Pretty much every real estate investor knows that certain properties are more flourishing and popular than others. And among those more sought-after housing, waterfront properties stand out the most, particularly the lakeside ones.

But why is that? Is investing in lakeside US properties a wise financial move or will it blunder later on?

Let’s dive into this article and find out.

Financial Benefits of Investing in Lakeside Properties

Anyone who invests in the real estate market wants income-generating benefits from the property. That’s the most basic purpose of any investment, to be honest.

And the lakeside properties provide exactly that!

“The combination of natural beauty, recreational opportunities, and the prestige associated with owning lakeside property makes it a strong investment choice” – says Sal Dimiceli Sr., broker and owner of Lake Geneva Area Realty.

Furthermore, there are several financial benefits that make buying a lakeside property a smart and safe investment. Such as:

1. Steady Appreciation

Not only do the waterfront properties come at a more premium price over inland properties, but they also tend to appreciate faster and steadier.

Let me explain.

According to Zillow, lakeside properties usually cost around 116% more than non-waterfront properties. This is due to the scarcity and the ever-increasing demand for waterfront/lakeside luxury housing.

Not to mention, the inventory level of such properties in the US has declined by 32%.

This level of scarcity of prime waterfront locations adds a layer of exclusivity, helping these properties retain or increase their value over time.

And if we take a look at the market trends, the median price of lakeside properties has increased by 10% compared to last year. This is very good news for any real estate investor. (Source: Lake and Village)

2. Rental Income Potential

Whether you want to buy a lakeside property for investment or as a vacation home, it provides a great opportunity for a steady rental income.

Enjoy the serenity of your second home during the holidays. And when you’re not using it, rent it out and enjoy a sustainable income. How great is that!

Not to mention, short-term rental platforms like Airbnb and VRBO make it easier to rent out these homes during peak vacation seasons. Hence, you can generate significant returns on your investment while the property is on sale or if you’re having a hard time selling it.

3. Tax Benefits

Unlike other real estate investments, lakeside properties can get some deductions for mortgage interest.

Not to mention, if the property is being used as a rental, you can claim depreciation from the IRS. This can further reduce the impact on your taxable income. (Source: IRS)

4. Attracts Diverse Customers

Most of the time, people who want to buy a luxury home usually gravitate toward waterfront properties. On the other hand, people who want a second home for vacation also prefer the same kind of property for obvious reasons.

Hence, if you invest in a lakeside property, you can cater to both sides and increase your chances of reselling the property at an appreciated value.

Lifestyle Appeal and Its Impact on Property Value

One of the most appealing aspects of lakeside properties is the unique lifestyle they offer. This is not only an attractive feature for buyers but also contributes to the long-term value of the property.

Let me elaborate.

1. Recreational Activities

Waterfront properties offer year-round recreational opportunities like no other!

Boating, fishing, swimming, water sports; whatever you want.

And for families and retirees, access to these outdoor activities enhances the appeal of owning or renting a lakeside property. Thus, making these homes highly sought-after by vacationers and second-home buyers.

2. Scenic Beauty and Privacy

The serene environment and picturesque views of a lake can be a major selling point.

The tranquil surroundings and natural beauty provide an escape from the hustle and bustle of urban life. It also significantly increases the desirability and value of lakeside homes.

Not to mention, lakeside neighborhoods, like Lake Geneva, have around 21% lower crime rate compared to the nation’s average, making it a safer investment choice. (Source: AreaVibes)

3. Health and Well-being

Studies have shown that proximity to water can improve mental health and well-being.

The calming effects of lakeside living are another major factor that draws buyers, especially those seeking a retreat from stressful city living.

4. Social Status and Exclusivity

People generally associate owning a lakeside property with a sense of prestige and exclusivity.

As a result, these properties are typically considered luxury assets.

This further drives up demand and, consequently, property values, which is very beneficial for investors.

Risks and Considerations for Lakeside Property Investors

While lakeside properties offer numerous advantages, they come with specific risks and considerations that investors should be mindful of. Such as:

• Higher Maintenance Costs: Waterfront properties are exposed to more wear and tear due to environmental factors. Such as humidity, water damage, and erosion. Hence, regular maintenance can result in higher costs compared to inland properties.

• Insurance Costs: Insurance companies generally put up higher prices for waterfront properties. This is mainly due to the increased risk of flooding, storms, and other weather-related damage.

• Seasonal Demand for Rentals: If your lakeside property is being purchased for rental income, you will see a drop in rental income during the off-season.

• Environmental Risks: Properties with closer proximity to the lake have a higher risk if the water level rises during the rainy season.

Note: Lakeside properties are at less environmental risk compared to other waterfront properties, like ocean-side ones. You won’t have to worry about hurricanes or tsunamis for a lake-view house.

Key Places to Consider When Choosing a Lakeside Property

Yes, a lakeside property is a smarter investment choice. But one thing you need to understand is that there are always pros and cons of every lake house.

Location, neighborhood, and various other factors determine the value and appreciation/depreciation of the property.

With that said, let’s see some of the best places to choose a lakeside property:

1. Geneva Lake, Wisconsin

A short drive away from Chicago and Milwaukee, you will find a midwestern lake town surrounding the 8.5 square miles lake in Geneva, Wisconsin.

Most of the homes in this neighborhood are situated by the lake’s shore path. Hence, they offer a million-dollar lake view for less than a half-a-million-dollar property price tag.

• Average Housing Cost: $359,413; up by 2.3% compared to last year.

Not to mention, the neighborhood covers all the modern amenities for families and tourists alike. Such as lakeside resorts, gift shops, well-received restaurants, etc.

2. Lake Placid, New York

Located in New York’s vast Adirondacks region, the small town surrounding the famous Lake Placid is in a league of its own for real estate investment.

It is one of the most coveted lakeside towns in the US due to the peaceful, quiet, and scenic environment it provides. And the lakefront cabins or cottages have everything that a customer needs, whether for family or vacation.

• Median Home Price: $271,332; up by 4.1% compared to last year.

Combined with a lower crime rate(around 12% lower than the nation’s average) and ever-increasing demand for sales inventory, this location is an ideal choice for long-term investments.

3. Leavenworth, Washington

To be frank, there’s rarely any lakeside neighborhood that looks as good as Leavenworth. Located in central Washington, this Bavaria-themed suburb looks straight out of a movie.

And the property price tag reflects that premium aspect.

The simplistic, yet charming houses surrounding Lake Wenatchee or near the Waterfront Park cost around $685,693; which is down by 2.1% compared to last year. (Source: Zillow)

Despite the decrease in property prices, if we look at the market trend, it shows a strong potential for investment return.

Wrapping Up

Whether it is waterfront or inland property, it is always recommended to get an in-depth understanding of the current real estate market in that area. That’s the only way you can make a sound investment decision and not regret it later on.

Anyway, that’s it for today. Hope this write-up has helped you with your real estate-related queries.

Have a nice day!