Thinking of Buying a Lakeside Home? 9 Things You Should Consider First

If you’re reading this, you’ve probably already been scrolling through listings in search of your idyllic lakeside cottage. And who could blame you? In these dog days of summer, we could all use a little waterfront respite from life’s stresses. 

Take it from me—lakeside living truly is a dream come true. My grandpa built a cabin in Michigan where I spent many weekends and summers, and it’s still used by our family today.

I also owned a home across from a lake at another point in my life. Lakeside living means no more crowded hotel pools and impersonal cramped rooms.

It means sinking your toes in the sand on your own private beach, waking up to sun-kissed mornings and sipping coffee on the deck, and ending the day with breathtaking sunsets and the rhythmic soundscape of bird calls and water lapping the shore.

But all that blissful daydreaming aside, buying a lakeside cottage is way different from buying a typical home. And if you’re not careful, you could end up in the deep end (pun intended!). Here’s what you need to factor in before making your lakeside dreams a reality.

1. Consider the type of lake

The main (and most amazing) difference between buying a lakeside cottage and a regular home is lake frontage!

But “the type of lake makes a world of difference in your lakeside experience,” says Sarah Darrow, a lakeside homeowner and broker with Realty ONE Group Clarity in Stanwood, WA.

Do you envision puttering around the lake on a pontoon or high-powered motorboat? You’d better make sure it’s allowed.

“I live on a lake that does not allow gas-powered motors and has a very low speed limit,” says Darrow.

If you’re more into sunbathing and swimming, is the lake clean or mucky? Is it shallow near the shore, or does it drop off quickly? Besides water sports, there are other essential details to consider.

“Each lake may be categorized differently by the local, state, or federal jurisdictions,” says Darrow. “These designations will likely have an impact on what you are allowed to do along the waterline and lot.”

That includes things like new docks, expanded parking, and beach enhancements. 

2. You should ask about the shoreline

You can pretty much do whatever you want when it comes to gardening and landscaping your house. When you live on a lake, however, there are typically rules and guidelines to protect the shoreline. There may be restrictions on the materials you can use, to prevent shoreline erosion; regulations for developing reinforced beach areas; or even bans on certain types of lawn fertilizer.

Speaking of the shoreline, be sure to check the history and see where it’s trending.

“The Great Lakes levels have hit historic highs over the last couple of years,” says Rob Serbin, broker and owner of Serbin Real Estate in Glen Arbor, MI.

Shoreline erosion can damage or completely demolish your lakeside vacation home. Securing permits from local and state authorities to amend the property may take much longer than you planned and become an extra expense you weren’t planning. On the other hand, if lower water levels are trending, your cottage could end up being farther from the water.

3. Look at where the sun shines (or doesn’t)

It might not matter too much where the sun rises and sets in your primary house, but when you buy a lakeside vacation home, that is something to consider for the quintessential lakeside experience.

“Think about morning coffee on the dock watching the sun come up, or evening cocktails on the patio—in the sun, or shade?” says Serbin. “Sunsets, while nice, can also heat up the interior of a home or cottage, and exposure to the sun can also create premature wear and tear on siding and roofing.”

You might need to earmark extra funds for weather-resistant materials to keep the decks and docks in good shape.

4. Can you rent out your cottage?

“While you may pay more for a lakefront home than a typical home, there’s also an opportunity for vacation or short-term rentals when you aren’t using the property,” says Lauren Buckland, director of sales and broker-in-charge, Cliffs Realty.

Local property management can check on the property, maintain the landscaping, and clean between renters. But before you start fantasizing about the loads of cash you’ll rake in, check with local ordinances to make sure you can legally rent out your home. 

5. Check for connectivity

With so many people working remotely, it’s possible to hang your hat just about anywhere—as long as you have high-speed internet access. Verify the speed and bandwidth if that’s important to you. If you have other obligations, or if the kids are still in school, living full time at the lake might have to wait.

6. Keep seasonal upkeep costs in mind

Consider hiring a property management company to perform regular checks while you’re away, suggests Buckland. Although you may think of your cottage as a summer getaway, winterizing it could be a smart move to avoid frozen pipes that can burst if temperatures fall below freezing.

In fact, if it is well insulated, you may want to consider keeping the heat on in winter, Serbin says.

“Cold winter temps inside can cause extra shrinkage in trim, flooring, and drywall,” he points out.

7. You might have to pay for storage

It seems houses never have enough storage, but they usually come with a garage, shed, basement, or attic where things can be stored. Lakeside cottages might not have the same storage options. Will you be able to throw tarps on the patio furniture and other outside goods? What about your boat? Will you haul it back home or store it near the cottage?

“If you plan to store a boat at your new cottage, research options for winterizing it during the off season to keep it in good condition,” says Buckland. “Some companies will pick up your boat from your home and deliver it back to you when you’re ready to get back on the lake.” 

8. Can you add on?

Lakeside cottages almost always have restrictions on making structural changes. You may have to jump through a few hoops, whether you’re building a new deck or adding on to the cottage.

“Check with the local authorities regarding any zoning restrictions, a lake association, or homeowners association who can provide you with written rules that may be attached to your property,” says Serbin. “A title commitment will often reference deed restrictions of record that can affect your future use.” 

9. You need an agent who specializes in lakeside homes

Finding the ideal lakeside cottage requires a real estate agent who is familiar with all facets of lakeside living. The average agent usually doesn’t have the detailed knowledge of waterfront properties as someone who specializes in lakeside homes.

“Your [agent] should be able to help you ‘Know what you don’t know’ about living lakeside, and set you up for a future of lakeside enjoyment,” says Darrow.

Get more tips on Realtor.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Why buying a condo for your college kid could be a smart financial move

Prices are booming in many residential real estate markets, including college towns. Is it too late to take advantage? Maybe not.

The idea of buying a condo for your college-bound kid to use while in school might be appealing. But diving into the market sooner rather than later may be wise. You could avoid paying through the nose for a dorm room or apartment with no hope of any profit. And if you buy a condo that has some extra space, you can rent it out to your kid’s pal(s) and offset some of the ownership costs. Nice.

Many parents have made good — sometimes great — money by following this strategy for the four or five or (gasp) six years their kids spent in college. Of course, the longer you can hold onto the property, the better the odds of cashing out for a nice profit. You don’t have to sell just because your kid graduated. Another key factor is the tax angles. Here’s how those work while the kid is still in school. 

Deducting college condo ownership expenses     

Federal income tax rules generally prevent you from deducting losses incurred from owning and renting out a residence that’s used more than a little bit by you or a member of your immediate family.

However, a favorable exception applies when you rent at market rates to a family member who uses the property as his or her principal residence. In that scenario, you can deduct losses from the rental activity — subject to the passive loss rules, which I’ll explain later in this column. This beneficial loophole is open for you if you buy a condo and rent it out to your college-attending child —and roomies, if any — at market rates. (You can dig into the details in Internal Revenue Code Section 280A(d)(3).)

As long as you charge market rent, you can — subject to the passive loss rules —deduct the mortgage interest and property taxes and write off all the operating expenses — including utilities, insurance, association fees, repairs and maintenance, and so forth. As a bonus, you can depreciate the cost of the condo itself — not the land — over 27.5 years, even if it’s appreciating.    

But where will your son or daughter get the money to pay you market rent for the condo? The same place he or she would get the cash to pay for a dorm room or an apartment rented from some third party. From you. You can give your kid up to $15,000 annually without any adverse federal tax consequences. If you’re married, you and your spouse can together give up to $30,000. Your child can use some of that money to write you monthly rent checks. Just make sure he or she actually sends the checks and make sure they say they are for rent. Also, it’s best if you open up a separate checking account to handle the rental income and expenses. Taking these simple steps will help keep the IRS off your back if you ever get audited.

Passive loss rules may postpone tax losses 

If the condo throws off annual tax losses — which it probably will after counting depreciation deductions — the passive activity loss (PAL) rules generally apply. The fundamental PAL concept goes like this: you can only deduct passive losses to the extent you have passive income from other sources — like positive taxable income from other rental properties you own or gains from selling them. 

Fortunately, a beneficial exception says you can deduct up to $25,000 of annual passive losses from rental real estate provided: (1) your annual adjusted gross income (before the real estate loss) is under $100,000 and (2) you “actively participate” in the rental activity. Active participation means being energetic enough to at least make management decisions like approving tenants, signing leases, and authorizing repairs. You don’t have to mop the floor of your college kid’s condo or snake out the drains.   

If you qualify for this exception, you won’t need any passive income from other sources to claim a deductible rental loss of up to $25,000 annually (your loss probably won’t be that big). However, if your adjusted gross income (AGI) is between $100,000 and $150,000, the exception gets proportionately phased out. So at AGI of $125,000, you can deduct no more than $12,500 of passive rental real estate losses each year (half the normal $25,000 maximum) if you have no passive income. If your AGI exceeds $150,000 and you have no passive income, you can’t currently deduct any rental real estate losses.

However, any disallowed losses are carried forward to future tax years, and you’ll be able deduct them when you have sufficient passive income or when sell the tax-loss-producing college condo. All in all, this is not a bad tax outcome — as long as your losses are mostly of the “paper” variety from depreciation write-offs. 

Favorable tax treatment when you sell

When you sell rental real estate that you’ve owned for over a year, the profit — the difference between sales proceeds and the tax basis of the property after subtracting depreciation — is long-term capital gain. Under current law, the maximum federal income tax rate on long-term capital gains is 15% for most folks. However, if you’re in very-high-income category, the maximum rate is 20%. Higher-income folks may also owe the 3.8% net investment income tax (NIIT) on long-term gains. Finally, part of the gain — the amount equal to your cumulative depreciation write-offs — can be taxed at a maximum federal rate of 25%.

Remember those carryover passive losses that we talked about earlier? You can use them to offset any gain from selling the condo.  

Warning: President Biden wants to raise the top federal rate on long-term capital gains to 39.6% plus the 3.8% NIIT for a combined top rate of 43.4%. Will that idea get through Congress? We shall see. Stay tuned.   

The bottom line

While buying a college condo is a pretty attractive idea purely from a tax perspective, it really only makes sense if you expect to come out ahead cash-wise when all is said and done. If you can buy now and sell for a healthy gain later, you’ll be glad you did the deal. Of course, it’s no sure thing.        

Read more on Market Watch.

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As Featured in West + Main Home Magazine: Horoscopes for Home

While last year has taught us that the future is unpredictable, we can look to the stars for some guidance. Find out your home horoscope according to your zodiac sign. 

For more remodel inspiration, visit the first edition of the West + Main Home Magazine.

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Flooded with tourists, Colorado mountain towns are starting to limit short-term rentals to combat housing crisis

Colorado resort towns are limiting vacation rentals as communities weather waves of tourists, a housing crisis and a labor shortage.

Short-term rental properties are under fire in the Colorado mountains as communities weather record traffic, a surge of new residents, soaring home prices and a painful shortage of workers.

“We are beaten down. Everybody is overworked. We have way too many people here and it’s not sustainable and it’s not productive,” Martha Keene, a longtime service worker in Crested Butte told her town council last week as they weighed a year-long moratorium on vacation rental property permits. “I’ve never seen this town like this. I’m not here to live next to businesses. I want a neighbor. We need a moratorium to catch our breath and formulate a real plan to save our community.”

Only a few towns in the high country are not weighing adjustments to short-term rentals right now. Here are some of the measures communities are considering:

• A citizen petition in Frisco would ban short-term rental properties with non-resident owners.

• Three Telluride residents last week submitted a petition for a vote in November that would slash the number of short-term rentals in town.

• Steamboat Springs’ city council last month suspended new short-term rental applications for 90 days.

• Crested Butte, which in 2017 capped short-term rentals at 30% of all the homes in town, this week approved a 12-month suspension of all vacation rental permits.

• Breckenridge town leaders are considering a significant increase in fees for the town’s 3,800 vacation rentals.

• Buena Vista’s board of trustees are weighing a plan to cap short-term rentals, which make up about 7% of the town’s housing stock. Neighboring Salida last week approved a three-month moratorium on new short-term rental permits.

• Vail, which has more than 2,100 short-term rental permits, also is mulling increased regulation.

All the caps, suspensions and regulation efforts hope to slow the recent wave of investors buying properties leased long term by locals and converting them into nightly rentals for vacationers. There’s a growing sense of urgency, as local leaders watch businesses struggle to remain open when workers lose their housing and leave town.

“We are seeing our community suffer. We are seeing our business owners close their doors and struggle to keep staff. Burnout is high. Turnover is high,” said Emily Scott Robinson, a Telluride musician who joined a restaurant manager and a filmmaker in gathering 200 signatures supporting a vote on a short-term rental cap in town. “We should have done this five years ago. We need to turn back the clock a little bit.”

Telluride has about 38% of its free-market units available for rent to visitors. That’s 737 homes, up from 382 a decade ago. Robinson last week submitted 200 signatures supporting a ballot question in November asking Telluride voters to cap short-term rentals in the town at 400, with permits available through a lottery.

Robinson — along with Hayley Nenadal and Olivia Lavercombe — know that many of the homeowners who lose their short-term rental permits will not automatically convert their properties into rental housing for locals. But combined with possible financial incentives to rent to local workers, she hopes a cap can “deflate a corner of the housing market.”

Like many locals in resort communities, she can name many friends who lost their rental homes in recent months as new owners purchased properties and converted them into more lucrative short-term rentals.

“We hope that a portion of them will convert back to long-term rentals,” she said, blaming investor-owned short-term rentals for inflating housing prices beyond the reach of local workers. “Most people we approach have been enthusiastic and they feel this is a fairly moderate proposal. This is one small step toward affordable housing and creating a sustainable community.”

Hayes Walsh has spent the past few weeks knocking on doors in Frisco to gather signatures for a petition requiring short-term rental owners to live in the house. Like Robinson, he’s finding residents eager to contain short-term rentals. 

“I have overwhelming support,” said Walsh, who works for a property management company. “The people who are opposing this do not live in this town.”

He’s close to gathering the 400 signatures he needs and he recently launched a website — friscopetition.com — to help grow support for the petition that asks local leaders to pass an ordinance that bans short-term rentals unless the home is the owner’s primary residence.

“Everybody here gets it,” Walsh said. “People want to live in a more tight-knit community.”

Read the full article on The Colorado Sun.

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A guide to Colorado’s fruit season — from peaches to apples, melons and berries

A century ago, the Montmorency cherry was a cash crop in Loveland, Colo. Today, Colorado Cherry Company co-owner Elias Lehnert says his fourth-generation family business’ name can be somewhat confusing.

“(Cherries) are not really grown in Colorado at scale anymore,” Lehnert lamented.

At the height of every fruit pie season, Lehnert and his family are searching the state for locally grown cherries, but they’ll often end up sourcing primarily from Utah and as far away as Michigan.

“When you find good Colorado cherries, get ’em and get ’em fast,” agreed Amy Kafka, owner of Garden Sweet in Fort Collins.

At Kafka’s 10-acre farm, fruits from strawberries to raspberries, melons and apples are nearing their August-September harvest. She and her family invite visitors each summer and fall to pick their own selection, whether for making pies at home or just for snacking.

“Strawberries and raspberries grow really well here; the bright sunshine and the cool nights contribute to their amazing flavor,” Kafka said, adding, “Our season is a little later than a lot of people expect… strawberries kind of take a vacation in July, since they don’t like the heat.”

While the berries are on a midsummer break, Colorado’s peaches are hanging heavy on their branches, ready for harvest. Picking and shipping are already underway from the Western Slope in places like Palisade and Hotchkiss.

And even though Delta County was hit with a sudden frost last October, “as an industry, we’re probably looking at about 70-80% of our normal crop yield,” explained Harrison Topp of Topp Fruits in Hotchkiss.

“It’s a situation where we’re not going to have a hard time selling what we’ve got, luckily,” he added.

Topp Fruits will ship some of its peaches to Colorado Cherry Company for pies and cobblers. Otherwise, shoppers will find those peaches and apples — and in better years, plums and cherries — at markets and through CSAs in the area.

“I think there were about two (growers) that had about 100 pounds of cherries this year,” Topp added of the cherry industry in Colorado.

But other fruits over the next weeks and months will be available at the smallest farm stands but also from the big-box grocers.

“While I think a lot of us take a lot of pride in our farms’ different unique brands, collectively as a group we do work together to maintain a reputation for quality for all Colorado fruit,” Topp said.

Just don’t get your hopes up about those Colorado cherries.

If you do still want a taste of cherry cider, jam, pie and more products made in Colorado, however, you’ll find the Lehnerts’ shops in Denver, Lyons, Estes Park and that original 1960s-era cabin along Highway 34 in Loveland.

Here’s when you’ll see some of Colorado’s best homegrown fruits in fields, at markets and on grocery shelves:

Cherries – from late June to July (good luck)

Peaches – starting mid-to-late July

Cantaloupe (Rocky Ford) – starting mid-to-late July

Strawberries – starting in August

Raspberries – starting in September

Apples – from September to October

Get recipes + more on The Denver Post.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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