Having your own beachfront property offers an incredible return on investment. Beachfront properties offer safe and reliable income because they’re always in demand. Another little benefit is that you get your own little hideaway in paradise because you can stay in the house yourself. It’s a common tactic to buy a beachfront property and rent it out during the peak season.
Beachfront properties aren’t the eternal paradise of their backdrops though. Here are some key points to consider about beachfront properties.
High Market Value
The key benefit to having beachfront property is that it comes with such a high market value. These homes are some of the most valuable on the market. Beachfront homes are also resistant to changes in the market and are likely to always be as valuable as they are.
Even if the property loses some value, you can rest assured that it will gain it back just as quickly once conditions improve. A property by the beach is one of the safest real estate investments you can make.
This high market value means these properties have high rentals too. Given the high rentals of beachfront property, many investors find that the money they make during peak periods is more than enough to keep the house running throughout the year.
A Pleasant Environment
Another benefit of beachfront property is that they tend to have a pleasant and relaxing environment. Houses by the beach are known for being refreshing and cool. Who doesn’t enjoy spending time in the sun?
The warmth of the sun, the cool breeze on your face, and the gentle nature of the sea have a profound effect on people. The elements offer emotional, psychological, and even physical benefits to people in the property. Whether that’s you or someone you are renting the property to can depend on the season, but the fact remains that these homes are a lovely place to stay.
One downside of beachfront property is that the insurance rates are much higher than with regular houses in the city. Beachfront properties need a lot of extra protection, in particular flood insurance. Flood insurance for beachfront properties is often mandatory, and the rates for flood insurance are slowly increasing.
Depending on where you live, you could find yourself paying up to $10,000 in annual premiums for flood insurance. Some areas have much more reasonable prices though. The good news is that the higher cost of insuring a property is offset by the increased value and rent on it.
Other Costs to Consider
A lot of money goes into buying and maintaining a beachfront property. They come with higher costs for insurance and mortgages, of course, but even utility costs can be higher. Beachfront property also comes with some significant tax costs given that they are so valuable.
If you plan on renting out your beachfront property you’ll have to invest in advertising and marketing for it. You’ll also likely need to hire people to showcase your property and manage it for you. If something goes wrong with a tenant you could be on the hook for the legal costs of dealing with them.
Beachfront property is an excellent investment, but you should always weigh the pros and cons to determine if it is the right investment for you. You’ll make more money, but there’s the risk of losing more money.