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Is Lake Property a Good Investment?
Every real estate investor should be educated about the income generating benefits of an available property. Some properties seem to flourish and others are less popular. One of the best investments that any investor can make is lake property or lake front real estate. Market studies have been conducted that show these properties grow rapidly above the original purchase price. Both large and small available lake properties rarely last in thriving real estate markets.
Two popular types of real estate properties perform well in any economic conditions. Vacation homes offer investors generous returns on the investment year after year. Areas with lake front homes are often occupied by visiting tourists or temporary residents that vacation for selected months out of the year. Single family or multiple family rental homes also offer property investors with a steady source of residual income since these properties are in high demand.
Appreciation Rate of Lake Properties
The annual appreciation of lake property rises each year. National average growth is around four percent compared to one or two percent
with a standard property. Many investors that purchase lake properties realize substantial growth during the ownership period. The attraction of vacationing in or renting a lake house drives tourists and families to occupy available properties.
A beginning investor or experienced investor should know and understand the market for lake properties. A vacant property is usually occupied fast and acting quickly provides the opportunity to get an excellent deal on a long-term income source. The natural vegetation, trees, boat access ramps and aquatic activities help to promote the allure of lake properties. While these properties are excellent investments, there are some disadvantages to owning lake front real estate.
Lake Property Disadvantages
1. Higher Taxation
Local and state taxing authorities know that these properties are popular and quickly appreciate in value. The tax rates are often higher for local, city and municipal taxes compared to owning an average suburban home. It is essential to check the taxation rate of a property that interests you before deciding to purchase.
2. Risk of Flood Damage
Areas that have higher than average rainfall totals could increase the risk of damage to a property from flooding or water deterioration. It is helpful to purchase flood insurance and have an insurance policy that can protect your investment if an act of nature or other unforeseen problem should happen to your lake property.
3. Increase in Tourism
You might purchase a lake property in hopes that it will be secluded and used only for vacations or private family use. One of the downsides to these properties is the increase in tourism. This brings extra noise, risks of property damage and strangers near your property.