Larry:  You say start with a business plan. How do you start researching?

Christine:  The thing that I like to tell people is to definitely start with a business plan, and I'll tell you why. Looking at property, especially vacation property, can really turn into a very emotional experience.

When you go and step foot in the beachfront home, look out the window and see that gorgeous view, you're going to shut off from that business savvy.

I always tell people that one of the things you should do is rent a vacation home first, before you even think about buying one. The reason is, you wouldn't dream of buying a restaurant franchise without going and eating in that restaurant first.

Go and rent a vacation home. Go to websites like CyberRentals.com or VRBO.com, find somebody that you can rent directly from, and try it out.

The business plan comes into play when you're looking at properties and you've got to research the area. Figure out why people are going there and what people are looking for.

For instance, if you're looking to buy in the mountains, it's probably a really good idea to have a fireplace and a hot tub. Things that are more wintry, cozy sort of attractions or amenities for those renters. Maybe you don't care two licks about having a hot tub, but your renters are going to.

Another thing you'll want to research is: who is coming to that area? For instance, when I bought my first property, I had just one child. When we bought, we only needed a one or two bedroom at the most, but I'd done some research, and I found out that a lot of families traveled to that area.

Families like to have bigger places. If you've got two or three kids, a one‑bedroom property is just not going to do it. Looking at who is going to rent in that area is a good idea.

For instance, let's take someplace like Niagara Falls or Las Vegas, where people go and get married and have little honeymoons. Maybe those are areas that are OK to buy a one bedroom, because there's just honeymooners going there.

Definitely look and see who your base is, that would be potential renters, even if you don't intend on renting it out. Most people don't intend on renting out a vacation home when they initially buy it. They have no desire whatsoever. But keeping the rental aspect in the back of your mind as a safety net will definitely make it so that you can rent that property later.

Larry:  That sounds like it's a good business investment too, really, from what you're telling me.  Are vacation rentals a good investment?

Christine:  Oh, absolutely. It's a great business investment to own a vacation home. Besides the investment aspect, where you're earning dividends on your investment (your dividends would either be appreciation or the rental revenue) you also have the wonderful tax ramifications. A lot of things can be written off if you're renting your vacation home. There are very strict rules about renting a vacation home and the tax ramifications. For instance, you can only use it yourself for 14 days or less, but like I said before, most people don't use it for much more than 14 days anyway.

Then, you can write off the trips when you go for maintenance. You can write off any sort of things that are associated with maintaining that property, from mowing the lawn to having the driveway plowed to buying new sheets or towels. If you're going to be renting it, those things can be written off.

Larry:  If I bought a piece of property for a second home, how do I go about marketing it to the people who are going to rent it? That seems like a full‑time job to me.

Christine:  Well, marketing used to be very difficult. Before the invention of the internet, really, what you used to have to do was put out an ad in various newspapers, or people would write up fliers and post them in their office, maybe even their church bulletins. It was very, very difficult to market a vacation home prior to the invention of the internet.

Since the internet was started, the very first vacation rental website, which was CyberRentals, started. It actually started before the internet. It was a magazine where owners could list their property in that magazine and then the magazine was distributed to various vacationers, to rest areas and to visitor and convention bureaus.

When the internet came on, they were able to list their properties on the internet. We know today that millions and millions and millions of travelers, every day, go to the internet for various reasons, whether it's looking for accommodations, rental cars, airplanes, or even just touristy things to do.

The internet has really opened up the ability to rent your property. It only costs around $300 a year per website to list your property. I always recommend that you list on two to four websites. It will definitely give you the most amount of exposure. The different websites have different functionalities and different looks and feels. What appeals to one vacationer may not appeal to the next vacationer. It's always good to list on multiple websites.

Larry:  What does a company like HomeAway provide? Do they do that service too? What do they do?

Christine:  HomeAway is a vacation rental website where you can list your property for rent by owner. Property managers can also list their properties, but it's a different system. They have to go through TripHomes [HomeAway for Property Managers], which is a different website.

Basically, what you do is very simple. I can do it. I'm not really savvy at the computer. I do admit that I'm doing better than I did five years ago, but even five years ago I was able to add my property.

All you have to do is write up a description for your home, figure out what rates you want to charge for your property, what dates it's not available. If your family is going to be taking a vacation, you'll want to mark those dates off. Take some really good photographs, and it's really easy to list your property.

Larry:  One of the things that would scare me would be to invest that much money, counting on renting the property, and then not having the property rented. That would cause me to chew my fingernails. What kind of steps would I take to ensure my property was rented, other than listing on a website?

Christine:  You bring up a good point. It's funny. I've talked to so many vacation homeowners who actually buy a vacation home. I'm typically very confident that the property will rent.

But I do have to admit, every time I buy a new home, there's always that little bit of wonder, "Oh, my gosh...will it rent?" There's nothing that I can say or do that will assure you of that. It's like teaching a child not to touch the stove because the stove is hot. You can't just say it. They have to actually feel it.

The same is true with vacation rentals. After about a year or so, you'll be confident in the market and you'll know that your property can, indeed, rent.

HomeAway did a survey of vacation homeowners, and they found that everybody rented some of the time. Not 52 weeks, but if your expectations are only 17 weeks, it's a very achievable figure.

Larry:  Tell me about this real estate bubble we're in right now. Are people going to get soaked when it busts?

Christine:  Well, you know, I'm not so sure that we're in a real estate bubble. Maybe there might be little pockets of areas.

Let me explain what a real estate bubble is. It's when prices of properties become so artificially inflated that when the economy slows down, the prices of the properties all of a sudden burst and drop. I actually don't worry too much about a real estate bubble because I do all of my research and my figuring ahead of time. Let me explain that a little further.

What I do when I look at a property is I figure whether or not it can cash‑flow based on 17 to 20 weeks a year. If that property can indeed cash-flow on 17 weeks‑ meaning the rental revenue will pay for all of the expenses associated with owning that property‑ then I don't have anything to fear about any real estate bubble. With most homes, you're going to take out a 30-year mortgage.

Yes, we're going to see ebbs and flows in the real estate market. It's going to go up; it's going to go down. Historically, the real estate market rolls in about seven year cycles. So if you intend on keeping this property for the long-term‑‑ which I always recommend, using it as more a long‑term investment rather than a quick flip‑‑ then you'll definitely see that property increase in value over time.

Now let me give you a gloom‑and‑doom situation where maybe you buy a property today for $200,000. It plummets in value and, 15 or 20 years from now, it's still only worth $200,000. Or maybe, worse yet, it's only worth a $150,000! Do I worry about that? Not really, because if the rental revenue is paying all of the expenses for that property during the full time of ownership, it doesn't much matter. The property didn't cost me another dime out of my pocket. All the rent has paid for the mortgage payment, all the expenses. It doesn't matter. If the property value is decreased 15 or 20 years down the line, my mortgage payment has also decreased because I've been paying it all those years.

Yes, it's always something you should keep in the back of your mind but it's not something that should stop you from going ahead and achieving that dream of owning a vacation home.

Larry:  What about timeshares?

Christine:  You know everybody always asks that question! Timeshares are a totally different entity. Whenever you're confronted with very high‑pressure salespeople I always say put up your guard and be cautioned.

Timeshares typically are not worth it from the investment position. If you look at one single timeshare unit and multiply it by 52 weeks, I can venture to bet that there's a property down the road that you could probably buy for much less. Timeshares are more or less a lifestyle purchase rather than an investment purchase.

I'm not saying that you should go sell your timeshare if you've already bought one. It's just a different thing. I like to say it's like if you bought a Honda Civic. It drives down the road just fine and is going to get you from point A to point B. However if you buy a Jaguar, it's going to cost you a lot more money. It'll still get you from point A to point B but it's just a lifestyle thing. You can look at a timeshare like a Jaguar where you're paying a lot more money for something just because you want it! That's OK too.

Larry:  Do you talk about conventional investment properties?

Christine:  I don't talk too much about conventional investment properties. For the people that don't know what a conventional investment property is, that would be a property in town where you're renting on a full year lease. I don't talk much about it because it's a little bit different than renting a vacation home.

First of all, vacation homeowners that rent out their vacation homes never refer to themselves as a landlord, which is kind of funny. Really, in some way, shape or form, you are a landlord, but we just say we're second‑homeowners who happen to rent our properties when we're not using them. There seems to be some negative connotation or black cloud that hangs around that 'landlord' word. But don't confuse it with buying in‑town properties!

You can buy in a major metropolitan area‑‑ like New York City or Montreal or Chicago, for instance‑‑ a property that's rented on a long‑term lease but may be in an area where tourism is around most of the time. You can rent the property on a weekly basis or maybe even a nightly basis. So don't always confuse conventional with metropolitan areas.

Larry:  When should I not do a vacation rental property?

Christine:  I think that there are a lot of things you should consider before buying a vacation home. Probably one of the biggest factors would be, do you even want to own a second home? I always say that having children didn't tie me down. Getting a pet didn't tie me down. But buying a house kind of ties you down!

There's a lot of work to be done around a house. As a matter of a fact, there's always something to do around the house. Whether it's sprucing up the yard or mowing the lawn or maybe it needs a new roof or you need to paint or you need to scrape your window trim‑‑ there's always something to do. So if you have absolutely no desire to take that on again, then maybe that's not the best thing for you. Maybe you should take your money and put it into other forms of investment, such as stocks or bonds or mutual funds.

Larry:  How much time does it take?

Christine:  Owning a vacation home does take a lot of time; I'm not going to lie. But usually it's enjoyable time. When we're taking reservations, we're helping somebody plan their vacation. It's not planning a funeral‑‑ it's a lot of fun! You're sharing with your guests, your renters, the things that you love the most about your property or the area that you have purchased in. That aspect is a lot of fun.

Larry:  If I buy a vacation property for rent, how much time am I going to have to spend doing this?

Christine:  As far as time, you are probably going to need about 10 or 15 minutes a day to respond to emails or phone calls. These, by the way, often end up to mean money. January through March is usually the busiest period for inquiries, the time when most people are planning their vacations.

In my family, if the phone rings during dinner, we sort of look at each other and then we go, "Okay, that could be $2,000 that I'm not answering. I'm going to pick up the phone!"

Then there are other times when I'm out, say with family, and we're at a restaurant or a family reunion. I look at my Blackberry and see an email, see this person wants July 4th. I'm pretty confident I'm going to rent for July 4th. So I don't need to get back to that person right away. I'm confident enough in the industry that I'll just say I'll get back to them when I have time.