Over the last decade, the percentage of homeowners purchasing second homes as an investment has risen dramatically.

And with real estate prices continuing to appreciate at rates far above stock market returns, it’s not surprising that so many homeowners have opted to purchase another property as an investment.

But the rigors of owning investment property can make for some headaches. Dealing with soft periods where renters are scarce, repairs are necessary and special assessments are required (if you rent out condos), can be financially and emotionally draining.

On the other hand, if you’re lucky enough to have several tenants who want to rent your property, you’ve got the enviable task of trying to figure out which tenants is going to be the right one for you.

In one case, the owners of a luxury condominium are choosing between three possible tenants. Deciding which one will make the best tenant is tough, because unless you’re psychic, you’ll never know until after the lease is signed – which is too late.

Here’s the background on the rental unit: It’s about 2,000 square feet, with three bedrooms, two and a half baths, with two parking places and an outdoor balcony. The unit is only 4 years old, and the kitchen has all the amenities you’d expect in a luxury unit.

The current tenants leave May 31, and the owner would like to rent the property starting June 1.

The first possible tenants are a family that is going to build a new home. They have four children and two rabbits, and given the scope of their construction project, they could be there as long as 18 months. That’s good, but they don’t want to rent the property until August 1st, and they don’t want to agree to any increase in rent after the first 12 months.

The second possible tenant is a man who is getting divorced. He has two children and a cat. He wants to stay in the neighborhood because he’s lived there a long time and his children are settled in school. He is interested in a one-year lease, but would consider a longer-term lease and wants an option to eventually purchase the property. He would rent the property June 1st.

The third possible tenant is a family that is being transferred to the area by the wife’s company. The couple was in town only for one day and immediately offered to rent the property June 1st, but admitted that the family would probably look to buy a single-family house within a year.

Which tenant would you choose?

It’s an embarrassment of riches for the landlord, especially since so many landlords are having tough times finding even one possible tenant. With interest rates at 40-year lows, many people who would have ordinarily rented an apartment are opting to buy condos and small houses. Landlords everywhere are struggling to fill their vacant rental units.

From the owner’s point of view, the best tenant is the man who is getting divorced – even though he has a cat. He probably will want to stay at least a year or two and might eventually purchase the unit. In tough times, landlords love the idea of a long-term tenant because it saves them the cost of advertising and paying the agent another fee, typically one month’s rent.

What do you do if you’re a landlord who can’t get a tenant? Consider lowering the monthly rent, giving a bonus to the broker who brings the tenant, or throwing in a bonus for the renter, like a free DVD player or VHS recorder, or free parking.

Be sure your marketing is up to snuff: distribute fliers, advertise in the newspaper, hold an open house, and let the other tenants in the building know you’ve got space available. You might also pay a bonus to another tenant who refers a friend.