There are a lot of reasons people may find themselves pondering the possibilities of owning an investment property. Investment properties are a great idea if you know what’s involved in purchasing a second home.

In a Perfect World | Foresight for Rental Properties

The most practical and profitable way to apply the wisdom of the investment property is to purchase a vacation home in early adulthood after you’ve initiated the purchase of your primary residence. Use part time as your household’s primary vacation spot. When not using the home for your vacation, it’s rented out for income. Over the course of 30 years, you pay that vacation home off. At the same time, you’re paying off the mortgage on your primary residence. Then, when the young ones are all grown and off on their own, it’s time to sell the primary residence. Use that money as a nest-egg, then move to the vacation home, mortgage-free, to live out your retirement in comfort with no mortgage payment, healthy savings to draw on, and a comfortable place to live a resort lifestyle.

Of course, you may be an empty-nester before the investment property opportunity seeks you out, and that’s okay, too. Here’s what you need to know about buying an investment property.

A Lot to Prove | Your Financial Integrity

Lenders are skeptical when providing funds for vacation home purchases, more than they are with traditional home loans. Small resorts and small tourism business are considered by financial institutions to be high-risk ventures. Make sure your credit score and debt to income ratio are in impeccable condition.

Doubling Down | Twice the Investment

When you bought your primary residence, your down payment was likely around 20 percent of the sales price of the home you bought. With rental resort investment properties, however, that investment is increased. At the bare bones worst-case-scenario, you should have no less than 25 percent down payment. However, if you want to kick-butt at your investment, a 50 percent down payment will turn a profit much more quickly.

Once you invest that hefty down payment, you’ll also be doubling your mortgage responsibilities – one for your primary residence, and a second on the vacation home. Both properties now need your time and attention.

The Right Real Estate Agent

Choose to work with a professional real estate agent who represents you, the buyer, and not the property such as a time share resort seller’s agent. The agent with whom you work should have extensive knowledge about vacation homes, rental houses, investment properties, and your goals for using the house and renting it out for income.

The Right Property

Even if you hit the nail on the head in every other part of your plan, if you buy a vacation property out on the boondocks with no Internet service, no phone service, and no readily-available property management company to oversee the details, you might find the home you’re buying is harder to rent out than you’d imagined. The place you buy has to be in a location where vacationers want to go, and managed in such a way that renters are comfortable when they arrive, refer a friend, and return next year.  Get a rental history on properties before you agree to a purchase.

The Right Property Manager

You may love the idea of owning an investment property for your future but detest the idea of being a landlord. Landlords have responsibilities like collecting rent, making household maintenance repairs, cleaning up after damaging renters, scouting out new renters, and repeating. However, property management companies take the hassle out of that process by doing all the hard work for you. However, the cost for that service must be factored in to your figures for your venture to prove successful.


With a plan and determination, you can purchase a resort property in early adulthood. Use that home to supplement your income, have it as a vacation home for your household, and then use it as a retirement home when you’re ready to convert the chaos of 9-5 into a cocktail on the beach at sunset with the ocean breezes blowing through your carefree hair. There are a lot of benefits to buying a resort investment property, if you follow the right steps.

Your real estate agent is the best source of information about the local community and real estate topics. Give Rachel Tullier a call today at 225-278-7595 to learn more about local areas, discuss selling a house, or tour available homes for sale.

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