what to do in a tough cashflow market...

General Real Estate Investing
8yFollow

what to do in a tough cashflow market...

Mark Baldwin
Investor · Koloa, Kauai, HI · Member since 2014 · 24 posts · 12 votes

Aloha BP,

I'm hoping for some strategy help...I own several vacant lots on the island of Kauai.  The cost of building and location of the lots, doesn't leave spec houses as a worthy option.  I can pocket the same money by selling the lots vacant, and save a ton of headache.  I am looking for a pure cashflow play.  I do not mind actively managing the portfolio, however my location presents a challenge.  Everything on Kauai is an appreciation play--and frankly, I don't want all my eggs in one basket.  I've considered investing in rental properties on the Big Island because of their relatively affordable housing, but I'm having a hard time getting my numbers to say anything above 6%.  I believe I would qualify as an accredited investor, so 6% on my money, being actively managed, doesn't seem very attractive to me.  I love having the potential for appreciation, but also want to maximize cashflow now.  I keep trying to convince myself to buy SFRs, but I'm starting to feel like I should just find a syndicator,  note fund of some sort, or maybe even a hard money lender, and let those that are qualified do their job...Or do I do a combination of all this?  I'd appreciate any thoughts you all had!

0Reply
23 views

Most Popular Reply

Mike V.
Rental Property Investor · Campbell, CA · Member since 2017 · 419 posts · 499 votes
8y

@Mark Baldwin, costs are high but rent more than covers it.  You need to purchase smart but you can do quite well. 

It will require a good 200k-300k per unit with 30% down and upgrades but the numbers will get you the return you’re looking for. 

1Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Alex Johnson
    Real Estate Agent · Denver, CO · Member since 2017 · 41 posts · 21 votes
    8y
    Knowing absolutely nothing about the Hawaii market or where the lots are located, tiny homes for Airbnb came to mind. Is that at all feasible?
    0Reply
  • Mark Baldwin
    OP
    Investor · Koloa, Kauai, HI · Member since 2014 · 24 posts · 12 votes
    8y

    I'm not allowed to do that on my lots, and if I were to purchase units to vacation rental, it would be a lot of work...for what seems like a minimal return.  Plus I could only pick up a few units.  I just feel like I'd be doing a lot of work, when I could achieve the same cashflow elsewhere...granted, I wouldn't have as much opportunity for appreciation.  As far as tiny homes...it's really hard to be the first at anything on this island, not that it couldn't/shouldn't work given our housing shortage, just not for me.  Appreciate the thought though!

    1Reply
  • Mike V.
    Rental Property Investor · Campbell, CA · Member since 2017 · 419 posts · 499 votes
    8y

    Why are you having a hard time getting numbers above 6%?  

    I own STRs on Kauai and am averaging 20% and that’s paying cleaners and my on island contact to do the little stuff. 

    0Reply
  • Mark Baldwin
    OP
    Investor · Koloa, Kauai, HI · Member since 2014 · 24 posts · 12 votes
    8y

    @Mike V., Perhaps I need to consider the Vacation rental landscape a little more.  On the south shore, there are so few options that don't have high maintenance costs, but maybe I should run the numbers a little more closely.

    @Greg Horn,  The tiny home thing won't work.  I have an agreement with the county and the CPR I created restricting the lots to have 1 house/lot.  It's unfortunate how it worked out, but my pockets weren't deep enough to maximize the land.  I also wanted to build a personal residence...there was no way to have it all.  I've already got a realtor I work with, but will consider you if things don't work out with him

    Thanks for the thoughts!

    1Reply
  • Mike V.
    Rental Property Investor · Campbell, CA · Member since 2017 · 419 posts · 499 votes
    8y

    @Mark Baldwin, costs are high but rent more than covers it.  You need to purchase smart but you can do quite well. 

    It will require a good 200k-300k per unit with 30% down and upgrades but the numbers will get you the return you’re looking for. 

    1Reply
  • Grant Rothenburger
    Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
    8y

    @Mark Baldwin Are you wanting to be passive?

    0Reply
  • Mark Baldwin
    OP
    Investor · Koloa, Kauai, HI · Member since 2014 · 24 posts · 12 votes
    8y

    @Grant Rothenburger, I'm not specifically looking to be passive...in fact I'd like to be more active, however my location limits my ability to do so. Kauai allows for great long term gains, but limited cash flow. I am already heavily invested/tied to Kauai, so feel comfortable with my long term positions here. I want to maximize cash flow however I can, but feel actively managing any property other than here will be difficult. It's not just a $250 southwest flight...and I'm not sure I can scale fast enough to make covering a $1000 flight worthwhile. I'm beginning to think I shouldn't focus so much on one approach, but instead diversify, until I hone in on what works well for me. Trying to do so without paying capital gains...wouldn't be the next challenge. Likely a series of purchases and refinances would be the ticket there. Then I could try my hand in some syndications, JV deals, notes, etc.

    1Reply
  • Grant Rothenburger
    Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
    8y

    @Mark Baldwin I understand. I was only asking that question because I didn't see how what you're looking to do would align with being passive. But you want to be active, so scratch that! Maybe selling the lots and using that cash to buy homes on your island that you can short term rent/ vacation rentals would be less headache than trying to build around all the guidelines and rules that you have to follow. But I don't know the real estate market there at all so I may be way off base in assuming that you would be able to buy  a house or two with the proceeds from the lots. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free