After purchasing your own home, the next most common step in real estate property investing is to buy a rental property. By making a smart purchase, keeping our ongoing expenses to a minimum, and receiving valuable rental payments, you could profit from capital gains, and the rental income you receive may be used to continue paying your mortgage. As you gain equity in your property and pay down your mortgage, you will be in a position to purchase yet another property and repeat the process.

You need to be careful to minimize the risk by buying properties at below their market value, preferably when market prices have dropped. This is because real estate prices increase over time and if you are prepared to hold onto property, you will always make money in the long term. Unless you are wealthy, you will need to take out a mortgage to buy real estate property.

A mortgage loan uses property as security for a loan on the property.

A mortgage allows you to purchase real estate with a down payment and repayment terms so that you do not have to pay the full value of the property immediately. If one decides to be delinquent on payments, foreclosure will find the neccessity for a judicial hearing that provides the borrower with certain forms of protection.

In the past, real estate has given investors much better returns than similar investment options. As a home buyer, you need to pay ten percent as a down payment with monthly payments in order to pay off a loan where the bank financed ninety percent of the property’s value. Therefore, if you buy conservatively you place yourself in an ideal position to make excellent profits.

The fact is that, over a period of time, returns traditionally have been much higher from real estate than from average stock market investments.

Along with accumulating money for the future, real estate investing may provide tax benefits. Talk to your tax professional to inquire about certain tax benefits you are qualified to receive.

Another advantage of real estate investing over stock market investing is that the prices are flexible. With real estate you can make an offer that is lower (sometimes substantially so) than the asking price. Stock market prices are set and do not allow you any room to move. As a result, you can sometimes get excellent property buys when the seller needs to sell quickly and is prepared to accept your offer.

Make an Attractive Package
Having a great property to rent out is the easy part — packaging it into something marketable that has its own personality takes a little thought and effort. When people tell their friends where they stayed on their Hawaii vacation, you want the name to be memorable. “Beautiful house right on the beach” is pretty generic. “Oahu Oasis” is something that people will remember, and hopefully look specifically for and find when they’re booking their own Hawaiian retreat. to go with your catchy vacation rental name, put together a .pdf brochure that you can send to people who request information, and have a professional graphic designer do it for you. It’s not that expensive, and you will more than make up the money you spend on it if it gets you one extra booking that you wouldn’t have gotten with your plain-jane email descriptions. Remember — you’re not writing fiction here, you’re simply trying to convey a sense of your vacation rental in 2D pictures and text. It’s not easy — let a professional take care of it for you.

Common Vacation Rental Questions
You know what people are going to ask you — they’re the same questions you’d ask ifyou were looking to book a vacation rental. What type of stores are within walking distance? How far to the ski lift? Does it have air conditioning? A wood-burning fireplace? The list goes on. Write them down and answer them, either on your brochure or in a separate document that you can send out with the brochure.

Consolidating it on the Internet
Hosting both your brochure and Q/A list on the internet will cost you very little, and it gives people a one-stop shop to get all the information you need. If you’re lucky, you can even reserve a domain name that’s the same as your vacation rental title. It doesn’t have to be complicated.

Avoid Old Apartment Buildings That Have Been Converted into Condo Rental Properties

When you’re searching for the perfect condo rental property, steer clear of old apartment buildings that have been converted into condo complexes. When an apartment building is converted into condominiums, the modifications and updates that come with the transition are typically superficial. The place may look modern and fresh, but underneath a new coat of paint, there could be lingering structural issues that will devalue the property. Old plumbing, electrical wiring and foundational insecurities can place a long-term drain on your investment. If you want to locate a condo that will be the perfect rental property, stick with original condominiums and avoid those apartment-condo conversions.

A Spacious Condo Property Will Generate Solid Rental Revenues

When you look for rental properties, try to target places that have a roomy, spacious feel. This is true for houses and apartments, but it is even more important when you purchase condos. If you purchase a posh condo in a luxurious community, it won’t matter how lavish the place is. If it has the feel of a small, walk-in closet, you’re going to have a more difficult time renting the place out. On the other hand, if you can find a condo that has high ceilings, an abundance of windows, smooth flow and an uncluttered layout, you’ll have a much easier time marketing the place to potential renters.

Find Condo Rental Properties in Locations That Attract Seasonal Vacationers

If you want to secure solid returns on your condo investment, locate a condo that’s situated in a seasonal vacation destination. Finding a condo property with an exclusive, resort-like feel is the best way to go. Beachfront condos are one option. Ski-lodges in posh mountain areas will also generate steady streams of vacation rental income. Think of your condo rental as an intimate, one-family hotel. If you can find a one-family hotel in an area that feels like a classy holiday retreat, you’ll have no trouble renting the place out on a short- or long-term basis.

Look for Condo Rentals That Offers Renters Plenty of Recreational Perks

If you want to maximize the marketability of your condo rental property, locate a condo that provides access to plenty of recreational activities. Having a majestic pool, gorgous tennis courts and a recently updated gym on the premises will increase the rental value of your property. The best part about these common area leisure perks is that you won’t have to worry about maintaining them. A homeowner’s association will have actual ownership of these condominium common areas. The more comfortable and opulent the common areas are, the easier it will be to attract interested renters.

Condos can provide you with steady streams of rental income, but if you want to maximize your returns you need to choose the perfect property. Spacious condos with wide, open layouts are easier to rent than condo properties that feel cluttered. Purchasing a condo in an area that features many vacationers will help your investment prospects. Finally, an abundance of recreational activities and other common area perks will also improve the marketability of your condo. If you want to avoid investment headaches, avoid apartment complexes that have been converted into condominiums.

“You look forward to your vacation all year and you want it to be perfect,” says Karpinski, a vacation property specialist who acts as an advocate for both owners and renters. “If you automatically think ‘hotel,’ you’re missing out on a whole separate world. Just ask the millions of people who reserve cabins, beachfront homes, and lakeside cottages each year. There is just something special about staying in a vacation property. It’s more private, more personal. After all, you’re staying in someone’s second home. There is no way to replicate that feeling in a hotel.”

Karpinski says the rise of the Internet has made it easier and more convenient to seek out and reserve a vacation rental home. As demand has risen, so has supply. In fact, she has written a book-How to Rent Vacation Properties by Owner: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment (Kinney Pollack Press, 2004, ISBN: 0-9748249-0-9, $26.00)-that demystifies this burgeoning industry.

“Even though it’s written for owners, it is also a valuable resource for renters,” she explains. “It includes an exhaustive list of websites that list vacation properties. That’s how most vacationers find the perfect place to stay. And these websites are humming with activity during January, February, and March. So if you think you might be interested in booking a vacation property for 2005, you need to be an ‘early bird’-it’s the only way to ensure you’ll get the perfect ‘worm’ for you and your family.”

If you’re nervous about dealing one-on-one with a vacation property owner, don’t be. Karpinski says that by being cautions and following some simple guidelines, you can minimize your risk and maximize your vacation enjoyment. She offers the following tips:

__Understand how vacation rental websites work. Most of these sites consist of thousands of privately-owned vacation properties available for rent directly from the homeowners or, sometimes, their agents.

__Choose a reputable booking website. Karpinski recommends CyberRentals.com. Not only do they have more than 20,000 properties listed, they are known for their good old-fashioned customer service. “They do due diligence on their property owners to ensure that they are legitimate and conduct themselves professionally and ethically. For example, they have a three-strikes-and-you’re-out policy: if there are three major complaints, you are banned from their site and can never list there again. If you’re a vacationer, this policy is a reassuring one,” says Karpinski.

__Book early to get your #1 choice. Again, Karpinski emphasizes that the “busy season” for rentals is early in the year. (At CyberRentals.com, 2004′s busiest day was January 19, when the site received 3.5 million hits with 180,000 unique visitors.) If you want the best vacation home, don’t wait. By the way, if this isn’t your “first time,” don’t assume the owners of the place you stayed in last year are holding the same week for you. If you loved where you stayed, book it now before someone else does.

__Get an official agreement from the property owner. It’s better to be safe than sorry. If you talk to someone you want to rent from, but he or she doesn’t have an agreement, both of you can download a free “sample” document from Karpinski’s website, www.howtorentbyowner.com. Make sure that issues like the cancellation policy, return of security deposits, and so forth are clearly spelled out and understood by both parties.

__Insist on a phone conversation before you book. If you encounter an owner or owner rep who is unwilling to talk to you on the phone, beware. You simply cannot send $2,000 to someone you’ve never spoken to. Fortunately, most “rent-by-owner” owners are happy to talk to their guests. After all, you are staying in their second home and they want to feel good about you, too. If there is something “shady” about the situation, you will probably notice it during your conversation. Trust your gut.

__Consider getting referrals. If something in the transaction seems suspicious, ask for referrals from past renters. Even if everything seems on the up-and-up, this may still be a good idea. Often, websites that list vacation properties have online guest books with e-mail address. You might also e-mail the webmaster and ask for more references.

__Do your homework before you send the check. Ask lots of questions to make sure you’re really getting what you pay for. If you aren’t satisfied with the quality of photos on the website, ask to see more. If the property is listed as “oceanfront,” ask to see a picture of the view from the balcony. Or ask very specific questions such as, “Are there any roads between the balcony and the view?” It might also be a good idea to get confirmation from the owner about the “recentness” of all photos-if the picture you’re looking at was taken ten years ago, you may be unpleasantly surprised if you arrive to find a deteriorated home.

__Be aware that you can ask for flexible payment. One of the benefits of renting from a vacation property owner is that they tend to be flexible. If you are counting on a holiday bonus or tax refund to fund your vacation, this is great news. Some owners will take your reservation and a small deposit (usually around $200-$500) and you pay the rest later. Others may let you make a monthly payment, so that by the time your long-awaited vacation is here, the bill is paid in full. “I offer payment plans to anyone who reserves before December 31st,” explains Karpinski. “Other owners might do the same-it never hurts to ask!”