homeowners and other real estate agents can all be contributing factors to a successful property investment. Hiring the right agent will also save you a lot of time and effort in the long run, so take the opportunity to hire the best agent you can find.

The tips above are only the beginning of the necessary due diligence when investing in waterfront property, but starting with these five will get you off on the right foot. To learn more about properties in your area or to discover great waterfront land across the country, click here to search LandHub’s property listings.

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by Bella Scotton
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If you are looking at buying your property from an investment point of view then you may want to take a look at waterfront property. If your concept is to buy property just to suit your personal living purposes then you can still strongly consider water front property but not with as much focus on what your ROI will be if you decide to sell it.

Buying This Property for Retirement:

If your intent is to spend the rest of your years in a wonderful atmosphere then residing by a body of water certainly will be a great choice. You won’t be as concerned about the resale value.

Buying This Property for Investment:

If resale value is your priority it may still mean that you want to live at your water front property but you want to know that you are going to get good resale value if and when you decide to sell it. If this is the case, then you want to put some expectations on this type of property.

  • You want the weather to be good so you can enjoy the water features as much as possible
  • You want to be able to purchase this property now at an affordable price
  • You want the environment to possess all of the amenities and be a safe place to live and perhaps raise a family.

These are not only what your expectations should be, but they are also excellent resale features.

This now takes you on a journey to find a beach front property that meets this criterion. At the same time keeping in mind what the resale value may be for the future. Also, you need to consider whether you want to buy property that is actually right on the water front, or would you be satisfied living in a beach town?

How to Analyze:

When you are looking for a waterfront property keeping in mind its future worth, you want to look at the trends that have taken place in the past.

For example:

You could currently purchase a lakefront lot in Hillsdale Michigan for $35,000. The average home in Hillsdale county sells for around $116,800. Water front property typically has a higher value.  If you compare this to what has happened in the last five years within this area in the general housing market you would note in 2013 the average housing price was $87,600.

If Wisconsin appeals to you then a good example here is a one-acre piece of property with a cute little house on it that has a wonderful natural environment to it on the waterfront. It is currently selling for $139,900. Looking back to 2013 for the average home sale in Wisconsin it came in at $141K and as of January 2017, the average sale was $162K. So as you can see when you shop around carefully there are some excellent deals to be found.

Actual statistics are always very slow to come out in any industry and the same can be said about Real estate. However, real estate always seems to go through the same cycles where the markets are hot then cold. With investments, you have to watch your timing. This means that if you are going to buy your water-front property with investment purposes in mind then you will only want to sell when the market is hot.

In late 2014 on a nationwide basis water-front properties were considered to be worth double the value of all the homes.

Traditionally the most expensive areas for this type of property has been…

Considered to be the cheapest were…

For a single family water front home in 1997 the approx. value was just over $150K then as of 2015 it rose to approx. $370,900.

Compare this to a single family home that was not water front and in 1997 it was $100K and then rose to $171,600 in 2015.

As you can see the rate of increase in value was not nearly as strong in the non water-front properties.

The one thing to keep in mind with your water-front property investment is that there is only so much of this type of property as there are only so many bodies of water. This is another factor that keeps the water-front property at a premium.


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