Buying Multi Family on Oahu With VA Loan

Buying Multi Family on Oahu With VA Loan

Oahu · Member since 2020 · 2 posts · 0 votes

I am AD Army and moved to Oahu five months ago. I am currently renting, but have been searching every day for a multi family home that I can purchase with my VA loan. I'm trying to be patient and wait for the right home to buy since I am looking for homes in the $1.2-2.0 million range. The problem is that I can't seem to find the "right" house for me and my family. Either the home is in rough condition, it's in a bad neighborhood, or the rent being collected pays for the mortgage, taxes and insurance, but doesn't cash flow. Based on my research, buying real estate in Hawaii is a long term investment that you cash in on when you sell. Even if you're not getting positive cash flow, the big payoff is in appreciation. Am I right? Maybe I need to loosen my requirements.

Is there a good resource for off market deals, or should I expect to pay a premium for any good RE investment here? Thank you

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Isi NauPro Member
Real Estate Broker · Mililani, HI · Member since 2016 · 217 posts · 253 votes
5y
Hey @Ryan Beetham
Based on your criteria, I think the best you can case scenario is finding something where the numbers are better than renting. Trying to cash flow with $0 down on a $1M-$2M property is going to be very tough here. Also, trying to do it with a property that doesn't need a fair amount of work.
Assuming you're at Schofield or Shafter, the best options for neighborhoods are Waialua, Mililani, Moanalua, Kaneohe, and Kailua. These are great neighborhoods, but if there are any multi units, it will likely be two units. Meaning you can expect about $1500-$2000 a month in rent (assuming your family lives in the bigger of the two units).
Appreciation here is good, but if you're here for three years (maybe 2.5 now) you can expect the appreciation gains to cover closing costs, essentially breaking even. If you're here longer than three years, then there's a good chance of coming out ahead.
There isn't a whole lot of variety in property types on Oahu, especially in good neighborhoods. So you've probably seen every property type available. There are off market opportunities, but not anything (property types) you haven't already seen. Some could come at a discount, but a fair amount of remodel work will be needed.
If you're looking for a solid long term investment, some criteria may need to be adjusted. For example property condition and neighborhood, but these can be tough when you have a busy job and family needs.
If you're okay with something that beats renting, then that is definitely doable.
Feel free to reach out with additional questions or for further discussion.
Aloha! Isi
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Ryan Beetham
OP
Oahu · Member since 2020 · 2 posts · 0 votes
5y
Originally posted by @Isi Nau:
Hey @Ryan Beetham
Based on your criteria, I think the best you can case scenario is finding something where the numbers are better than renting. Trying to cash flow with $0 down on a $1M-$2M property is going to be very tough here. Also, trying to do it with a property that doesn't need a fair amount of work.
Assuming you're at Schofield or Shafter, the best options for neighborhoods are Waialua, Mililani, Moanalua, Kaneohe, and Kailua. These are great neighborhoods, but if there are any multi units, it will likely be two units. Meaning you can expect about $1500-$2000 a month in rent (assuming your family lives in the bigger of the two units).
Appreciation here is good, but if you're here for three years (maybe 2.5 now) you can expect the appreciation gains to cover closing costs, essentially breaking even. If you're here longer than three years, then there's a good chance of coming out ahead.
There isn't a whole lot of variety in property types on Oahu, especially in good neighborhoods. So you've probably seen every property type available. There are off market opportunities, but not anything (property types) you haven't already seen. Some could come at a discount, but a fair amount of remodel work will be needed.
If you're looking for a solid long term investment, some criteria may need to be adjusted. For example property condition and neighborhood, but these can be tough when you have a busy job and family needs.
If you're okay with something that beats renting, then that is definitely doable.
Feel free to reach out with additional questions or for further discussion.
Aloha! Isi

Thank you for the feedback. Even though I work at Schofield, I live in town and am looking around Diamond Head, Kapahulu, Kahala and the other areas I mentioned in my OP. I drive against traffic so the commute isn't bad. I have seen some listings in these areas that may pan out, but since I am using my VA loan I really don't want to put much money into the properties. The cash I have saved up will be better used towards investments on the mainland that can cash flow each month. Again, maybe I need to change my expectations and understand that I may need to pay out of pocket each month, with the big payoff coming at the time I decide to sell. I'm here for three years, but may stay longer. Even if I move back to the mainland, I would continue to rent the units out. I'm aware of the costs, which is why I have budgeted 30-35% of gross monthly rent towards fixed and variable expenses. I guess I'll just keep looking and hope that I can find a diamond in the rough. Mahalo
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