Tag: investment property

Why Buyers are Investing in Lake Houses During the Pandemic

Posted on Camille Smith
Photo courtesy of OneKindesign.com.

There’s no question that the pandemic has rendered city life stifling. With no bars, movie theaters, or indoor dining, the draw of big cities has dissolved. As a result, more people are investing in lake houses for the freedom the city doesn’t provide anymore. Real estate appraiser and consultant Jonathan Miller told CNN that he calls these “co-primary” homes. 

Instead of spending more time in one home and occasionally vacationing, those with co-primary residences spend equal time at both. According to Forbes, people are especially seeking markets where you can live comfortably “off the grid.” As the pandemic continues, this trend isn’t slowing down. If you’re looking to make a lake house your co-primary home, check out the key reasons driving this trend. 

A City Home Isn’t Necessary Since…

Photo courtesy of Jessica Bryant via Pexels

A simple rationale for this trend is that due to the pandemic, a city home isn’t necessary anymore. Many people stayed in cities for their in-person obligations. However, more shutdowns of offices and social life defeat the purpose of owning a city home. According to brokerage firm Miller Samuel Inc., Manhattan Sales have fallen 54% from last year. Instead, New York dwellers are investing in lake houses and other vacation homes in places like Connecticut and the Hudson Valley. This way, they can go back and forth between their co-primary homes whenever they need.

Priorities Have Shifted

Photo courtesy of Vincent Nguyen via Pexels

Before COVID-19, a thriving social scene, and employment opportunities were a huge draw for urban environments. Living in a small apartment didn’t matter because many people practically lived at the office. However, as non-essential workers continue to work remotely, spacious homes are a bigger priority. With more people choosing open spaces over proximity to a now fading city life, investing in lake houses has become popular.  According to a Zillow survey, among Americans working at home currently, 66% would consider moving homes if their job continued remotely. This majority position marks a clear priority shift from access to work to access to space.

It’s Less Expensive

Photo courtesy of maitree rimthong via Pexels

Many buyers cannot afford a lake house as a co-primary residence. These individuals may move to the lake full-time, in part, because it’s less expensive. This trend is especially true for buyers who have lost their jobs due to the pandemic. The country’s unemployment rate rose from 3.8% in February to 13.0% in May. According to the Pew Research Center, even these numbers might be underreported. When money is scarce, why stay in a pricey urban apartment when you can retreat to a less expensive lake house? Saving on expenses is just one reason why city renters are buying lake houses as a first home.

Immediacy Over Investment

Photo courtesy of QuickenLoans.com.

Typically, buyers see lake houses as an investment—something to put stock in and reap the benefits later. However, now that things are more distressing and uncertain, buyers want something they can enjoy immediately. For similar reasons, rentals have been harder to come by. Robert Nelson, sales managing director for Brown Harris Stevens, told CNN that those who may typically rent their lake house to guests are opting to spend more time at their vacation residence. When everything else is up in the air, being at a lake house offers a sense of immediate security.

This Pandemic Was the Last Straw

For many buyers, investing in lake houses during the pandemic was not a split-second decision. They had been mulling over it for a while, and COVID-19 was the final straw that prompted the purchase. In New York specifically, an influx of people have left the city in favor of more remote locations. According to CNBC, there are not enough homes on the market in nearby vacation areas to meet the current demand. Many of those who said “maybe one day” to their dream of a lake house are deciding that day is today. 

With so much uncertainty ahead, owning a lake house provides a much-needed sense of warmth and comfort. Are you interested in hopping on the bandwagon? Check out our listings in multiple states at Lakehomes.com! 

Lake Homes: More Than Just Waterfront

Posted on Staff

When you hear “lake home,” those words can conjure various images. Contrary to popular belief, not all lake homes are waterfront homes.

As a matter of fact, many people who own lake houses aren’t even close to the waterfront! Because of this, many lake homes are more affordable than you might think.

There are three major types of lake property: lakefront, lake access, and lake community. Each has its pros and cons, both functionally and financially.

looking out at the lake through window

Waterfront Property

Lakefront, also known as “waterfront,” property extends to the shore of the lake itself.

It offers the most prestige, the most access, and a direct line to the lake right out your door.

Lakefront property can be incredibly beautiful, and there’s nothing like looking out your back patio directly onto the calm waters of the lake in the evening.

Naturally, such prestige comes with a high price tag. Waterfront property is significantly more expensive than similar property, even a block away from the water.

It also brings with it many more responsibilities.

Waterfront property is the most vulnerable to flooding, erosion, and inclement weather. There are often special insurance requirements, and upkeep can be a significant commitment of time and money.

If you plan to build or improve on waterfront property, make sure your plans fit with the local regulations. Many lakes have restrictions on docks, signage, and landscaping.

Since there is a limited amount of shoreline on each lake, property on the water’s edge often appreciates the fastest.

Waterfront is also very attractive to vacationers. This can pay dividends if you intend to rent it out.

Waterfront property is perfect for those who have their heart set on the water’s edge and have the time and money to maintain it.

Lake View Property

“Lake view” property, also known as “lake access,” is near the water but does not extend to the lake itself.

This property can be a literal stone’s throw away from the water and is often just as picturesque as the lakefront.

Prices vary from lake to lake, but lake view property is typically much less expensive than lakefront.

Lake view property isn’t as scarce, doesn’t have the same water access, and doesn’t have the convenience or prestige of being directly on the waterfront.

At the same time, a lake view can give many of the benefits of a waterfront at a fraction of the cost or the headaches.

Owners still typically have easy access to the lake without needing to maintain their own stretch of shoreline. Weatherproofing and maintenance costs aren’t as significant, either.

Most lake communities have options for those who live on the lake to enjoy its benefits. Marinas can store boats until you need it, and there are usually access points for swimming, fishing and water sports.

If you want a property close to the water’s edge but have a limited budget, a lake view property may be for you.

Lake Community

Most lakes have neighborhoods arrayed about them. Many of these homes aren’t within clear view of the water’s edge but are still very much part of the lake community.

Homes situated in a lake community a short distance from the water can cost a fraction of waterfront property.

Nicole Anderson Walters, a Lake Homes Realty agent specializing in real estate on Logan Martin Lake, Alabama, offered, “you can save money by being in a lake view or lake access neighborhood. Many have water views and community areas with boat launch.”

“Where a home may cost you $89 per square foot off the water, the same home could cost upwards of $168-$200+ per square foot directly on the water,” she added. “You can often find a much nicer home off the water with amenities in the neighborhood.”

Depending on the size of the lake, these neighborhoods can range from high-end gated communities to condos and cabins to retirement communities and everyday suburbs.

These lake communities are often a short drive to a short walk or drive to the lake itself but still have easy access to fishing, swimming, boating, and other lake activities.

As an added benefit, most avoid many of the upkeep costs and restrictions associated with lakefront property.

Many communities are also situated near state parks, landmarks, shopping centers, and other attractions. If these appeal to you more than living near the water, look for lake communities within a short distance of the lake.

Find what works for you!

Every lake is different.

In addition to those listed here, market prices can vary greatly between lakes. If you can’t find the kind of property you are looking for at one lake, look for others nearby.

You may find a hidden gem right under your nose!

Renting Your Lake Home on Airbnb

Posted on Staff

Airbnb is an online network where people can lease or rent short-term lodging in private homes.

The company was started in San Francisco by two roommates who wanted to “just make a few bucks” by renting out their apartment like a bed and breakfast, hence, the “bnb” part of Airbnb.

Today, it is the most popular and fastest growing individual vacation rental website in the world!

cell phone featuring Airbnb logo being held over bed

Almost anyone can be a host on Airbnb, which allows people to utilize their spare homes or rooms to earn extra income.

The host sets the price for the space, and renters pay for their visit in advance online. Both hosts and renters maintain profiles with ratings, feedback and general information.

This is perfect for those who own a lake home!

Lake homes are a great draw in vacation season, and you can earn hundreds of dollars in extra cash by listing your home.

Below are some helpful tips for listing your lake home on Airbnb.

Follow all local regulations

Find out what local regulations, taxes, licenses, permits and registrations apply where your lake house is located.

The governing authorities who control the use and development of property in your area usually have useful information on any such regulations.

If your lake home is in a rent-controlled area, there may be stricter rules that apply.

Call and ask questions if you aren’t sure – it’s extremely likely you’re not the first person in your area to inquire about renting your home.

HOA or Co-Op Permissions

Some cities and neighborhoods have bans or restrictions on Airbnb, so it is critical you check with your homeowner’s association or Co-Op Board regulations prior to listing your lake house.

If your lake home is a unit in a condominium community, check your contract to see if there are any short-term lease stipulations.

Remember your neighbors

Consider your neighbors when you plan to host your lake home on Airbnb.

When you have guests coming, let your neighbors know so they won’t be alarmed by strange cars showing up in the driveway.

This can save you a concerned phone call from your neighbor when they show up, or worse!

If your community has a security service, you should also notify them, as well, and make sure your guests have any entry or alarm codes before their stay begins.

Take photos to post online

At least some photos of your property are mandatory on Airbnb. Just some quick shots with your phone will suffice, but make them attractive!

You want to not only give prospective renters an idea of what to expect, you also want your home to be desirable.

Make sure any messes are cleaned up – and be sure to include some shots of the lake from your property!

Make your lake home safe for your guests

Leaving a reference sheet for your guests can be very helpful.

They should already have your contact number through Airbnb, but leaving it there can make it easier. Local emergency numbers, a backup contact, and other services are a good idea, too.

Make a basic first aid kit to keep fully stocked on the premises. The kit should be checked and restocked each time a guests checks out.

Make sure there is a fully functional fire extinguisher in the home and that the guests know where it and the first aid kit are kept!

Confirm that your smoke alarms and carbon monoxide detectors are fully functioning, and that your lake home meets government safety guidelines for your area.

Ensure that you have a clearly accessible fire escape route, too.

Make sure your lake home is spotless for guests

One of Airbnb’s hosting ideals is cleanliness.

Providing a clean and tidy lake home will make your guests feel comfortable from the moment they arrive so they can focus on enjoying their stay and the scenery surrounding them.

This also demonstrates you dedication to making your guests feel welcome.

Most guests travel light and assume their host will have the basic amenities that a hotel would.

Make sure you are fully stocked up on paper goods like toilet paper, napkins, paper towels, etc., and have plenty of clean towels and washcloths. Three to four sets is a suggested minimum to provide for your guests.

Also provide basic shampoo, conditioner and soap for your renters.

Little things tend to make a big difference with guests’ satisfaction as well.

Providing a map of the local area, suggestions for local places to eat and drink and local events and happenings go a long way with Airbnb renters.

There are many other ways to maximize your income through Airbnb, while minimizing the impact of guests on your home.

With these tips, you have an excellent head start!

Deductions Aren’t the Only Way to Save on Real Estate Taxes

Posted on Nerdwallet (LHR Content Provider)

man in suit holding up white house outline

By Bill Brown, 2017 President of the NATIONAL ASSOCIATION OF REALTORS®.

Learn more about Bill on NerdWallet’s Ask an Advisor

The mortgage interest deduction and the state and local property tax deduction are probably the best-known tax incentives for homeownership and real estate investment.

That’s no surprise. Roughly nine out of 10 home buyers borrow money to buy a home, meaning they likely pay some form of mortgage interest. And property taxes are a near-universal expense for homeowners.

Both deductions are crucial to making homeownership possible for the average buyer.

But there are other real estate-related tax incentives that might not be as familiar.

Capital gains exclusion

All homeowners hope their property will appreciate.

The flip side is that anyone selling an asset that has gone up in value may get hit with a tax bill for the profit, also known as the capital gain. Thankfully, homeowners have some help in their corner.

An individual selling his or her principal home can qualify for an exclusion of up to $250,000 in capital gains, and married people who file jointly may qualify for an exclusion of up to $500,000.

There’s no need to report gains up to these limits on a tax return.

To take the exclusion, sellers must pass the IRS’ ownership and use test, but it’s fairly straightforward.

Essentially, they must own the property and have used it as a primary residence for a total of two out of the five years preceding the sale. Even if owners currently rent the property and depreciate it — as we’ll discuss shortly — they might still meet the use and ownership test and qualify for the exclusion. And even if sellers haven’t lived in the home during the past five years, they might qualify for a partial exclusion.

That’s a big help, as well as a recognition of the fact that millions of Americans depend on their home to build wealth throughout their lives.

1031 like-kind exchanges

The “1031 like-kind exchange” sounds like it’s ripped right from an accountancy textbook, but it’s actually fairly easy to understand.

Let’s say a person owns a single-family, detached rental home as part of an investment portfolio. If the home appreciates, the owner will likely owe capital gains taxes in the event of a sale — unless he or she uses the proceeds to buy a condominium in a market with higher rents.

Because the single-family home and the condo are both investment properties, tax law treats them as “like kind.” And because this transaction is a “like-kind exchange,” the owner won’t pay capital gains tax until he or she sells the new property.

This gives investors an incentive to put any realized gains back into the economy rather than pocketing them. And it’s a big deal: Major real estate investors and mom-and-pop investors alike can benefit.

Depreciation on rental property

Homeowners who rent a portion or all of their property might be able to “depreciate” that asset, which means deducting some of the cost of the property each year on their tax return.

That could result in a significant income tax deduction.

If you do earn money on the sale of your home after depreciation is taken into account, you’ll generally owe tax on the depreciated portion at the 25 percent “depreciation recapture” rate.

Any other gains will be taxed as capital gains.

Changes may be coming

For more than a century, the United States has recognized the benefits of homeownership and real estate investment.

It strengthens communities and helps individuals grow nest eggs for themselves. However, Congress is considering tax reform proposals that could have sweeping implications for real estate incentives.

That’s something to keep an eye on.

Everyone’s tax situation is unique. Before you count on any of these incentives, you may want to talk with a tax professional. But if you’re ready to take the plunge into homeownership or real estate investment, tax benefits — some obvious and others perhaps less so — are out there.

Bill Brown is the incoming president of the National Association of Realtors.

The article Deductions Aren’t the Only Way to Save on Real Estate Taxes originally appeared on NerdWallet.

NerdWallet is a Lake Homes Realty / LakeHomes.com content partner providing real estate news and commentary. Its content is produced independently of Lake Homes Realty and LakeHomes.com.

6 Reasons We Prefer a Lake Home to a Beach House

Posted on Staff
Lake House VS Beach house what is the best for me | Lake Homes Realty

There are cat people and there are dog people. Chocolate or vanilla? Lake home or beach house? When it comes down to it, there is no right or wrong answer, but here are six reasons why we prefer a lake home to a beach house!

Reason #1: Sand

Little girl playing in sand at beach

Sand. Sand everywhere.

If you spend time out on the beach, prepare to bring pounds of it back home with you.

You can rest assured that the hard-to-clean-up substance will end up in your shoes, your car, all around the house, and even in the bed.

Oh, and that’s without even mentioning sand spurs or sand gnats/flies!

Reason #2: Salt Water

Some may prefer the saltwater to the freshwater, but it’s nice to be able to look around underwater unaided by goggles and without burning your eyes.

Reason #3: Sharks

No swimming sharks sign

While not a completely rational fear, there is a percentage of the population who is afraid of sharks.

If that’s the case, come on over to the lake.

There are no freshwater sharks, with the exception of the bull shark, which can travel up rivers but generally stays near the coast.

Not to mention, there is no way for a bull shark to get over a man-made dam which almost all lakes of size are created by.

Reason #4: Rope Swings/Cliff Faces

Man swinging on rope swing at lake with dog

Beaches do not offer trees, nor does it offer a “deep area” where someone can just jump in the water from some height.

You are forced to wade into the shallow water until it gradually gets deeper.

On the other hand, lakes can be hundreds of feet deep right at the edge of the shoreline. This provides ample opportunity for cliff jumping, launching from a rope swing, or perfecting your dive!

Reason #5: Docks

Older retired man relaxing on dock at lake

A large portion of lakeside properties includes a private dock or the ability to construct one, whereas many beach homes do not.

Similar to reason 4, this can provide a platform to dive into the water, even from as high as 25 feet if you have a double-decker dock.

In addition to diving, the dock provides an excellent platform to fish from, and many species of fish will naturally take cover in the water under the dock.

It’s also the perfect place to relax or hang out.

You can grill out, sunbathe, read a book, or whatever you’d like, all the while enjoying the sounds and scenery of being right on the lake.

Reason #6: Cost/Availability

Historic Charleston lake community on Colonial Lake

While both freshwater and coastal shorelines can only provide a finite amount of real estate, there are actually many more miles of lake shoreline than coastal.

In fact, there are more lake shoreline miles in the state of Alabama than there are coastline miles on the entire Atlantic Coast and Gulf of Mexico (in the U.S.) combined.

What does this boil down to? Supply and demand.

Both properties are more costly than your average primary home, but there is a much larger supply of lake property, making it a lower price point in many instances.

At the end of the day, both lake and beach properties make for fantastic getaways. And though we may be a little bit biased, there are pros and cons to each location.

We just choose to head to the lake.

Do you prefer the lake? If so let us know why in the comments below!

Lake Property and Shoreline Ownership

Posted on Glenn S. Phillips
Person holding set of keys with house keychain in the air

Every lake home buyer has the same question when it comes to shoreline ownership. Do you own this land, or lease it? The choice does not always belong to you.

Who Legally Owns the Land?

The owner of the lakebed and the shoreline property may have stipulations on the way they can legally offer building lots. Most owners of major, developed lakes in the United States are public utilities. Utilities such as power companies or government agencies like the U.S. Army Corps of Engineers.

In fact, some estimates show that these kinds of shoreline ownership accounts for about 90 percent of the approximately 41 million acres of lakes and reservoirs in the United States.

When a public utility builds a lake because it needs water for industrial use, such as hydroelectric power, cooling of industrial power plants, etc., the public utility, within Federal Energy Regulatory Commission (FERC) agreements, retains possession of much of the land around the lake, including shoreline areas.

The FERC may allow the public utility to only lease shoreline lots to homeowners. In other cases, the public utility is able to actually sell the lots to homeowners.

Whether they lease or sell the lot is based on the individual public utility’s agreement with the FERC regarding a particular lake. Additionally, highly detailed state or local lake protection ordinances contain restrictions covering many concerns. These concerns include how many homes can be built along shorelines, how close to the water they can be, and how wide visibility buffers must be between them.

Things to Consider with Leased Land and Shoreline Ownership

Potential lake home residents are cautioned to read the fine print on land lease documents. For instance, a lease may stipulate that if “improvements” are not made within a certain number of years, the lease could be terminated.

This means that a person who intends to eventually build a retirement home on leased land, let’s say in 40 years, may not be allowed to do so. This is because the lease could stipulate that “improvements” or building of the home must occur within 5 years.

Land leases can run for a maximum of 99 years, while some lake leases are much shorter. Sometimes running 35 or less. A mortgage lender will typically not issue a mortgage to buy or build your lake home for longer than the length of the lease on the lot. For instance, seeking a 30-year mortgage to build on a lot that is leased for 25 years is futile.

Person holding house and keys in hand while homebuyer signs leased land contract

Consideration for inheritance must include the length of the property lease and whether it is renewable. With many leases, after the lease term expires and there is no renewal option, all land and “improvements” (inclusive of houses and other structures) revert back to the organization who has issued the lease to the person.

So don’t build a lake home on leased land with no ability to renew. Also don’t expect your heirs to automatically have ownership of the lake home.

At some lakes, ownership of the ground might be an option when deciding to build a new home or purchase an existing home. There is usually more opportunity for this on a privately-owned lake, although many publicly-owned lakes offer ownership as well.

Some public utility officials say the trend at public utility-owned lakes is moving more toward selling the lots, rather than leasing them. But, only if it is allowed in the FERC agreement.

Floodplains and Your Shoreline

Keep in mind that whether leasing or buying land to build on, power companies by law must retain ownership of the floodplain. In practical terms, a floodplain is a certain number of feet of land extending from the shore of a lake.

This boundary is determined by federal and state agencies. It is vital for storm runoff, vegetation diversity, water quality, wildlife habitat, and aesthetic qualities.

Turn to an Expert

There can be many complications when it comes to purchasing or leasing property on a lake. This is why it is always best to enlist the help of a real estate agent. Specifically one who focuses on lake real estate.

A true lake specialist will be very familiar with all of the details of their lake. They will be glad to walk you through all available options and what each will mean to you as a buyer.

Value of My Home Is Rising … Do I Need More Homeowners Insurance?

Posted on Glenn S. Phillips

home value rising, home insuranceHome prices fluctuate considerably, often times leaving people to wonder whether or not they have adequate homeowners insurance coverage.

That’s especially true whenever home prices are on the rise around the country.

But just because the value of your home has risen recently doesn’t mean you need additional insurance coverage, as there are a number of things that play a role in determining the amount of coverage that you’ll really need. Continue reading “Value of My Home Is Rising … Do I Need More Homeowners Insurance?”

Must-Have Amenities For Renting Your Lake Home

Posted on Glenn S. Phillips

Renting your lake home is a great way to earn additional income while you’re not using it. However, because you’re only renting it out as a vacation home during certain parts of the year, you’ll still have to provide those amenities that renters have come to expect.

Just as important, you’ll want your lake home to stand out from the crowd and encourage renters to choose your home over others.

The following are some of the amenities that you should provide to renters when renting your lake home to make it a more attractive vacation destination: Continue reading “Must-Have Amenities For Renting Your Lake Home”