Recession Coming? Is Now A Bad Time To Purchase A STR?

[Adam Gonzalez]

Morning BiggerPockets community!

I hope everyone is doing well and thriving. I am currently on the market to purchase my first investment property which will be a STR and am extremely excited to finally jump in!

With that being said, it is a little hard for me to ignore the news / financial experts constantly saying we are headed for a recession soon as a result of everything going on. From the research I have done, recessions hit STRs pretty hard as people tend to travel less and spend less during recessions. While I know no one has that magic crystal ball, I wanted to see what you, the experts think? Do you think now is a risky time to get into STRs or is this all hysteria? How did your STRs perform during the last recession if you had them then? 

Your feedback is greatly appreciated as always. Thanks so much and I look forward to gaining a lot of insight from your answers. Cheers! 

- Adam G. 

[Ryan Moyer]

Looming recession is not the issue.  People buying properties at prices based on 2021 numbers when 2021 numbers were a temporary outlier is the issue.

It's not easy like it was a year ago where any dolt with a dollar could buy some random cabin in the woods and make 40% cash on cash. But STR is still a very viable asset class, if you are hunting for the right deal.

The people buying some random cabin in the woods for $1.2M because it did $120k in 2021 have extremely limited margins for any kind of travel pullback, and they are likely going to get smoked just as badly as the folks that bought high growth tech at the top of that temporary boom.  Underwrite conservatively, and based on pre-covid numbers, and you can protect yourself.  Those deals aren't easy to find, but they're out there.