NEW YORK (Money Magazine) -
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 near the water is the closest many of us will get to paradise on earth. Many of the rewards are personal, of course, but others are financial.
Coastal properties have appreciated at an average annual 7 percent rate over the past 50 years, according to a federal study. A waterfront property is worth from 8 percent more (on the Gulf) to 45 percent more (around the Great Lakes) than a comparable inland site.
But let's face it, the supply of ideal places to live on the coast is limited. Unregulated development has marred the beauty of some areas; in others the economy is too closely tied to tourism to support the good life year round. Perhaps there's too much summer traffic -- or too many winter storms. And prices are steep.
Where should you look for your spot on the shore? In our online gallery, the editors of our sister publication, Coastal Living, recommend the most livable places in seven regions. (See the full "Be by the sea" package at coastalliving.com)
But first, here are seven steps to take before you buy.
Learn the language -- and 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 a beach in North Carolina. Weeks later, bulldozers started tearing up the earth between them and the sea for the actual oceanfront house. Some lenders have stopped requiring surveys, but order one anyway to protect yourself.
Find out whether the beach is public or private. If the beach is public, you can't stop people from setting up umbrellas and lounge chairs right in front of your home.
Check out building restrictions. Ask local and state governments about height limits, setbacks and wind-resistance rules. Learn the environmental laws; you may not be able to build in areas that contain protected wildlife.
At Cecelia and Greg's home, the state requires water-quality tests annually. If your heart is set on a boat dock, make sure you'll be able to install one; you may have to lease underwater land from the state and acquire permits from several agencies. Check tide charts and bridges to make sure you can get to your property by boat at all times.
Guard your investment. Choose a property that's relatively safe from erosion and storm damage. Houses above the 100-year flood level and those with a seawall, for instance, are worth more than unprotected properties. Other factors affecting value include a beach renourishment program and the distance of the houses from the water. Finally, buying in an area that encourages recreation can pay off because of a greater demand for rentals.
Talk to a builder before you buy. Coastal homes need to withstand the elements, which often means stronger (and pricier) building materials and specific design elements, such as rounded rather than angular corners. Restrictions on sewer systems and septic tanks may dictate the size of the house you can build. 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 houses. If you're purchasing an older home, have a structural engineer determine how vulnerable it is to storm damage. Then, no matter how old the construction, have your home inspected regularly for signs of corrosion.
Plan for maintenance. Salt air is tough on homes, cars, fabrics -- anything left outdoors. Every time you throw open those French doors onto the beach, salt spray and mildew get inside; expect to replace rugs, appliances and even mirrors more often.
Build hefty insurance premiums into your budget. 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 nearby, insurers will stop writing new policies until the danger has passed; that 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 of the Lincoln County Board of Realtors. Make your sales contract contingent upon obtaining insurance.
Contact the state insurance department to find insurers that cover your area and assistance programs for coastal properties. Also, be aware that insurers generally won't compensate you for land lost to beach erosion.