Waterfront property investing is a slam dunk. It generally pays for itself, builds equity fast and sells at a premium. These vacation homes make lucrative short-term rentals for transient guests seeking various water activities, are more valuable than their inland comps and reliably appreciate over time. However, the risks depend on whether you go with lakefront homes or oceanfront properties. Which assets are safer?
Lakefront Homes Are More Affordable
Buying a lakefront home requires less capital. Oceanfront properties tend to be more expensive despite generally having minimal outdoor space. Lakehouses often have large yards with lush vegetation, which units by the ocean rarely have.
In addition, vacation home loans are synonymous with more demanding qualifications. Your credit must be stellar to take out a secondary mortgage, and you may have to put down a more significant portion of the property’s appraised value and demonstrate a low debt-to-income ratio. If you’re on a budget or want to break even more quickly, investing in lakefront homes will be logical.
Insurers Fear Oceans More Than Lakes
Oceanfront homes usually have steeper insurance premiums than lakefront ones. Insurance companies believe owning a property by the ocean can be incredibly dangerous — and they’re correct.
Living near a lake does have hazards — it can harbor harmful microorganisms, dangerous critters and pollution from runoff after rainfall. Heavy downpours can strengthen their currents more than usual. Lakes rarely overflow, but the homes near them are more prone to flood risk than those inland. On the other hand, oceanfront properties bear the brunt of hurricanes, which form because of warm ocean air.
Regarding tsunamis, lakefront and oceanfront homes are unsafe. Earthquakes near or below the ocean floor can submerge properties near the sea. Terrifying meteotsunamis can happen in lakes — the 20-foot waves in Vela Luka, Croatia, in 1978 and the 6-foot swells that hit New England in 2013 are notabe examples.
Salt Destroys Most Building Materials
The upkeep of coastal homes is taxing because of high moisture levels, but saltwater renders maintenance a bigger headache. Oceanfront properties are no stranger to coastal erosion — salt air can travel inland and threaten the structural integrity of properties miles away from the ocean.
Salty environments are also a considerable concern for boat owners. Compared to freshwater, which has lower conductivity and penetrating power, saltwater will quickly corrode most vessels. While this can be planned for — for instance, aluminum, bronze and stainless steel have exceptional corrosion resistance — boat owners will still likely find lakefront homes more attractive investments.
The Climate Change Effect
Global warming negatively impacts bodies of water. The melting of ice sheets and glaciers increases seawater volume, and the encroaching sea claims more land, flooding oceanfront properties first.
Meanwhile, lakes are drying up because of climate change-caused droughts, evaporating 15.4% worse than older estimates. Loss of water neutralizes what’s unique about waterfront homes. At this rate, many lakefront properties may eventually become regular inland houses.
Lakefront vs. Oceanfront Homes — You Decide
Oceanfront properties cost more to buy and maintain than their lakefront counterparts. Still, adding assets near the ocean may suit your investment portfolio and lifestyle. Exercise due diligence to determine which waterfront homes fit your investing goals.
Author Bio
Jack Shaw is a writer and editor for the lifestyle magazine Modded, as well as a car enthusiast and lover of nature. His writings on home design and renovations have been published on sites like CADdetails, A House in the Hills, House 2 Home Organizing and more.
