The last time you vacationed in your favorite location, you thought, "Wow, I'd love to buy a place here." If you're in the market for a second home, a rental property or a combination of the two, the key is to be in a strong financial position.

You'll be focused on finding a good property in a neighborhood you enjoy. Then you can figure out how you want to use your property. Maybe you will use it solely for a personal getaway. Maybe you're interested in renting out your property when you're not using it.

Depending on your familiarity with the region, this decision could require significant research to find good properties in good neighborhoods. Once you do, it's important to have a smart, solid plan in place. The strategy should include what type of property you want to purchase, how you will use the property, how you will pay for the property and how you will sell the property, just in case you want to. It's best to prepare for all contingencies; otherwise, the cost of owning, maintaining and managing this second property could cause some headaches.

When renting, it's important to know the local vacancy rates and have a financial cushion in place to weather any slow times during the year. It's also important to know the average market rate for rentals in order to price your property accordingly.

Expenses related to a second property go beyond the purchase price, property taxes and insurance. There are regular maintenance costs that might come into play more often than with your primary residence. Also, you may be paying for a property manager if you're a considerable distance from your second home, or a bookkeeper to manage the rental's finances. Many real estate investors subscribe to the 50% rule on investment properties, meaning over time, on average, the expenses on a property equal 50% of the rental income prior to paying the mortgage.

The point is, go into this with your eyes open. That will help you get the most out of your investment.

When it comes to financing your vacation home/rental property, turn to Finco Lending, Ince for various mortgage options, including fixed rate mortgages, ARMs, jumbo loans and more.