Anyone have advice about buying and short term renting a condo or apartment from a building? I see some deals that look decent and wondered if it's worth it and if the laws make it possible or a pain to short term rent these sort of units?
It sounds like it could work in an "resort area??"
Aloha @Sam Booth
I wanted to chime in as you have been getting some misinformation from other members though @Mark Waite provided good advice. Personally, I have and currently work with many investors looking for legal STR's and some of my clients are also looking for opportunities on Maui and Big Island. In the past 40 days, I've had 2 clients close on STR properties in Waikiki where the numbers looked quite attractive. For O'ahu, it is completely possible to buy a legal nightly rental building and be cash flow positive. Below is some key info it is best you are aware of.
* STR's can legally operate in Waikiki, Turtle Bay, Ko'olina and Makaha if the property is in the hotel/resort district AND the AOAO allows for short term rentals.
* If you need financing, best you work with a local lender that is familiar with STR units. However, most conventional lenders will not finance a unit that does not have a stove/oven. If you are interested in a unit that only has a kitchenette, I do have relationships with lenders who will finance it but the rate is considerably higher. You will need at least a 25% down payment.
* I have a relationship with a highly rated STR property management company. They charge 20% for full service and handle all marketing, cleaning, maintenance and will pay the GET, TAT, and OTAT tax on your behalf.
* GET, TAT, and OTAT taxes are paid by the guest.
* I recently had a client buy a beautiful 2 BR for $715k at Waikiki Sunset. This building was approved for STR's in Bill 41. A quality STR management company thinks it will gross $7-$9k/mo in current market.
* I also had another client buy a STR at Ilikai for $575K. It is expected to gross $4200-$5500/mo in current market.
* In currently market, you can buy a well maintained 1 BR in $550-$650k range and it will likely gross $5-$6k. To get an idea of units and highly rates, I recommend you visit Alii Beach Rental website.
* I have clients who live on the mainland but are self managing their property to avoid paying a PM fee. Obviously this greatly reducing operating expenses.
* VERY IMPORTANT: The STR market is in a period of uncertainty. Bill 41 is scheduled to go into effect Oct 23rd, 2023. Due to this bill, STR owners are supposed to register their units with the Department of Planning and Permitting (DPP) to obtain a registration number in order to legally operate their STR. At this time, it looks like the DPP will not have the registration process in place by Oct 23rd. There is uncertainty what will happen then. For this reason, I'm advising my clients to wait to buy an STR here until we see how this all plays out - unless they have high risk tolerance.
Happy to answer any questions you have - I am here to serve you.
Aloha @Sam Booth
I think the biggest mistake for investors that want to invest in Hawaii is if they only look for financial benefit only. Because it's guaranteed mainland would be better if one is looking for a return only. To invest in the island the investor must love the island,the lifestyle and the culture. For example my motivation is to invest in HI, but to live/work remote there , to retire ; so even with all STR difficulty that's created by gov. , I see that only as a small hassle.
Also many Hawaiian towns offered a lot of varieties in terms of lifestyle, you could have Waikiki but if you are into Oceanport you have Kona and Hilo as well, with Maui if you are into whitesand beach. This is the biggest factor I think. What lifestyle fits you and your budget.Aloha @Sam Booth
I think the biggest mistake for investors that want to invest in Hawaii is if they only look for financial benefit only. Because it's guaranteed mainland would be better if one is looking for a return only. To invest in the island the investor must love the island,the lifestyle and the culture. For example my motivation is to invest in HI, but to live/work remote there , to retire ; so even with all STR difficulty that's created by gov. , I see that only as a small hassle.
Also many Hawaiian towns offered a lot of varieties in terms of lifestyle, you could have Waikiki but if you are into Oceanport you have Kona and Hilo as well, with Maui if you are into whitesand beach. This is the biggest factor I think. What lifestyle fits you and your budget.@Carlos Ptriawan agree to some degree, especially in today’s market. However, I and other agents have mainland clients who purchase in Hawaii only for the financial benefits. But they are also very disciplined with their investment strategy and will pass if the property doesn’t pencil out.
Granted there are far more buyers who are getting into the STR business as a lifestyle purchase.
Opportunities still exist. You just need to do your homework and be ready to move if the deal makes sense.
Aloha @Sam Booth
I think the biggest mistake for investors that want to invest in Hawaii is if they only look for financial benefit only. Because it's guaranteed mainland would be better if one is looking for a return only. To invest in the island the investor must love the island,the lifestyle and the culture. For example my motivation is to invest in HI, but to live/work remote there , to retire ; so even with all STR difficulty that's created by gov. , I see that only as a small hassle.
Also many Hawaiian towns offered a lot of varieties in terms of lifestyle, you could have Waikiki but if you are into Oceanport you have Kona and Hilo as well, with Maui if you are into whitesand beach. This is the biggest factor I think. What lifestyle fits you and your budget.@Carlos Ptriawan agree to some degree, especially in today’s market. However, I and other agents have mainland clients who purchase in Hawaii only for the financial benefits. But they are also very disciplined with their investment strategy and will pass if the property doesn’t pencil out.
Granted there are far more buyers who are getting into the STR business as a lifestyle purchase.
Opportunities still exist. You just need to do your homework and be ready to move if the deal makes sense.
Sure, my STVR is fully booked until May 2023 actually. I did a lot of calculations most STVR in HI would be okay financially if the down is above 45% with consideration of 20% PM Fee. My only shock is the Hawaiian Electric cost.
Btw any of you guys invested in multiple island? I am wondering if we can work live between Maui and BI. Now I know to do a lot of things in BI I'm wondering the same about Maui. I'm mostly interested in the non-financial aspect of it.
Aloha @Sam Booth
I think the biggest mistake for investors that want to invest in Hawaii is if they only look for financial benefit only. Because it's guaranteed mainland would be better if one is looking for a return only. To invest in the island the investor must love the island,the lifestyle and the culture. For example my motivation is to invest in HI, but to live/work remote there , to retire ; so even with all STR difficulty that's created by gov. , I see that only as a small hassle.
Also many Hawaiian towns offered a lot of varieties in terms of lifestyle, you could have Waikiki but if you are into Oceanport you have Kona and Hilo as well, with Maui if you are into whitesand beach. This is the biggest factor I think. What lifestyle fits you and your budget.@Carlos Ptriawan agree to some degree, especially in today’s market. However, I and other agents have mainland clients who purchase in Hawaii only for the financial benefits. But they are also very disciplined with their investment strategy and will pass if the property doesn’t pencil out.
Granted there are far more buyers who are getting into the STR business as a lifestyle purchase.
Opportunities still exist. You just need to do your homework and be ready to move if the deal makes sense.
Sure, my STVR is fully booked until May 2023 actually. I did a lot of calculations most STVR in HI would be okay financially if the down is above 45% with consideration of 20% PM Fee. My only shock is the Hawaiian Electric cost.
Btw any of you guys invested in multiple island? I am wondering if we can work live between Maui and BI. Now I know to do a lot of things in BI I'm wondering the same about Maui. I'm mostly interested in the non-financial aspect of it.
Yes, Hawaiian electric is about 5 times what you're used to paying in the states. And watch out for those eroding shorelines too. It's a big problem.
I live in Hawaii and am working on a STR project myself. Generally, unless it's designated as a vacation rental or you get a Bed & Breakfast allowance, then 6 months is the shortest term lease allowed. Someone advised you to check with a realtor and that sounds like good advice, but you can also walk into the Planning Dept with a specific property address and find out some things that way.
If it's a property that you're considering living at and renting extra rooms that is the kind of scenario that can qualify for Bed & Breakfast if the zoning is right. My project is zoned Multi Family which allows for Bed & Breakfast. I'm told that that "Apps used such as Airbnb or VRBO are beside the point).
Hi @Eduardo Bilbao - I just want to clarify that the STR situation on O'ahu has cleared up significantly and things have turned out quite well. Department of Planning and Permitting opened up the STR registration on October 24th, 2022 and once you submit the required documentation and pay the fee, you will receive authorization to do nightly rentals. Key thing is that your building has to be recognized as vacation rental building and the building association has to allows STR's. Clients have told me it the entire process went smoothly for them.
So at this point, I see no reason not to invest in an STR on O'ahu if it fulfills your real estate goals.
Aloha,
Hi @Bryan Vukelich, do you know if Fairways Edge at Ocean Point in Ewa Beach allows 30 day rentals?
Hi @Eduardo Bilbao - I just want to clarify that the STR situation on O'ahu has cleared up significantly and things have turned out quite well. Department of Planning and Permitting opened up the STR registration on October 24th, 2022 and once you submit the required documentation and pay the fee, you will receive authorization to do nightly rentals. Key thing is that your building has to be recognized as vacation rental building and the building association has to allows STR's. Clients have told me it the entire process went smoothly for them.
So at this point, I see no reason not to invest in an STR on O'ahu if it fulfills your real estate goals.
Aloha,
Hi @Bryan Vukelich, do you know if Fairways Edge at Ocean Point in Ewa Beach allows 30 day rentals?
One thing you could do is checking the list from the same apartment complex in Zillow or you call them directly.
Hi @Matthew Brown - I messaged you directly. Happy to answer any other questions you have.