In 2018, second-home markets saw a surge in real estate transactions. Whether they were families looking to better own their vacation experiences, retirees avoiding harsh weather or investors building their portfolio (or a mix of all three), vacation homes have become an increasingly popular option in markets across the U.S. That’s probably why some 9 million homeowners have done it.

However, the full picture of a buyer’s motivation to purchase has shifted due to fluctuations in both the stock market and local real estate markets. According to a recent study by the National Association of Realtors, vacation property buyers are primarily motivated to purchase a home as a family retreat, to use it for future retirement and to take advantage of low real estate prices. (This is in contrast to pure investors, largely concerned with generating income and taking advantage of price appreciation.)

If you are buying from a pure investment standpoint, your decision is going to be based on risk and return and you are likely considering buying anything from single-family homes to metro apartments. If you are buying with the hope of using it yourself, then you will likely face a very different set of decisions to make, and the process does require some due diligence. So, before you sign on any dotted lines, here are a few items to consider that could make your vacation rental purchase a more positive experience.

Consider the Location

This may seem obvious, but start by choosing a location you love. While there are always lists of hot and up-and-coming vacation destinations circulating online, it’s important that you pick a destination for a vacation home that will not only help you generate revenue but that you personally enjoy as well, and you will naturally want to go back to over and over. Why? Because buying a vacation rental is a substantial investment. When you purchase a property, you’re not just buying a house. You’re investing in a neighborhood, a community, a town, and ultimately a vacation experience. You will enjoy your home much more if it is in a location you love to visit.

Nevertheless, there may be special considerations based on where you decide to buy. If you’re looking to buy a ski home, for example, you may want to learn if there is a big consumer preference between a home on the mountain or a condo near the base. Or if you plan to buy in a beach town, you’ll need to decide if your priority is a view or a profit (and, yes, sometimes you can have both!). Homes that are located directly on the beach are often in higher demand from guests and can be rented out at higher rates per night, but they typically have higher purchase prices. On the other hand, homes a block or two from the beach can still be valuable vacation rentals, but at a lower initial investment.

Consider the Property Type

As you look at potential properties to buy, it’s also key to think through how you want to use the home – strictly as a second home for your family and friends to use, or as a full-time rental, or some combination – as well as if you want to buy a condo or a single-family house. Both condos and single-family homes have their upsides and can be great investments. How involved you want to be in the management of your property will help you decide whether a house or condo is right for you.

Single-family homes typically can accommodate larger groups than condos, and so they often have the ability of charging a higher nightly rate. However, they can also require more maintenance and upkeep than a condo. So, if you’re willing to roll up your sleeves on the weekends to weed the garden (or manage service providers to do this for you), you might want to purchase a home.

Condos can also be a positive investment option, often generating a fast return-on-investment. In addition, the homeowners association (HOA) will probably handle much of the maintenance, meaning there’s less for you to do. There are other considerations as well, like what the HOA fees cover, and what the local or HOA rules are regarding short-term rentals.

Consider the Costs

Finally – as is the case with any major real estate investment – there are other costs aside from the purchase price to keep in mind, such as your down payment, taxes, renovations, property management (if applicable) and ongoing maintenance. Investment properties usually require a larger down payment than a primary residence, and while your federal tax obligations are fairly straightforward, local tax laws can vary widely. Some cities require you to obtain a business license, pay sales tax, or hotel taxes. Talking to property managers, other short-term rental owners or accountants in areas you’re looking to buy in can prove helpful in understanding what your taxes may look like.

In addition, should you decide to list your property as a short-term rental, it’s wise to consider working with a vacation rental property manager. Property managers offer valuable services, including marketing and managing bookings, housekeeping and vendor management, communicating with guests, and much more. Many owners – especially if they live far away from their vacation home – find property managers can save them time and earn them more revenue even after the cost of management.

Consider the Purchase Options

Once you’ve determined the location, property type and prospective costs of your vacation rental, you need to prepare yourself for the purchase. This entails some long- and short-term planning. Longer-term items can include saving money for your down payment and working to improve your credit score, if necessary. If those aren’t current obstacles, you can focus on short-term items like talking to other property owners about their experiences using and renting their homes, researching and analyzing different properties for sale, and learning about local rental laws and regulations.

Purchasing a vacation rental with a friend or family member is an option for those who are not prepared to make such an investment alone. If you’re going to do so, however, it’s worth making sure you and your co-owner(s) are on the same page about some essentials like where the home is located, its style, and how you will use it (i.e. what percentage of the time will you rent it vs. what percentage of the time will you and your co-owners use it). In addition, while it’s not the most fun you’ll have with your vacation rental, it’s important to consult with an attorney to determine the best form of ownership and insuring your assets are protected.

Owning a vacation rental can be a rewarding and lucrative way to invest some of your assets. If you’re inclined to join the millions of other Americans who have purchased a vacation home for their own enjoyment and as an income-generating investment, just be sure you do your homework and purchase wisely. If you do, you can look forward to years of joyful and profitable use ahead.