Essential Considerations Before Buying That Gorgeous Lake House

Whether it’s a family cabin on the lake or a seaside dream home, it’s helpful to consider a few different things before finalizing the purchase.
Wooden walkout deck with outdoor table set and swinging bench at lake house. Seven Essential Considerations Before Buying That Gorgeous Lake House.

Buying a lake house isn't exactly the same as buying another type of home. Lake houses come with their own set of risks and exposures, and it's critical to keep these in mind before you sign any official papers. For starters, you'll need special types of insurance to protect your purchase from numerous disasters.

Luckily, an independent insurance agent can help you find the right kinds of coverage for your lake house. They'll get you covered against many types of unexpected threats. But for starters, here's a closer look at what's helpful to consider before buying a lake house. 

Essential Consideration #1: Property Cost

Lake houses come with extra beauty and opportunities for recreation compared to a regular house, but they also carry a higher price tag. Here are a few things to keep in mind when considering property costs for a lake house:

  • Your budget: It's useful to keep your budget in mind, especially if this will be a second property for you that requires an additional mortgage. To prepare, start practicing paying the second mortgage every month to see if you can comfortably afford it, and to determine what adjustments you may need to make.
  • New toys: Are you planning to buy a boat to go with your lake house? How about other water toys? Will you be parking your new equipment at a dock or marina that comes with its own fees? All of these new factors also bring their own costs that must be factored in.
  • HOA fees: Your new lake house may also come with recurring HOA fees. You'll need to make sure you can afford these additional costs along with with all the other expenses you're taking on.

Considering a property's costs as a first step may seem obvious, but in reality, there can be a lot of hidden expenses that many folks fail to consider upfront. If your budget's not ready to take on a lake house and all the expenses that come with it, now may not be the time to buy after all.

Essential Consideration #2: Insurance

Your lake house needs special types of insurance coverage tailored to protect it from unique risks to the property's location. Just a few things to keep in mind in this department are:

  • Flood insurance: With a house right on the water, flood insurance becomes a must-have. Standard home insurance policies don't protect against natural flood damage due to sources like lakes, hurricanes, etc. Your independent insurance agent can help you get the coverage you need.
  • Vacation home insurance: Since your lake house may be unoccupied for long periods of time, there's a higher risk of damage, and premiums will typically be higher than coverage for your primary home. If you take out a mortgage, your lender will likely require you to insure the property appropriately. 
  • Landlord insurance: If you rent the property either short-term or long-term, you’ll need additional coverage. You may need landlord insurance, or if you’re renting through a service like Airbnb, you may need short-term property insurance and liability insurance to cover the rental period. 
  • Homeowners insurance: A home insurance policy can provide essential coverage for your property's structure and contents, as well as liability coverage and loss of use coverage. The difference with a lake house is that just a home insurance policy isn't enough to fully cover it.
  • Umbrella insurance: You may want to consider adding an umbrella insurance policy to increase your liability coverage to a limit of $1 million or more. Living on the water increases your chances of disasters that could impact a third party, like an injury or property damage, and they might decide to sue you.
  • Boat insurance: If you do buy a boat, you'll need separate boat insurance to cover it from physical damage, liability, and more. Your car insurance won't extend to cover exposures related to your boat.

Getting equipped with all the insurance you need before officially moving into your lake house can help you be prepared to receive critical reimbursement should a disaster impact any piece of your new property.

Essential Consideration #3: Time and Maintenance

With a new type of property comes a need for a new type of maintenance. Keep these factors in mind when considering your lake house's maintenance needs:

  • Wear and tear: A lakefront property undergoes wear and tear over time, the same as any other property does, only at an accelerated rate due to being along the water. This maintenance requires time and effort on your part, at least to hire an appropriate professional to keep your property in top shape.
  • Budgeting: If you'll be hiring a professional to do the maintenance, you'll need to factor these costs into your overall budget as well. Even if you choose to buy the necessary tools and materials yourself, you'll still need to factor in these new costs.

Other new elements like a dock or marina also require their own special maintenance that another type of house just doesn't. Keep this in mind before deciding to buy a lake house of your own.


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Essential Consideration #4: The Fun Part

Many folks who decide to buy a lakefront property plan to actually get in the water at some point. Whether it's boating or jet skiing or something else that strikes your fancy, safety needs should be at the forefront. Remember that any special equipment likely requires its own type of insurance, and you might need to take formal lessons before operating a new toy.

Being out on the water, whether it's by boat or jet ski, etc., can be a significant financial investment in itself. Be sure to factor in the costs of the activities you'll be doing on the lake itself ahead of time. All of these expenses must be accounted for in your budget.

Essential Consideration #5: Uses (Primary and Secondary)

Before buying your lake house, you'll want to evaluate how it'll be used. There are some relevant questions you can ask yourself ahead of time, including:

  • Will this lake house be your primary home now? Your secondary?
  • How will adding a new lakefront property affect your taxes?
  • How often will you be staying at the home?
  • Will you rent the property out? Will you need rental insurance?
  • Will you be providing another type of service, such as through Airbnb?

All of these questions can help you plan for the costs of the property, such as necessary forms of insurance. Knowing how your taxes will change after buying a lake house can help you financially prepare, too.

Essential Consideration #6: The Pros

Obviously, if you're even considering buying a lake house for yourself, you know that there are many potential pros that can come with it. Just a few of these include:

  1. The relaxation and rest you need: You've worked hard for your success, and maybe it's finally time you relaxed in it all and rewarded yourself with a lakefront property.
  2. Can be a great investment: Lakefront properties can serve as a great investment over time since this type of property seems to always be in high demand and holds its value well. Lake houses can also be passed down to family members as an asset if you don't want to sell them.
  3. Perfect for water lovers: The potential for lots of new activities opens up when you invest in a lake house. Children and grandchildren will always be entertained at your property, with so much to do and so many avenues available to create new hobbies and pastimes. 
  4. Incredible views: A lakefront property can be somewhat of a painting come to life. Between the trees, forests, rocks, mountains, and other lakes in the distance, a lakefront property comes with a ton of incredible views to soak in, which can also inspire exploration or artistic projects.
  5. Attracts family and friends: Can you imagine any of your friends or family not wanting to visit you at your lake house? With so much to see and do, getting company over to your place should never be a problem. You can really step up family weekends and have a great place to get away together with everyone.

The pros are the fun parts everyone wants to consider first when thinking of buying a lake house. Unfortunately, they don't account for all the considerations you need to make ahead of time.

Essential Consideration #7: The Cons

Buying a lake house isn't all fun and games, even though it might look that way upon first glance at the property. There are very real cons that must be taken into consideration before you pull the trigger on that major purchase, like:

  1. Costs can get carried away: The lake home will most likely be the most expensive portion of your new costs, but you’ll also need to factor in security systems, amenities, boats, insurance, etc., taking even more money from you. Without a budget, these new expenses can quickly get carried away.
  2. Maintenance: Lakes, as well as the winds and wildlife that accompany them, can take a toll on your lake house. You'll need to be ready for the upkeep that comes with the property ahead of time, which will leave you much better off than waiting until anything becomes too problematic.
  3. Insurance: The cost of flood insurance, home insurance, boat insurance, etc., can get out of hand pretty fast, too. Look for discounts and use an expert independent insurance agent to help you find the right blend of coverages and costs together for each type of policy you need.
  4. Mosquitoes, etc.: Bugs are everywhere along the lake, and mosquitoes are typically the worst. Even if these pests don't bother you, they could easily bite or irritate friends and family members who visit.

Knowing the ins as well as the outs of purchasing a lake home before signing any paperwork can help you make a much better-informed decision. Also considering how you can properly protect your investment and finances can help you avoid potential disasters down the road. At the end of the day, buying a lake home can be an extremely rewarding accomplishment. It's just not a decision to be made lightly or on a whim.                 

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Independent insurance agents also have access to multiple insurance companies, ultimately finding you the best home insurance and vacation home insurance coverage, accessibility, and competitive pricing while working for you.

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