'They Have Wonderful Recurring Cash Flows,' Says Kevin O'Leary About This Overlooked Real Estate Investment

‘Demographics Are In Your Favor,' Says Kevin O'Leary About This Underrated Real Estate Investment That Pays Monthly

Shark Tank star and seasoned investor Kevin O’Leary recently gave his opinions on a real estate asset sector that is frequently overlooked: resorts. According to him, resorts make great investments because they're profitable and have strong demand from families, making them a smart option for people who want a steady monthly income.

Why Resorts Are a Great Investment

In a recent podcast, O’Leary explained that post-pandemic travel trends drive families to seek all-inclusive, hassle-free vacation destinations. More people want to travel together, especially in the winter, which has made warm places and beautiful lakeside resorts in Canada very popular.

Don't Miss:

• This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100 for properties like the Byer House from Stranger Things.
• Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — you can become an investor for $0.80 per share today.

"Families want a complete package,” O'Leary said. They want convenience and they come back again and again. This loyalty leads to a lower customer acquisition cost over time and creates what O'Leary calls "wonderful recurring cash flows."

The podcast’s host, Ken Dunn, explains that resorts usually make more money than regular rental properties. Resorts often have a net operating income (NOI) of 40-50%, while rentals usually stay around 10-20%. 

How to Identify a Profitable Resort Investment

Investing in resorts isn't as simple as picking a property and hoping for the best. Here are a few key factors to consider, inspired by O'Leary's insights:

See Also: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." These high-yield real estate notes that pay 7.5% – 9% make earning passive income easier than ever.

1. Location is Everything

Pick places where lots of people want to travel. Warm, sunny spots near beaches or pretty lakes are great options. Resorts near big cities or airports can be easier for families to visit.

2. Look for Existing Operations

If you're new to this, buy a resort that is already running and making money. This way, you'll earn income immediately instead of waiting to build something new.

3. Focus on Upside Potential

Identify properties that require repairs or enhancements to their functionality. Modernizing amenities, improving marketing or renovating facilities can raise occupancy rates and revenue streams. O'Leary suggests hiring a skilled management team to execute these improvements: “You need a good team because you got to do that right and then you got to market it.” 

Trending: Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

4. Recurring Revenue Opportunities

Look for resorts that can produce extra revenue, such as spa treatments and food and drink sales. Resorts with various revenue streams are typically more robust and profitable during recessions.

5. Customer Loyalty Programs

As O'Leary points out, about a third of resort guests return annually. Resorts with strong loyalty programs and a robust database of past guests have a significant edge. Incentivizing repeat visits can dramatically reduce your marketing expenses.

Trending: If there was a new fund backed by Jeff Bezos offering a 7-9% target yield with monthly dividends would you invest in it?

It’s Not All Peachy

O'Leary explains that more families want to spend time together and resorts make it easy. This has made resorts one of the best real estate investments today. Resorts can offer big rewards for investors ready to work or hire a team. With high profits and loyal customers, it's easy to see why O'Leary is excited about them.

Even though resorts can be very profitable, they do come with challenges. They cost a lot up-front for repairs, staff and advertising. Some resorts also struggle during slow seasons when fewer people travel. Running a resort also means managing many details and meeting customer needs, which are tough for beginners.

Read Next:

• During market downturns, investors are learning that unlike equities, these high-yield real estate notes that pay 7.5% – 9% are protected by resilient assets, buffering against losses.
• Arrived Home's Private Credit Fund’s has historically paid an annualized dividend yield of 8.1%*, which provides access to a pool of short-term loans backed by residential real estate with just a $100 minimum.