Does anyone here invest in Oahu, Hawaii? If so, what investments do you have? How does it work to be investing in a very popular tourist area? Would love to learn more about investments there!

Stacy, it depends if you are looking for cashflow or more of a trophy asset.

The Rent-to-Value Ratio of more than 1% is needed to be able to cashflow after expenses - you definitely will not find it here. You find the Rent-to-Value Ratio by taking the monthly rent dividing by the purchase price. For example a $100,000 home that rents for 1,000 a month would have a Rent-to-Value Ratio of 1%. 

I live here in Hawaii but invest in the South plus Phoenix. Live where you want and invest where the numbers make sense 🤙

@Lane Kawaoka Thanks for the incite Lane! I’ve learned the 1% rule definitely. I also like the live where you want, invest where the numbers work. Did you find partners through BiggerPockets when investing in different areas? I saw you have numerous investments in different states.

Hi @Stacey Ocampo - Lane is correct about rent/mortgages. You're unlikely to find your typical cash flow properties unless you uncover an incredibly smoking (re: motivated seller) deal or put together a creative finance structure like a lease option or wrap. I do a lot of flips throughout the year, but that's a different strategy entirely.

@Lane Kawaoka

Great reminder Lane.  Building an investment portfolio that allows you to live where you want is a really good thing to keep in mind.  I am currently strategizing on how to build a portfolio so I can retire in Hawaii when I retire from the military in 5 years.  It's going to take some serious work but it will be worth it.

Aloha Surf Hotel hits $155,000 its a STEAL.  Currently listed for $179,000

@Michael Borger Definitely makes sense with Hawaii. Thank you Michael!

@Andrew Keeler Awesome goal Andrew, I have a similar one with living in Hawaii. Let’s get to work!🙌🏽😊

Hoping others can chime in on here. Specifically looking for opinions from people who believe in appreciation and aren’t totally caught up on cash flow. Would it be a good idea to take a gamble and invest in Oahu or is it the market already too high?

@Dewayne Perry Take a look at the first response from Lane!

Dewayne, it doesn't matter what I believe in, but my family has owned a B+ single-family home in Waipio Gentry for over 30 years.  During those three decades it's appreciated at the rate of inflation.  In terms of the 1% thumbrule, we've finally managed to boost net cash flow to 0.4%. 

Several thousand new homes are coming to Oahu in the next few years in Ho'opili, Koa Ridge, and the light rail corridor.  "Gamble" is the right word.  Why not invest anywhere else in the U.S. where the numbers work for both cash flow and appreciation?

@Doug Nordman Thanks for the insight Doug! I can agree to it as a gamble, gotta invest where the numbers make sense.

Hey Stacey, I'm moving to Oahu this summer with the military and looking into purchasing a property- I've been told appreciation is amazing out here ("prices double every 10 years! Woah!") though I'm not as impressed, primarily due to such poor cash flow. My military housing allowance changes the equation somewhat, but a Richonmoney article titled "What You need to know about Appreciation in Real Estate" really put me back on a teeter-tooter. 

Short term rentals, pre COVID, appeared to cash flow well but with Bill 89, passed last year, limiting STR #s on Oahu the rules of the game have changed.. Lane put it well- cashflow or trophy asset?

That doesn't mean if you really want to invest, you can't be creative about it- ADU laws changed on Oahu in 2015 and there's tons of condos on the island, though I don't really know anything about them, but there's always opportunities if you look hard enough.

Jeffrey, that old trope of "buy a home at every duty station" might have been cool in the 1980s, but now the Web lets everyone invest where it makes financial sense.  If you're going to become a long-distance landlord after the military transfers you out of Hawaii, maybe it makes more sense to learn how to do it while you're living in Hawaii and investing in someplace like Oklahoma or Michigan.

The military homeowners in Hawaii are making their money by househacking with roommates (like Scott Trench's "Set For Life") or by doing live-in flips... and the more rewarding live-in flips are practically gut-rebuild.  If you're planning to buy a multi-family while you're here during the tail end of a pandemic, well, you'll get real familiar with the landlord-tenant code.

Just because the DoD hands out more BAH here than almost anywhere else is no reason to leverage a VA loan on short-term speculation. The reward is not worth the uncompensated risk.

@Jeffrey L Jerschina I too, heard about ADU's and rentals doing well, but sounds unsure with covid and agree with what Lane said. How exciting for such a big move! You're definitely gonna love it there. Good luck!

Originally posted by @Doug Nordman :

Jeffrey, that old trope of "buy a home at every duty station" might have been cool in the 1980s, but now the Web lets everyone invest where it makes financial sense.  If you're going to become a long-distance landlord after the military transfers you out of Hawaii, maybe it makes more sense to learn how to do it while you're living in Hawaii and investing in someplace like Oklahoma or Michigan.

The military homeowners in Hawaii are making their money by househacking with roommates (like Scott Trench's "Set For Life") or by doing live-in flips... and the more rewarding live-in flips are practically gut-rebuild.  If you're planning to buy a multi-family while you're here during the tail end of a pandemic, well, you'll get real familiar with the landlord-tenant code.

Just because the DoD hands out more BAH here than almost anywhere else is no reason to leverage a VA loan on short-term speculation. The reward is not worth the uncompensated risk.

 Doug, thanks for the response and reality check. While I don't subscribe to that specific AD mantra of "buy at every duty station," it is a very emotionally charged decision to look at renting in Hawaii for 3 years and seeing a potential 100k+ in equity never materialize, although that's at the crux of the rent vs. buy conundrum- emotions vs underwriting!

I need to run the numbers on a few properties in Hawaii- I've been talking to a RE agent and browsing SFHs on the windward side around Kailua and Kaneohe. With enough square footage and correct zoning, I would strongly consider building an ADU on the property and lurking to see if solar panel tax incentives return.

Whether forced appreciation through doing a live-in-flip, ADU, and potentially solar along with equity is enough to eclipse a potential collapse/stagnation in the Oahu market- that's the big sticking point, and all of my musings come back to your premise: is the cash flow there and is the potential for appreciation and equity worth the "uncompensated risk?" With a 0% down VA loan and 3400$+/mo in BAH, it's a tough choice!

I hear you on the emotions of the buy vs rent decision. Let me know if you want more help crunching numbers-- we have a number of military investors on the islands who network and help for free.

You also want to make sure you're not asking a barber if you need a haircut-- hopefully your realtor is experienced at working with real estate investors instead of homeowners. You'll get the $3400 BAH whether you spend it on housing or not, so a sure way to put it to work is to go cheap on rent (or house hack) and invest the rest in your asset allocation (equity index funds or REI) where it makes sense. You don't have to dump your BAH into real estate in the same ZIP code as your duty station.

I’m a solar nerd, and we’ve had a grid-tied system since 2005. It paid us back by 2011 and we’ve had free power since then. It’s worth buying (solar water heating as well as photovoltaic) when your electric bill becomes $26/month instead of $250/month. However Hawaii’s photovoltaic incentives are not coming back. Those subsidies did their job and the systems are cheap enough for the markets to compete on their own merits.