Real Estate Investment Strategies for Small Towns: Exploring Lake Geneva

Natural elements, strategic proximity to big cities, and the charm of small towns make Lake Geneva magnetic to tourists. Along with it comes the perfect opportunity to invest in a small town. The track record vouches for it to be an ideal location for real estate investors.

In this write-up, I will bring up the effective strategies for you to come out as a successful investor. So, without further ado, let's get started. 

Lake Geneva: An Ideal Small-Town Investment Destination

Picturesque landscapes, proximity to major cities like Chicago and Milwaukee, a strong appreciation rate, and stable market performance pull real estate investors like ants to sugar. Vacation homes, rental properties, and luxury real estate hold the dominant positions for such opportunities.

Coming back to appreciation, it is the cornerstone of Lake Geneva’s real estate market. Speaking of which, in 2023, property values went up extraordinarily with a 19.81% increase in annual appreciation rate. According to NeighborhoodScout, this puts Lake Geneva on the top list of appreciating communities in the United States.

Whether it's long-term or short-term, this is a strong real estate market even though real estate fluctuations are seen nationwide. Although this market saw a slight decline after the pandemic in 2020, Lake Geneva remained stable and competitive with a year-to-date increase in home sales by 40% in 2024. Reported by Judy Peralta.

The limited supply of available property with a combination of a fast-moving market is a clear indication that Lake Geneva is becoming a seller’s market. If I put it in numbers, homes are selling 31% faster than they did in 2023.

Strategies to Imitate While Investing in Lake Geneva

Airbnb and Vacation Rental Properties

Vacation rental is booming in Lake Geneva. Airbnb and VRBO offer a diverse range of arrangements. These include lavish lakeside villas, cozy cabins, or single-home setups. As guests often seek the charm of a small town paired with modern amenities, the demand for vacation homes continues to rise.

Little did you know, AirDNA reports, the occupancy rate of vacation homes in Lake Geneva in 2023 was around 58.5%. This translated to 9% more revenue.

Scenic places with water activities and local attractions create superior appeal for holiday homes in Lake Geneva. Abbey Springs as an example of a popular listing near the lake boasts beachfront views, golf courses, and private pools. A destination like this is on the top list of a wide demographic, including families, couples, and outdoor enthusiasts.

In terms of actual rates, putting up properties for rental will get you $250 to $495 per night. So owners will capitalize on both high occupancy and premium pricing, especially in peak seasons.

Residential Arrangements

Retirees, second-home buyers, and people looking for a small-town atmosphere fancy the residential estates in Lake Geneva to live in. They fuel this market and open a new horizon for investors to make the best use of their capital.

On the question of how the investment is going to play off, the median price and appreciation rate speak for themselves. The appreciation is dependent on the increasing demand for waterfront homes. Conventionally, the property value in such a location is higher. Investing in such a destination will offer considerable returns both in the form of rental income and rental appreciation.

Here’s a quick look at the Real Estate condition in Lake Geneva:

Commercial Real Estate

With high growth potential, Lake Geneva’s commercial real estate market screams opening opportunities for new investors. As of mid-2024, the average listing price for commercial estates is around $1.3 million. Pricing for per square foot hovers around $353. (Source: CommercialZip). These numbers show the premium nature of commercial assets. The robust tourism sector and affluent residential community drive this market.

You see, Lake Geneva’s reputation as a tourist city creates a high demand for retail spaces. To give an example, popular spots like Main Street and Broad Street feature prime retail properties. Some of these are listed as high as $4.4 million.

Speaking of commercial spaces, the central business district put forward possibilities for office and mixed-use developments. As a result, this place is a lucrative destination for businesses like tourism, hospitality, and service sectors. Know that, the commercial market also doesn’t disappoint in terms of rental potential.

Maximize Returns

For any real estate investor thinking about putting down money in properties in Lake Geneva, a well-thought smart plan should come in place to get the best returns. Like, for vacation rentals, focusing on spots that really stand out matters the most. Places near the lakefront or close to popular tourist areas like Abbey Springs are great choices to invest in. 

These kinds of properties can easily pull in nightly rates between $250 and $495 during the busy season. Plus, occupancy rates coming in around 58.5% as of 2023 data, proves that the demand is substantial. Hence, money in the wallet.

On the flip side, it is wise to avoid places where housing is in great demand, for long-term residential rentals seekers. Rental rates in this case typically float between $1,500 to $3,000 a month. And properties near the water or in prime locations can offer a steady stream of income. 

As for commercial real estate, retail spaces are a hot commodity with high listing and per-square-foot prices. The best bets are in the central business district, especially near Main and Broad Streets, where tourism and hospitality businesses thrive. These areas typically bring in higher rental returns, making them great for investors aiming for strong yields.

Minimization of Risks

No matter how high the potential for a great return on investment in Lake Geneva, keeping an eye on risks is a must.

Seasonal shift is the biggest hurdle for vacation rentals. Discounts during the off-season, and marketing the property as a winter getaway, can be great ways to advertise. Most of the time, such strategies bring in more guests. But getting carried away in the process will be a shot in the foot. To avoid legal issues, every offer must be in line with the local short-term rental rules.

You see, In the residential market, the ups and downs of property values can be tricky. Focus on properties in the neighborhoods with solid appreciation potential. For any crash in the market, you’ll still come out ahead in the long run.

In terms of commercial properties, getting a firm grasp on the tourism trends in Lake Geneva is key. Try to diversify your tenants so you're not relying too much on one type of business, and keep your eyes peeled for local market changes. That way, you can adjust things like rent and leasing terms to stay competitive.

Factors to Consider to Invest in Lake Geneva

Seasonal Market: During Summer and holidays, lots of visitors flock to Lake Geneva. That makes its real estate market seasonal. So, except for a fall in rental income in the off-season. Take the data for the year 2023, where occupancy rates for vacation homes were around 58.5%, peaking in the summer.

Supply and Demand: Being a competitive real estate market homes are to sell quicker. A $500,000 median price, and a 6% annual appreciation rate, could return a generous amount to long-term investors.

Zoning Rules: Local zoning rules can impact rental income. For example, short-time rentals like Airbnb can be affected by these laws. So make sure to go through these laws meticulously.

Property Management Cost: Take hiring a property manager into consideration especially if you live far from Lake Geneva. For vacation rental homes, guests need a person who they can contact at any time. With that, factor in the maintenance cost of waterfront homes due to weather exposure.

Growth Trends: Keep an eye on local development projects. These can significantly increase property values. In addition, the steady flow of boomers and second-home buyers makes this area appealing for residential and commercial investments.

Summary

Prospective investors need to become mindful of the town's offerings as well as the downsides like seasonal market, zoning rules, property management costs, and ongoing development trends. Proper analysis will alleviate risks and create opportunities to capitalize on the investment.