Real Estate News & Market Insights:
- Hidden costs: Factor in higher insurance, property taxes, flood insurance, and ongoing maintenance when budgeting.
- Use and restrictions: Decide if it’s a primary, vacation, or rental and check local or HOA rental rules and permits.
- Unique maintenance and risks: Inspect for flood risk, shoreline erosion, dock issues, septic systems, and seasonal accessibility before buying.
Key Takeaways:
- Lakefront property can be a great investment both personally and financially.
- Insurance, maintenance, and property taxes can all add significant costs.
- It’s important to consider how the pros and cons will impact you personally and financially before making a decision.
There’s something so peaceful about the idea of buying a lake house — quiet mornings by the water, endless outdoor activities, and a welcome escape from the everyday hustle. For some, it’s about revisiting favorite childhood spots; for others, it’s a smart way to generate vacation rental income. No matter your reason, buying a lake house isn’t just a lifestyle upgrade—it’s a big financial decision.
Before diving right in and buying a lakefront property on Lake Washington, Lake of the Ozarks, or the Great Lakes, it’s important to weigh the hidden costs, unique maintenance needs, and rental potential. In this Redfin guide, we’ll walk you through what to consider before buying a lake house so you can make the most of your investment – and your time on the water.
Owning lakefront property: A quick pros and cons list
Before we dive into the details on lakefront living, here’s a quick look at the biggest advantages and drawbacks that come with buying a house on the lake:
| Pros | Cons |
| Great for vacations and weekend getaways | Higher taxes and insurance costs |
| Potential for rental income | Maintenance challenges |
| Access to outdoor activities | Flood risk and wear from weather |
| Long-term investment and appreciation | Seasonal accessibility |
Questions to ask before buying a home on the lake
Just like any home, asking the right questions before buying will help you uncover essential details about your investment.
1. Is this a vacation home, investment, or primary residence?
Ask yourself how you’ll actually use the lake house. If you’re making a move to lakefront life, you can follow a standard home buying process. If it’s a secondary property, either for investment or for vacation, you’ll need to think about the associated costs and effort that come with running a rental property.
2. How much time will you spend there?
How much time you personally spend on the property correlates with how much a lender will give you, how much insurance you will need, and what kind of maintenance you need to account for in your absence.
3. What is the flood risk in the area?
If you’re buying waterfront property, you’re most likely buying a house in a flood zone. Ask about the flood history of the property and know the specific risks associated with the zone you’re buying in.
4. Are there rental restrictions?
Rental restrictions are rules set by the local government or homeowners association (HOA) to manage the leasing of properties. Some restrictions include:
- Banning short-term rentals
- Requiring rental permits or licenses
- Limiting how many days per year you can rent it out
- Setting minimum stay lengths for guests (like 30 days or more)
If you’re planning to rent out your lake house, check local laws and HOA rules before buying.
5. Is the shoreline private or shared?
A house on the shore can be nice for beach access, but most lakes are public property. That means you could have people strolling along the shore, sitting on the dock, or swimming right outside your window.
Consider how much you value privacy and quiet and use your answer to determine where you buy. A lake with a loud and busy tourist season might not fit with your dream image of reading quietly in the sun on the beach.
Hidden costs associated with buying a lake house
Buying a house on a lake means making sure you can cover the hidden costs. A good price at face value doesn’t factor in components like maintenance and taxes which could exceed your ideal budget. Here are some common hidden costs and a few tips to help you navigate them:
Property taxes on waterfront vs inland properties
Property taxes are based on your home’s value and location. A high-value home in an ideal location, like a nice cabin on a popular lake, will have higher property taxes. Although this may add to your monthly expenses, most property taxes are tax deductible. If you’re mainly using your lake house for personal use as a secondary residence, you can deduct the mortgage interest and property taxes. You can still get a tax deduction if you’re renting out the property, but you’ll have to meet certain conditions.
Higher costs for insurance
A house on a lake requires more insurance than you typically need on average in a few different areas:
- Liability insurance: Lake homes tend to have more accidents. More guests or renters coming through means more activity, excitement, and potential for injury. Adding more liability insurance to your policy might be necessary.
- Boat insurance: If you buy a boat to use at your new lake house, don’t forget that insurance has to come with it. Adding the expense ahead of time will protect you in the long run from expensive repairs due to weather, damage, or rider injury.
- External structures: Deciding how much home insurance you need at a lake house means covering more than the house itself. Docks, sheds, hot tubs, boat houses, or other structures that aren’t physically attached to the home should all be included.
- Flood insurance: Flood insurance is not covered under most home insurance policies, and you’ll need it if your lake house is in a flood zone. You can look into private insurance companies or federally funded insurance from the National Flood Insurance Program (NFIP).
Despite the higher upfront costs, having the right insurance pays dividends in the event of an accident.
Waterfront land leases
You may own the house, but it could be on leased land owned by the government or other agency. Buying a house on a lake means taking over whatever lease the land owner has put in place. Be aware of the terms of the lease, how close it is to ending, and what the renegotiation process looks like. You may have to account for price inflations if the lease ends while you own the house. On the bright side, you don’t have to pay property taxes in addition to a land lease fee if one exists.
Unique maintenance considerations
Lakefront homes are considerably more exposed to the elements. These are some of the most common issues you could encounter:
- Flooding or water damage
- Shoreline erosion
- Algae bloom or poor water quality
- Wood rot and mold
- Insects, pests, and wildlife
- Dock and seawall deterioration
- Septic system maintenance
Getting a home inspection before buying a lake house will help you identify which issues already exist. While some are fixable and preventable, constant upkeep is required to keep your getaway clean and safe. If you’ll be away from your property for extended periods of time, hiring a maintenance company might be a necessity, especially if you don’t want to be stuck doing chores on your vacation.
Places to buy a lake house
Picking which lake to buy on is a big decision, and there are an endless number to choose from. Knowing what you’re intending to use your lake house for will help you narrow down your search. Here are a few examples of different lakes and what makes them attractive to buyers:
- Lake Tahoe: On the border between California and Nevada, Lake Tahoe is well known for its gorgeous scenery, blue waters, and year-round recreation. Buying a house on this lake allows for rental income from both summer and winter tourists.
- Lake Murray: This charming South Carolina lake is a hub for local residents who enjoy fishing and boating in their spare time. The variety of lakefront property and houses near the water make excellent primary residence choices.
- Lake Chelan: As one of the most popular lakes in Washington, Chelan is a favorite summer getaway for residents all over the state. Vacation homes are popular here, especially for families that make annual visits.
>>Discover: Best Lakes to Live On in California, Washington, South Carolina, and more on Redfin
Buying a lake house to rent it out
Done right, renting out your lake house can help offset the cost of ownership. If you’re hoping to make your lake house work as a source of income, here are some things to consider before buying one:
- Rental restrictions: As mentioned above, there may be local rules regarding rental properties in certain communities.
- Permits and taxes: Some cities require short-term rental licenses to operate a vacation rental. You may also be taxed on your rental income.
- Property management: If you live far away, or simply don’t want to facilitate yourself, you’ll need to hire a property management company to handle guests, cleanings, and repairs.
- Occupancy rates: Income for lake house rentals is often seasonal, booking more guests in the summer than the winter.
The key to making a rental property work for you is making it stand out from the rest. Adding attractive amenities and buying in a location that has year-round attraction will help keep bookings up.
Tips for first time lake house buyers
While it might seem daunting to finally jump for a long time dream, here are a few tips for first time buyers that will ease the pressure of buying a lake house:
- Work with a real estate agent: You don’t have to do it alone! A local agent who specializes in lakefront properties is a great asset in this home buying process.
- Visit during all seasons: Know what to expect – rain, shine, or snow – to get a better picture of what upkeep and maintenance looks like year-round.
- Get a specialized home inspection: Be sure to include the shoreline, docks, septic systems, and other unique amenities.
- Talk to neighbors: Your potential neighbors will have first-hand knowledge of lake conditions, seasonal traffic, and any concerns to be aware of. Plus, if your lake house is more remote, having some friendly faces nearby to help you in a bind is priceless.
- Research local laws and regulations: Doing a little extra research will put your mind at ease and prepare you for what to expect.
Is buying a lake house worth it?
Despite the extra considerations, buying a lake house can be a rewarding experience. Extra income from renting it out is nice, but the memories you could make are priceless. Whether you’re an active outdoors enthusiast or someone looking for a quiet retreat on the shore, the right research and planning will lead you to the perfect lake property to match your vibe. Just be sure to prepare for the extra costs and maintenance before diving in.
Lake house buying FAQ
Can I get a mortgage on a lake house?
Yes, you can get a mortgage on a lake house much like you would on a regular house. However, your lender may have different requirements for lakefront properties or second homes. Speak to a financial advisor for help with the financing that best fits your situation.
What is the best time to buy a waterfront property?
The best time to buy on a lake is typically between the end of summer and the end of the year. You’ll have less competition from other buyers, more inventory to choose from sellers, and more time to prepare the home for rent or your own use in the peak season.
How much does it cost to maintain a lake house?
Lakefront properties cost more in maintenance on average than a typical home. The specific costs largely depend on location, disaster risk, and amenities. Be aware of the requirements for upkeep and consider the cost and benefit of insurance to protect your wallet from expensive out-of-pocket costs.
Where should I buy a lake house?
Where you buy is heavily dependent on what you’ll use your lake house for. If you’re looking for a primary residence, consider what is most valuable to you that will outweigh the potential drawbacks. For an investment property or vacation home, be sure to factor in what guests may be looking for in the area, as well as the extra cost of property management while you’re away.
Will I need flood insurance?
If you’re buying a house on a lake, it’s highly likely that you’re buying a house in a flood zone. Flood insurance isn’t covered under typical home insurance policies, and may be required by law in certain high-risk zones. Check FEMA’s Flood Map Service Center to see what type of zone your house is in, and prepare accordingly.
Do all lake houses have septic systems?
Many lake houses in more rural areas do, but not all of them have septic tanks. Septic systems do require periodic maintenance and inspection by a professional. Be sure to consider the extra costs associated – and get a septic system inspection – before buying a lake house that uses one.
Is a lake house a good investment?
Buying a lake house can be a good investment with the proper research and preparation. Lake houses in desirable locations tend to appreciate in value, as well as have strong rental potential. Renting out your lake house when you’re not using it can allow for a second stream of income that can be especially profitable in high tourist seasons.
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