Reality Check

Know the difference between "ocean view" and "oceanfront"? Know the value of a tourist town? A contributor at Money shares what you should consider before making that big move to the shore.
By Lisa Gibbs
Cecelia Bonifay and her husband, Greg Presnell, always wanted a house on the water where they could indulge their love of fishing and sailing. Now they walk out of their three-story contemporary home on Gasparilla Island in southwest Florida to a semiprivate dock, hop on their boat, and scour the nearby mangrove islands for snook and trout.

Living on the coast brings many rewards, not the least of them financial. The values of coastal properties have appreciated at an average annual 7 percent rate over the last 50 years, according to a federal study. A waterfront property is worth anywhere from 8 percent (Gulf) to 45 percent (Great Lakes) more than a comparable inland site.

Idyllic as it all sounds, living on the water also takes a bit of work. Consider the following:

Read the fine print. "Ocean view" does not mean "oceanfront," as one retired California couple discovered. They purchased what they thought was a dream home on the beaches of North Carolina. Weeks later, bulldozers started tearing up the earth between them and the sea for the actual oceanfront home. Some lenders have stopped requiring surveys, but order one anyway to protect yourself.

Is the beach public or private? You can buy waterfront property, but if the beach is public you won't be able to stop people from setting up a lounge chair right in front of your home.

Check building restrictions. Ask the local and state governments about height limits, setbacks, and wind-resistance rules. Learn the environmental laws; certain areas may be unbuildable if they contain protected wildlife. At Cecelia and Greg's home, the state requires water quality tests annually. If your heart's set on a boat dock, make sure you'll be able to install one. A dock likely will require leasing underwater land from the state and acquiring permits from several agencies. Check tide charts and bridges to make sure you can access your property by boat at all times and from all directions.

Talk to a builder before you buy. Coastal homes need to withstand the elements. Restrictions on sewer systems and septic tanks may dictate the size home you can build on your property. Having to truck heavy machinery and materials to an island or remote waterfront location will add to costs. Consult a builder with experience in coastal homes.

Realize insurance is expensive. Many insurers have stopped writing homeowners' policies in coastal areas because of storm losses; expect to pay more for less coverage. If a hurricane is swirling within a certain number of miles, insurers will stop writing new policies, which can delay closings. You'll also need flood insurance. For some Oregon oceanfront properties, that can run more than $3,600 a year, says Sue Poling, executive director for the Lincoln County Board of Realtors. Contact the state insurance department for info about insurers who cover your area and special assistance programs for coastal properties. Be aware that insurers won't compensate you for the loss of land due to beach erosion.

Prepare for maintenance. Salty air is tough on homes, cars, fabrics, really anything left outdoors.

Guard your investment. Choose properties relatively safe from erosion and storm damage. Homes above the 100-year flood level and those with a seawall, for instance, are worth more than unprotected properties. Other factors affecting values include whether there's a beach renourishment program and the distance between the house and water. Finally, a purchase in an area that encourages tourism and recreation can pay off because of a greater demand for rental properties.