6 Reasons to Get into Waterfront Property Investment

Waterfront properties are an appealing choice in Canada when investing in commercial real estate. Not only do they offer great views, but they are often in higher demand, their resale value has the potential to shoot up, and they also come with some surprising health benefits.

There are also downsides that you must consider when making any type of investment. Make sure to carefully weigh the pros and cons of waterfront property investment before making any decisions.

So, if you’re contemplating whether to get into waterfront property investing, here are six reasons why you should do it.

1. Plenty of Demand

The number one reason why you should invest in a waterfront property in Canada is because there is plenty of demand. Investing in real estate, especially commercial, can be a risky venture, and there is no 100 per cent guarantee that you will be a success, but with waterfront property, there is a high demand, so you know you’re starting on a solid foundation.

Waterfront properties with stunning views can open several business opportunities for you investment-wise. Investing in event rentals along the waterfront can see an increase in rent as people will rent the venue for weddings, photoshoots and even corporate retreats. Waterfront properties can be lucrative investments whether you’re choosing to invest in the property for vacation appeal or even as a restaurant.

With plenty of health benefits that come with investing in waterfront properties, it’s no wonder they’re in demand. The calming effect of water, outdoor activities and connection with nature can increase the overall well-being of a person.

Another reason waterfront properties attract high demand is that many properties come with an interesting history, and people will pay large amounts of money to relive those memories on the property.

2. May be Used in Many Different Ways

As previously mentioned, investing in commercial waterfront properties can be very lucrative because you can use the property in so many ways. With the appeal of a gorgeous waterfront view, you can easily decide to invest in the property as a hotel, a resort, an event venue, a restaurant or a bar.

You could even use the property to offer outdoor activities like sailing, fishing, swimming and water skiing. Just be sure to check what regulations you need to follow. This type of property can draw a higher income, especially during the holiday season.

3. Limited Supply of Waterfront Properties

Another reason why you should get into waterfront property investing is because there is a limited supply of waterfront properties to begin with. Depending on the area, there may be restrictions on where developers can build and how many properties can physically fit onto the waterfront.

So, what does that mean for you? A limited supply means there is a higher demand for the few select properties, and people will be willing to pay more to be able to use the property. This also means you are more likely to sell your property much faster since there is such a short supply and high demand, which means you can increase the asking price.

4. Appreciation Potential

Historically, waterfront properties have always held their value and see increases as the property sees an appreciation in value. This generally happens when demand is high and there is limited supply. The more you invest in the property, carry out needed upgrades and keep it well-maintained, the more the property will increase in value.

Location also plays a big part in appreciation potential. For example, as the surrounding area grows and more people move into the area, more buildings are developed. This means an increase in retail and resort businesses near your property, which can increase the value of your property.

5. Tax Benefits

Suppose you’re still on the fence about whether to invest in waterfront property. In that case, there are some tax benefits that come from investing in commercial waterfront properties in Canada that might be of interest to you.

While waterfront properties in Canada are often taxed higher than other properties because of their value, the Canadian government does offer investors tax credits. However, be sure to check your specific provinces.

Take advantage of other tax benefits as well, thanks to write-offs like mortgage interest, insurance costs, maintenance and repair costs, property taxes, and fees paid to professionals like attorneys and even your tax consultants. If you use a property management company to handle your properties and even office supplies, you can use this as a deductible expense for tax purposes.

Timing the sale of your property can also result in some tax benefits you never considered. For example, profits earned on a short-term lease will attract less tax than long-term leases. Depending on when you sell the property, you may qualify to use various tax credits and deductions.

Although investing in waterfront property in Canada does come with some appealing tax benefits, you should always consult a tax professional for specific details about your province.

6. Great Diversification for Portfolio

When it comes to real estate investing, you want to keep your portfolio risk-free by ensuring you have a wide variety of different stocks. Investing in just one type of real estate puts you at risk for bankruptcy. The real estate market in Canada is always fluctuating, and multiple types of investments can protect your income.

Adding commercial waterfront properties to your portfolio is a good idea as there is a high demand, which means you can rely on these properties to bring in money and offer a good buffer for when other properties lose their value. In short, you want to try to limit the impact of market trend volatility on your portfolio as much as possible, and waterfront properties may be your solution for that.