Imagine taking that trip to Maui every year without having to pay for an expensive condo rental. Maybe even set aside a few extra weeks for an extended holiday and have someone else pay the rent. Purchasing a vacation rental may give you this option, or the ability to travel whenever you choose using the income from the rentals to subsidize or pay off your mortgage. Not to mention, that you are diversifying your investment portfolio by adding a new piece of real estate.

Sounds great, doesn't it? In reality, this is a big step; make certain you know all the facts before signing on the dotted line.

Don't let emotions get in the way: Purchasing a vacation property is often an emotional buy. You're having a great time on holidays, a million miles from reality, and suddenly this attractive deal is put in front of you and it seems like a great idea. Most times, it is, but sometimes people will get home, look at each other and say, "What did we do?"

Commitment: Understand that this isn't someplace you can visit and then forget about for another year. A vacation property is an active business that will require your loving care to flourish; and whether you decide to employ a property management company or choose to self-manage, a certain amount of commitment and attention is essential.

Locations: If this is a property that you intend to use, make certain the location is someplace you want to return to, year after year. Also, if it's a plane trip away, realize also, that you may be required to make unplanned trips to deal with landlord/tenant issues.

Affordability: You have that nest egg set aside that will take care of the deposit, but what about those off-seasons where the property may not be rented. Like any home, you will experience emergency repairs or unexpected expenditures. Ensure that you can afford this piece of property; after all, you want to be able to sleep at night.

Due diligence: Make certain you are working with a reputable realtor who can guide you through the various laws in the area you are investing in, but you should also have some prior knowledge. Especially for "across the border" purchases, research the area so that you understand the implications of this acquisition, including the immigration policies regarding the length of time you are allowed to visit and how often.

Talking to other renters can provide invaluable, "don't let this happen to you" information, as well as tips on property management companies, cleaning help and anything associated with your rental. Before purchasing, I went through some of the online vacation rental sites, such as a1vacations.com, and searched for other rentals in the same location. I noted the owner's email or phone numbers and contacted them. They were extremely helpful and quite happy to share their stories.

So you've done your research and you're certain this is something you really want. Congratulations - enjoy your new property! For the next steps, read on to Part II - The Highs & Lows of Self-Management.