How to Buy Beachfront Property

Beachfront property purchases can be a tricky investment. Homeowners spend relatively little time in their beach homes, but a substantial portion of their paychecks on them. Because there’s so much uncertainty, ranging from market conditions to eroding beachfront, here are eight tips to think about when investing in that waterfront villa.

1.) Changing Shorelines

Your mortgage is likely to last twenty-five or thirty years; shouldn’t your beach house? Beaches are victim to erosion and hurricanes. Spend some time researching information on the history of the area to make sure your second home will remain on the good side of the shoreline.

2.) Hurricane And Flood Liability

Flood and hurricane insurance is often sold separately from general homeowner’s insurance. If, as was often the case following hurricanes such as Katrina, insurance brokers can’t determine if your home was destroyed by wind or water, and you lack one of those insurance policies, it’s likely you won’t be reimbursed. If you’re a condo buyer, make sure to find out whether or not your condo fees cover wind and flood damage.

3.) Where is the Market Heading?

In situations where the local market is down by double digits, you can afford to wait for it to bottom out. In this case, it might be worth renting a beach house for a year or two to avoid a negative-equity situation.

4.) Renting Your Property

It’s unlikely that you’ll spend more than one or two months a year in your beach home. Understanding the state of the local rental market is key to how much of a drag your beach home will be on your finances. If you’re looking at buying in a beach community dominated by overbuilding or foreclosure, as with many of the sub-markets in South Florida, there is sometimes a glut of unsold homes which are being rented, and rental yields are down as a result. Not being able to rent your home ups the overall cost of the investment.

5.) Beachfront Deals

Almost every beach community has investors, speculators and regular buyers who have lost money on their beachfront property. If you’re looking for a deal on a home (or want to get an idea on how low your low-ball offer can go) make sure to check the title and loan status of the home in question through the county assessor’s office. Keep in mind that most sellers are unlikely to accept an offer too far below what they paid originally, unless they are in extreme distress.

6.) Foreign Property

It’s never a good idea to buy into the next speculative bubble, but if you’re looking for a hot sales market, consider areas like Mexico, where there are areas like Los Cabos, which are undergoing real-estate booms. These properties will often give you a lot more space, closer access to beachfront and more amenities than what you can buy in established U.S. markets.

7.) Fringe Markets

A phenomenon seen during the boom in the urban market, but also in beach markets, was the rush to fringe markets with the idea that they were up-and-coming. Since the market has turned in both places, those fringe areas have depreciated quickly. We’re currently in a market where there are very few up-and-coming neighborhoods or beach communities in terms of appreciation, so you should be wary of any broker who promises you as much.

8.) Right on the Beach is Best

If you are looking for the best price appreciation, homes located right on the beach are much more likely to hold their value than cheaper alternatives in the same town or community that are a short distance from the beach. There’s a much more limited quantity of actual beachfront property than there is of homes that are in adjacent areas.

portions of this article originally appeared at forbes.com