Purchasing a waterfront home in Wilmington, NC, is a dream for many. It has a profound effect on the mind and body, and can be a positive lifestyle choice. However, to buy waterfront property means you need to budget for some extra expenses you wouldn’t normally face with other properties.
Here’s what you need to consider:
When you purchase a home for sale, your REALTOR® will order a home inspection to unveil current and potential issues, like foundation cracks, a leaking roof, old electrical, and rotting wood. This is to ensure you are making a sound investment. The same should be done for other structures on the property, like a bulkhead, dock, or pier. This requires an additional inspection from an experienced professional, the cost of which varies. If it’s a newer structure, sometimes the construction companies will provide a free annual or bi-annual inspection, which could be beneficial for your pocketbook.
Extra Closing Costs
If you aren’t proactive with the loan, it could cost you money. Waterfront properties can be expensive and deemed special real estate, which can put them into the Jumbo Mortgage category. Jumbo loans take longer to underwrite. Delays in closing can lead to extra fees and costs for you, especially if you need to sell to buy and your current home closes well in advance of your new home. Make sure you respond promptly to all requests from your mortgage broker to prevent additional fees and delays, and coordinate with your REALTOR® on closing dates.
Higher Property Taxes
Because homes near water are worth more, they are assessed at a higher rate. This means you’ll have higher property taxes. Of course, the assessment for an oceanfront property will be higher than a home that sits next to a pond due to demand. There are also additional tax rates for homes located within city or town limits, which should be included in the calculations. You can view past tax bills for properties located in New Hanover County online at the Tax Department website. They handle all taxes levied by the county and the municipalities of Wilmington, Wrightsville Beach, Carolina Beach and Kure Beach.
It’s common for waterfront homes to have higher insurance premiums. It’s also normal for mortgage lenders to require flood insurance for funding. This can be done through a private flood insurance provider or the National Flood Insurance Program (NFIP), which aims to provide affordable costs for homeowners. The average cost of flood insurance in North Carolina through NFIP is $751 per year, but it varies by property. The best approach to determining cost is to get a quote directly from your insurance agent.
Higher Maintenance Costs
Waterfront homes have higher maintenance costs, especially oceanfront properties. They are subject to more wear and tear from humidity and saltwater, which can cause rust and oxidation in metal that isn’t stainless steel. HVACs in beachfront properties tend to have shorter lifespans for this reason.
For homes with bulkheads, docks, or piers, owners have the additional costs of annual maintenance. A bulkhead is a barrier wall that separates the water from the property and can be critical in preventing flooding of the home. Large bulkheads costs tens of thousands of dollars to replace, so maintenance is very important.
Residents of North Carolina are very familiar with large storms, because the state is located right on Hurricane Alley. High winds, hail, rain, and flooding can cause damage to structures. If the home is properly protected by insurance, most major repairs will be covered; however, taking the steps to protect the property when a hurricane is on the way can cost money, especially if you need to install plywood or hurricane shutters, or lay down sand bags. Beachfront and Intracoastal Waterway homes are most affected, but even properties along the Cape Fear River must deal with flooding from storm surge.
Many waterfront homes face frequently-visited public areas, like the beach and Intracoastal Waterway. For that reason, you’ll want to invest in a security system. The home you purchase may already have one, but you’ll need to budget for a monthly service fee. Even the simplest DIY systems require you to pay for server usage and cloud storage for saving camera footage.
Waterfront properties are frequently used as second homes or vacation homes that are then rented out to offset ownership costs. If this is your plan, you need to budget for the expenses of property management. You may choose to skip hiring a property management company, but you’ll still have additional fees for processing payments and listing the home’s availability. Keep in mind that condo buildings sometimes have onsite rental agents. This can be beneficial for you as it helps lower the cost of management.
While buying and owning a waterfront home in Wilmington is more expensive than purchasing a regular property, the additional expenses can really pay off. Not only do you get to enjoy a lifestyle that’s been known to reduce stress, but a waterfront property is almost guaranteed to have an increase in value, especially in an area like Wilmington where buildable waterfront lots are scarce.
If you have any questions about purchasing a waterfront home in Wilmington, NC, give us a call at (910) 202-2546 or send us a message through our contact page.
REALTOR® Melanie Cameron talks about extra expenses home buyers can expect when shopping for waterfront properties for sale in Wilmington, NC, and the surrounding barrier islands. Have questions about buying a waterfront home in this area? Give us a call at (910) 202-2546 or send us an email at [email protected]!
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