Purchase a beach home and you’ll join millions of other Americans who have made similar investments along the Atlantic, Gulf, and Pacific coasts. Beach property is typically enjoyed at least three to four months of the year, even year ‘round in many locales. If you’re considering buying a beach home you stand to enjoy an excellent return on your investment. Here’s what you need to know before you jump in.
Property Values Vary
What you pay for a beach home will vary immensely, depending on the community, the home’s location, weather conditions, and more. Suffice to say, the closer your home is to water, the more you’ll pay for it.
In some communities homes farther inland cost only a fraction of what homes retail for near the water. Thus, if you want beach access, you’ll pay for it. On the other hand, if a five or 10 minute drive from your home to the beach is fine with you, then your costs will come in considerably less.
Your low interest-rate mortgage on your main home won’t be easily repeated elsewhere. That’s because lenders charge a premium for investment or vacation property.
You may be satisfied with a 5 percent loan on a vacation home loan where 4 percent is common to a primary home. But if you are financing an expensive purchase, such as one costing $500,000 or more, your monthly payment can come in as much as $300 higher than one secured at 4 percent. That means you’ll pay an extra $3,600 per year in interest for your vacation home.
How much do you pay for homeowner’s insurance for your primary home? Chances are you’ll pay more for insurance for your vacation home. And why is that? Consider the vulnerability such homes have to hurricanes, especially on the Atlantic and Gulf coasts.
You’ll need to secure flood insurance and that’s sold separate from your standard insurance. Such insurance can add thousands of dollars to your costs, an expense you may never recover even if you rent it out for part of the year.
You’ll pay for water, electric and perhaps gasoline or propane at your vacation home. Those rates may compare to what you’re paying elsewhere when the same level of usage is realized.
Other costs to you will include real estate taxes. You may also pay homeowner’s association fees if you live in a private community. Consider how much income your home can derive when you rent it out. Also keep in mind costs for advertising the home, hiring a property manager, and managing other expenses.
Homes near the beach tend to take on a “weathered” look sooner than homes that are inland. Sea salt and sun can wear out the paint, singe the shingles, and take its toll on the pavement and other surfaces.
You need to keep up on home care, including power washing the house, painting, roof maintenance, grounds care, pest control, and so forth. Security services are another cost to include.
Moving to the Seashore
If none of these concerns dissuade you, then begin your search for a home. Work with a real estate agent, especially one who has inside knowledge of the market. This is important if the market is hot — she can alert you to homes as they come on the market and before the news becomes widespread.
Find a home and you’ll make plans to move in. You may be planning to buy new furnishings as well as to supplement the home with items you have in your main house. Contact a moving company to obtain an estimate on moving furniture from your current place to your beach house advises Allied Moving.