As everyone has their eye on the direction of the economy, here is an observation for a certain investment that can perform well in a recession.

When looking to purchase another real estate asset for your portfolio, you may want to consider purchasing a property that will cash flow well in an economic downturn.

Upon perusing the vacation rental market in Florida, I have come across many Airbnb hosts looking to offload their multi-million dollar properties. For them, it’s a smart move but for a potential buyer, not so much.

Here’s why:

While it is widely accepted that we won’t be seeing a repeat of the 2008 housing crash any time soon, there is a valid concern that people who own luxury homes on the beach (charging upwards of $1000 a night for a 3 bedroom home) might see a slowdown in bookings. The reason is simple. Although folks won’t stop vacationing in a recession, they WILL be looking for inexpensive accommodations and forgo the luxurious portion of their vacations.

Obviously, this will put luxury homes in a tough spot.

However, if you are looking to build a portfolio of luxury homes there can be a better way to offer something that should appeal in any market condition.

Instead of having a 3 bedroom, $2 million home on the beach, perhaps you are better off having a large 6 bedroom home a few blocks from the beach. This way, extended families or groups can still get together at an affordable price while giving up on location.

Having a nice-looking home that can cater to larger groups is a good play in any market condition. It also beats having a 6-room motel as you don’t have to deal with multiple guests, just one person representing the group. I have seen small motel owners run themselves haggard over managing multiple room reservations. Trust me, it’s not pretty.

If you are interested in investing in just this type of deal and making great returns, please DM me for a pitch deck.