Real estate is big business, and vacation rentals are a hot commodity. It’s entirely possible to begin your real estate investment journey on apartments, condominiums, and cabins in and around popular tourist destinations. But there’s more to it than just collecting a check. Keep scrolling for a few things you should know before scouring the MLS for affordable properties.

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Not All Loans Are Created Equal

When you bought your first home, you likely had many options for financing. An FHA loan may have been offered, and these are great for first-time buyers. However, you cannot purchase a vacation property with an FHA loan. Instead, you’ll need to make sure that your credit allows you to qualify for a conventional loan. A second home may also require more of a down payment, so don’t be afraid to shop around for the best interest rates and terms. Another option is to find a reliable private lender like Tidal Loans. Learn more about your options and get a free quote.

There Are Different Ways to Invest in Real Estate

Buying a single vacation property is not your only option. Depending on local housing rules and regulations, you may be able to split a large home into multiple rentals, which can significantly increase your rental income. This is known as House Hacking, and it is a popular way to get the most out of a multi-housing unit or a property that you live in. You may also have the option of investing in a REIT or real estate investment trust. The drawback here is that you do not directly control any particular property, nor do you own anything. Another aspect of owning a rental property that you’ll want to consider is your business entity. Many owners of vacation rental properties choose to set themselves up as a limited liability company to gain tax advantages and avoid potential litigation. This is a relatively simple process that you can complete yourself or delegate a formation service.

Your Property Will Likely Require Hands-On Attention

Renting property, whether for vacation or for long-term use, is, according to Investopedia, best suited to individuals with handyman skills or, at the very least, cash on hand for renovations, upgrades, and repairs. If you plan to manage the rental yourself, you will be solely responsible for making sure that issues, such as a leaky hot tub or busted window, are handled quickly so as not to interrupt your guests’ relaxation time. Another option is to hire a management company to handle booking, tenants, and day-to-day issues. A property manager can screen tenants and guests, offer on-the-ground local support, and maintain your property and home. These hospitality measures can increase customer satisfaction, making it more likely that guests will leave positive reviews and book another stay at your home.

The Search for a Property Can Be Long and Arduous

Buying a vacation home for the purpose of earning an income is very different than buying a primary residence. When you bought your home, you had to consider your family’s needs. A vacation property must meet the needs of a diverse range of potential renters. You cannot begin the process simply by looking at listings; you must take the time to research the destination, tourist statistics, crime rate, potential rental income, and proximity to area attractions. The further it is away from the central draw of an area, the less you are likely to earn and the more frequently your property will be vacant.

When choosing the location of your vacation home, look for a spot near tourist-friendly activities and events. For example, if you’re purchasing a home in South Lake Tahoe, a home on Lakeview is Lake Tahoe Vacation Homes (watch out for their website to get live!) and skiers, while a property near Stateline is perfect for vacationers who want to enjoy the area’s six casinos.

Once you are certain that there are enough vacationers to warrant buying a property, you can search online listings (e.g., South Lake Tahoe home sales have averaged . Keep in mind that these are ever-changing, so you will also need to partner with a real estate agent from Aston Morley Real Estate Services knows the area.

There Are Many Expenses Beyond the Mortgage

The cost of the loan is not the only thing you’ll be out each month. Things like repairs, insurance, taxes, advertising, supplies, and accounting fees can add up. Further, you’re still paying for the property even when it’s vacant. Fortunately, many expenses may be tax-deductible. However, make sure that you understand and can calculate your monthly financial obligations before you find yourself in a bad situation.

Investing in real estate is not necessarily complicated. It does, however, require research and a significant investment. If you are willing to take a chance, don’t mind getting your hands dirty, and are dedicated enough to research your options before you invest, you may just find that owning a vacation property is a great way to add to your income. As an added bonus, you’ll always have a place to unwind on those (hopefully rare) weekends that it’s unoccupied.

About the Author: Brittany Fisher spent more than 20 years as a full time Certified Public Accountant (CPA). With her extensive knowledge about taxes, personal finance and general financial literacy she runs her own site Financiallywell.info hoping to help anyone who may benefit from it.