Would you start your investing in Hawaii?

28 Replies

Good morning everybody,

I'm a brand new investor. I've been learning and analyzing deals for just under a year now. I have a large amount of savings that Im looking to invest. I'm currently in the military so VA loans are an option. I'm in a unique spot where my job will allow me to move to Hawaii (Kauai) or move back to the Midwest. I would love to move to Hawaii but the issue I'm running into most is it seems to be a very expert level market. Just want your thoughts if you could do everything over would you rather have started in a market like Hawaii or Midwest and any advice you can give me in regards to harder and more expensive markets.

Thanks in advance.

@Cody Buckingham There is money to be made in every real estate market in the country! It all comes down to your personal goals, risk tolerance, and access to capital. 

Do not think that because you live in Hawaii, that is the only state you can invest in. I highly recommend @David Greene's first book "Long-Distance Real Estate Investing" which puts action to the idea: live where you want to live, invest where the numbers make sense.

I am active duty military as well, and I live in San Diego. However, I own real estate in Wisconsin, Florida, and Oklahoma. It is not easy, but it is possible. Best of luck on your journey and feel free to reach out if you want to discuss more. 

Have you looked into house hacking? VA loans are great. My Dad has used them many times. If you wanted to do other strategies then Hawaii would be tough. Flips would work there. BRRR's maybe, depends on rent. I imagine single family or multi family hold would be insane. Midwest has a lot of opportunities along with lower bar of entry BUT house hacking is an easy way to start especially with how much the prices will continue to rise there. If you do go OOS build a team and interview them to find the perfect ones.

I think it'd be sweet to live and invest in Hawaii, but you could scale much faster here in the midwest. You could do both.. pull out the equity in Hawaii and invest here with a solid PM team behind your back.

@Cody Buckingham my first investment market was Honolulu on the island of Oahu so it is doable and the is real potential for growth. As some of the other commentators have mentioned you have to know your market and while all of Hawaii has a high cost for entry there are still opportunities to be found.

I found a very specific market (C-, 2/1 condos, near major hospitals, pet friendly, low HOA) that I studied intensely and because of that specific focus knew a good deal when I saw it and could quickly get the ball rolling while others were still analyzing.

Kauai is such a unique community that you will be faced with nuanced challenges but that also means you may find opportunities where others miss them if you know the market.

Kauai is the most beautiful island in the state and has a great sense of community, if you want to move there do it and make real estate work for you, don't go about it the other way or you may be left with more properties but also more regret.

All the best and Há coffee house is a great place to grab breakfast.

@Cody Buckingham if you are looking to OOS invest I would look into the Midwest specifically Columbus Ohio. Hawaii is cool and all.  However, the barrier to enter is a lot higher with less return. It is a great place if you want a vacation home and rent it out when you are not there.

Originally posted by @Cody Buckingham :

Good morning everybody,

I'm a brand new investor. I've been learning and analyzing deals for just under a year now. I have a large amount of savings that Im looking to invest. I'm currently in the military so VA loans are an option. I'm in a unique spot where my job will allow me to move to Hawaii (Kauai) or move back to the Midwest. I would love to move to Hawaii but the issue I'm running into most is it seems to be a very expert level market. Just want your thoughts if you could do everything over would you rather have started in a market like Hawaii or Midwest and any advice you can give me in regards to harder and more expensive markets.

Thanks in advance.

 I have a brother in law who bought property on Maui to live. It's awesome and has appreciated (10 acres by ocean), but the infrastructure is challenging because he is located in a more remote area - like getting solid wifi. Are you looking to purchase a duplex to house hack or SF?

I would consider leveraging your VA loan to purchase a place in Hawaii that you could house hack for a few years while you feel out your options and preferences while building equity. If you decided to move on later to the Midwest, etc., you would at least get to experience life in Hawaii and could easily be able to rent out your Hawaii property and interview local PMs in advance.

@Brandon Goldsmith

Agree with this.

Even though prices are high there, renting is very tough to just find a place and you can also expect high rents. So if you are going to live there I would def take advantage of house hacking and after 2 years (get your capital gains exemption) I would consider selling if you had some good appreciation and then invest in the Midwest.

Many homes there are set up with “Ohana” units and converted garages to living spaces so it’s pretty easy to find a good house hack home. Best of luck!!

I rent in Hawaii and invest on the mainland. Makes no sense to since large down payments in properties. 

Even with a VA loan you are mostly gambling on appreciation with low cap cashflow.

Originally posted by @Cody Buckingham :

Good morning everybody,

I'm a brand new investor. I've been learning and analyzing deals for just under a year now. I have a large amount of savings that Im looking to invest. I'm currently in the military so VA loans are an option. I'm in a unique spot where my job will allow me to move to Hawaii (Kauai) or move back to the Midwest. I would love to move to Hawaii but the issue I'm running into most is it seems to be a very expert level market. Just want your thoughts if you could do everything over would you rather have started in a market like Hawaii or Midwest and any advice you can give me in regards to harder and more expensive markets.

Thanks in advance.

 If you house hack into a multifamily then you cannot go wrong. That is what I did 4 years ago in Columbus, Ohio.

Hi Cody, congrats to savings up a chunk of cash and thank you for your service to our country. I agree with others that have posted that house hacking could be a good way to go about owning a property in Hawaii and take advantage of your VA benefits. Personally, and how I advise clients, is that for investing I've found the mainland is a better place to own investment property. But with your VA benefits, and if you will be living in Hawaii for work for at least a couple years, then owning a place in Hawaii might work well for you - especially if property values continue to appreciate as they have this past year (I'm skeptical).

But good luck with whatever you decide to do and if you have questions or want to talk Hawaii real estate, you are welcome to contact me at any time.  

@Cody Buckingham If you want to flip, then sure - Hawaii can be great. You'll need access to a fair amount of cash (doesn't have to be yours - I use private capital for most deals) or be skilled in putting together creative financing transactions like sub-2s, owner wraps, lease options, etc. I live in San Diego, but my main market is Hawaii and I do creative deals all the time.

Kauai would be challenging just b/c there aren't as many people there -- simple math -- but just 1-3 deals a year could still provide a comfortable living.

@Joel Lazar - most of the properties are definitely not leasehold. The remaining leasehold properties are mostly condos with a few SFR here and there (Waimanalo and such). You can still make money on LH properties, as long as you understand the extra variables, like monthly lease rent, remaining term, renegotiation, and fee availability/price. I did a LH flip in Honolulu 5 years or so ago - it was a nice little project.

I actively invest in Kauai. I own and self manage several short term rentals there and make a fantastic ROI. STRs are a bit more work but they're cash cows.

Just got back to Milwaukee from Kauai last night LOL - of course I could not help myself looking at properties around Lihue and Wailua. And of course the difference could not be more drastic, both in terms of construction as well as price. In the midwest everything has to be built to withstand frost. The best starategy I can see is STR. I rented a car from Turo - the only option and paid $250 per day for a 2012 Infinity... Great money, but also more active to manage.

House hacking is a lot easier in Milwaukee, no city has more duplexes than we do - about 66,000 of them. However they get sold four times less often than single family homes: for a good reason; it makes sense to own one. I have a video series on my YT channel on the the topic. Most of our duplxes were specifically built by German and Polish immigrants specifically as owner occupied income properties, so the concept of house hacking is at least 120 years old!

On the VA loan topic - great in theory, but Milwaukee has become a very competitive market. Any good property will sell with multiple offers and VA and FHA usually don 't make it to the top. Seller's don't like the unpredictability of the lender inspection and their requirements - i.e. will not close until exterior gets painted, but its February and paint won't cure.

I was in the New York/New Jersey markets and finding it difficult to find deals we wanted in our backyard.  I researched areas outside of our comfort zone, built a team in alternate markets and now own and grow rentals in Jacksonville, Baltimore, and Pittsburgh, we will be in Texas by September.  Prior to the pandemic it was relatively easy to find great deals, but there is still a market for good deals.  If you will be investing outside your knowledge base make sure you build a strong team in the area to support you.

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