Investing in Hawaii?

Question

Hi!  I live in Providence Rhode Island and have been in the market for a three family for about 6 months. The market is red hot here. I found out I may be transferring to Hawaii (Oahu), in a couple months, and I don’t know anything about the market there. I do know that it’s pricey. I may be living there for 3-4 years max.

Does anyone have experience on that island?  Multi families do not seem to be popular. I see a lot of condos and small SFH. My initial thought would be to get a 2-3 bed condo or SFH, with 2 baths, and rent rooms on Airbnb. I’d love to hear from folks who have actually invested in that market.

Thanks!

Lane Kawaoka · Answer

I would rent... number just don't make sense here in Hawaii. Too much unsophisticated money or international money.

It could appreciate but I consider that gambling. Sophisticated investors invest on cashflow where the rents exceed the mortgage plus expenses (and enough money to pay for professional property manage to do our dirty work).Sophisticated investors look at the Rent-to-Value Ratio and look for at least 1% or more to be able to cashflow after expenses.

Shelon Hutchinson · Answer

@Jacob Lapp

I was stationed in Hawaii for 10 years and 3 months.  I love everyday there.  I never had any issues with the locals.  In fact, I love the culture and the people so much that I marry one and have been married now for 19 years.

Multifamily is not a big thing there.  Condos come with a big HOA.

The native are however very protective of the island as we all should be.

I am looking to move back there after I retire from the Marine Corps and have $10,000 per month in passive income through multifamily properties.

-Hutch

Kyle Keller · Answer

@Jason Cote

It's a hard market out here... That is if you don't find a deal. Rates are super low though so it helps. I bought a SFH in Ewa beach 2 years ago and have been renting it out which just covers mortgage. But the price will inflate and rent will go up and all I have to do is hold onto it.

I would recommend going more expensive SFH than a condo, less in maintenance fees that way and more likely to appreciate well in Ewa Beach. Kapolei is growing and more people are looking to move over there.

David Rucker · Answer

@Jason Cote      Without getting into too much detail,  Airbnb is very restricted on Oahu outside of resort zones.    To be legal, unless you purchase a property that already has what is called a non-conforming use certificate (NUC), you will have to get a certificate for what they are now calling Bed and Breakfast homes.   The certificates are limited by area of the island, and the the start of that program has been pushed back to April 2021.    Therefore you may want to focus on a unit where you can rent out a portion long term.

Jason Leavitt · Answer

There are lots of tourist friendly areas here in Hawaii. It is not very AirBnB friendly though. Read more here: https://realhawaii.co/blog/air...

Cost of living is extreme and therefore housing costs. You won’t find 1% deals here but, like the mainland coastal markets, it’s an appreciation market. Condos here will kill your cash flow with high HOA dues (pools, tennis courts, clubhouses to maintain).

Jacob Lapp · Answer

@Shelon Hutchinson

I want to end up there as well! I was just recommending staying away from vacation rentals there!

Michael Borger · Answer

@Jason Cote Can you be more specific in what you're looking for? You mentioned both the west and east sides - that's a night and day difference in about every property characteristic. I'm working through a couple of multi-unit Makaha CPRs right now as well as SFHs in Makakilo, Haiku Plantations (Kaneohe), waterfront in Kailua, etc. Some of the properties I end up with have flexible floor plans for separate units, but it all depends on 1) where you want to be (not everyone wants to be in Makaha), 2) affordability, 3) how many units you're looking for.

Send me a PM if you want to discuss it further.

Lane Kawaoka · Answer

Great place to live not the best for numbers.

Brandon Vukelich · Answer

@Kyle Keller I should connect you with my brother.  He lives in/on North Shore.  He's my investing business partner but he's also licensed. Anyway, we both like connecting with other investors in our local markets, etc.  Shoot me a PM if interested.

Investing in Hawaii?

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