What kind of REI market is Hawaii?

Question

Michael Mazzella · Answer

Aloha from Hawaii Kai, @Micah A.!Welcome to the site, and to the exciting world of Hawaii real estate investing! There's potentially big money in this business and the work is fun... (most of the time, hahaha!)

To answer your question, the Oahu / Honolulu metro is ideally suited for wealth creation - appreciation plays, as in combining forced, instant, and market appreciation (i.e., house flipping), as these are mostly all 6-figure deals. That means most people can replace their w-2 income with just one house flip a year. By the time you're flipping 4-5+ houses a year, you're in the top income bracket making $400k - $600k a year, and it truly becomes life changing. I've got 22 projects with 39 house-flips in progress at the moment here on Oahu, which shows that there are plenty of deals to be had here. Obviously getting funded is essential, also totally do-able.

Its possible to cash-flow stuff here too, (I've got a few rentals here) but the cash-on-cash return is typically lower than what you can find elsewhere, because of the high price-points here. As an example, for some of my passive income, a few years ago I took $1.5m and bought 48 houses in Jacksonville, FL, which provide a NOI of $20k to $22k per month.

Seize the day, Micah - now get out there and kick some okole! ;-)

Chad H. · Answer

Micah,

Very interesting that you mentioned your interest in buy and hold and having a great job and lastly your goal. I'm in that similar situation, to be honest. As for me, my recommendation to you would be that whatever works for you, focus on that and be great at it. If buy and hold fits your criteria instead of flipping, Do that way for now, things might change later. Don't rule out the others, because they could be used as other vehicles for your REI journey. For me, buy and hold works for me. I'm learning every single day, from reading books, youtube, etc, everyday working on my craft. Thanks to Josh Dorkin and Brandon Turner for creating biggerpockets. The BP community is awesome the forums and podcast are terrific and the feedback is great . Good luck Micah on your REI journey.

Chad H. · Answer

Hi Micah,

I totally agree with Michael Mazzella, I knew Michael back in the days with HIREI. He's a great guy who is honest and truly a person with a wealth of knowledge about Hawaii REI and the mainland, he definitely knows what he's talking about. Good luck and great investing

Michael Borger · Answer

What color is a rainbow? Hawaii offers a mix. I'd say flipping is generally more powerful in Hawaii than elsewhere from the sheer price point. Cash flow can be hard to generate for the same price reasons, but there are people doing it. You might need to bank on appreciation more than cash flow in a buy and hold strategy in most areas, though, which puts you on a speculation trajectory. I do all buy/fix/sells in Hawaii right now but am open to cash flowing deals if/when they present themselves.

Mark Waite · Answer

Hey Micah,

Some very good points on here. One thing you mentioned is not having the time to do a rehab and flip. If you don't have the time to manage the project or have someone you trust implicitly to do so on your behalf, it might not be a wise move. Could end up costing a lot more in time and money.

Buy and hold is a great way to generate cash flow in an appreciating market. I have a client who is looking at both but, in order to make the numbers work, they're taking the BRRR approach. Which means you'll still have to do your homework. To buy a place that needs no work isn't going to likely make you much in the near term on a cash flow basis.

And don't forget, if you go the flip path, there's likely to be taxes owed unless you can do a 1031 (which has its benefits if you can move quick enough on the new property).

Loren Clive · Answer

@micah a. if you'd consider buying in Maui, great opportunities for buy and hold here. We're seriously underbuilt which makes finding tenants easy. Very competitive rental market with good appreciation

Michael Mazzella · Answer

Aloha @Chad Haili! Hey brother, its been a long time - I hope things are going great for you! I just wanted to thank you for the nice compliment - Feel free to message me if I can do anything to help you. Create an Awesome day!~Michael

What kind of REI market is Hawaii?

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