With summer in full swing, many are seeking out the perfect vacation home.

For renters, it's an oasis for relaxation. For buyers, it's an investment that could create an easy stream of cash. Either way, there's a lot to take into account: How much should you spend? How much does location matter? When should you start the search?

The tips below will help you cut costs when you plan for that island getaway.

1. Do your research

The good news: This is the perfect time to make a luxury purchase. Despite popular notions, you actually stand to benefit from the recent recession, says Ralph McLaughlin, a housing economist at Trulia. While it's true that many Americans sold their vacation homes back in 2008, it's still possible to find good deals.

In fact, the stronger the economy becomes, the more Americans will start buying vacation properties again, thus eliminating the cheaper deals you might have access to at present.

Karen Schaler, Emmy Award-winning creator and host of Travel Therapy TV, agrees to an extent--adding that real estate is still one of our safest investments. "It's brilliant...as long as you know the risks," she says, recalling a story about a friend who once booked a vacation rental through an obscure website. Upon arrival, she found that her home away from home didn't exist at all.

Without a paper trail, renters can easily lose all their money. Schaler recommends browsing and booking rentals through well-known websites such as HomeAway.com or VacationRentals.com.

2. Stay close

Location is important if you're looking to buy, especially if you don't have a steady cash flow and want to use the property as another source of income. Closer is better because, if you can't hire a manager or cleaning service, it's easier to handle the property upkeep yourself.

3. Know your budget, use it wisely

General wisdom holds that buyers or renters shouldn't spend any more than 30 percent of their net income on rent of any kind.

Of course, you can raise your budget if you plan to buy for both leisure and investment purposes. If that's the case, McLaughlin says it's important to identify what times of the year you plan to be at the home yourself, and when you want to lease it out. Then, make sure you report any income you make during tax season. You may hear from the IRS if you don't.

It's also a good idea to shut off utilities when you're away, to avoid incurring additional (and unnecessary) monthly costs.

4. Plan in advance, or wait until the very last minute

Renters looking for a place during peak seasons in warm climates should book at least one year in advance. For instance, if it's October and you're just starting your search for a sweet spot in Hawaii during Christmastime of the same year, it won't be easy. 

On the other hand, if you're willing to be more flexible in terms of location and timing, it may be in your best interest to procrastinate. Oftentimes, you can book a rental home for much cheaper than you would otherwise if the property owner is scrambling for a last-minute tenant.

5. Ask for advice 

It's generally a good idea to hire a broker if you're looking to buy. "He or she might know things about the vacation home market that you don't," says McLaughlin, and could ultimately help you land a better (read: cheaper) deal.

While you'll still have to pay the broker fees, Schaler describes this as a "front cost for a long-term gain." After all, you can always negotiate details with your broker. If you do, make sure both parties have documented files of the terms.

6. Find a partner

Consider purchasing your property with a friend or family member, someone who would likely frequent the house at different times of the year. "You can do it with multiple people, but the signing and financing is more difficult," says McLaughlin.

If you decide to go this route, be sure it's with a person you trust.

7. Analyze your history 

Before you buy a vacation home, it's important to analyze your spending habits. Start by writing down how much money you spent on travel in 2014 and see if it's greater than or equal to the cost of the house.

If feasible, McLaughlin suggests buying over renting to start building equity (as opposed to paying someone else's account).

Published on: Jul 9, 2015