Does anyone have experience with short vacation term rentals in MAUI? My wife and I are looking at a property on the Lahaina side of Maui. The numbers seem to work out (not huge cashflow), however, we are a little concerned about the impact that COVID is having on vacation rentals. We would be hedging on more cashflow post pandemic if we decided to pull the trigger.
Thanks in advance.
P.S. this is my very first Post!
Aloha Dominic, I have several short term rentals here on Maui. I’m happy to talk story with you about the market if you like. Feel free to DM me and let’s chat. Aloha!
Currently, we are experiencing many last minute bookings as well as trip extensions. As we begin to loosen some restrictions, bookings are increasing. There are also bookings into this holiday season and spring of next year already. It’s important to have a good property management company to ensure a better occupancy rate. If you self-manage, you must have an on island contact for guests. If you purchase a vacation rentable condo, you will also receive the rental documents during escrow to show the future bookings. You can always ask for these prior to submitting an offer to see how well the unit rents out.
Hope this helps! Reach out if you would like more info. I am a Resort and Second-Home Property Specialist here on Maui.
@Nick He I just saw your messages and responded to you. The broad answer is yes, it is possible to cash flow with STRs in this market from out of state. The details are tricky though. And there are a lot of things you'll want to consider.
From about July to December of 2020 the STR market here was flat. Nothing was moving and some owners were eager to let properties go. As soon as January hit though, the market has been making up for that. Prices have gone up and all that sitting inventory is almost gone. A lot of institutional money has come in driving up prices and compressing cap rates.
Make sure you look very closely at your numbers when analyzing deals. I helped @Dominic Lattanzi look at his and I'm happy to help you look at yours. Just give me a shout and we can go over all the pros, cons and pitfalls to watch out for.
I've also been scouring the Maui market for the last week or so looking for the same. I love vacationing in Hawaii, and with young kids, have spent the last few years in Maui. I'm intrigued by the idea of having an investment asset that has value beyond simply generating a return.
But despite Redfin listing the market as slow, Mike's analysis rings true: it feels like things are really heating up. Further complicating things, I don't want to travel until I'm vaccinated, so I doubt I can physically visit any properties until June/July. I have yet to find anything that will generate positive cash flow based on actual 2019 rental income once you subtract out mortgage, HOA, and property management (25%). There are a few that are self managed, and the agent claims could make a lot more if they were professionally managed. They sent me comps that look more promising, but I can't figure out how optimistic they are.
Here are a few questions I've been struggling with:
1) How important is it to be right on the beach vs across the street? Obviously it'll impact the rental price, but if you can get a condo that has a 30% lower price and HOA that's directly across the street from a beach, is that a worthwhile trade off?
2) Beach erosion - How big a looming threat is this? I have relatives with property in the outer banks, and this is threatening the existence of entire communities. I don't think Hawaii has as big a storm problem, but I recently found a condo that has a $580/month in Maui have big extra assessments for the construction of anti-erosion measures like storm walls.
@Mike Neubauer I want to be respectful of your time, but if you're willing, I'd love to share a few properties I have my eye on and get your quick impressions. DM me if you're up for it.
@Keith Simmons excellent points, excellent insight and yes, some agents are overly optimistic trying to make the sale. I’m happy to talk with you. I’m around this morning until about 11 Maui time if you like. I’ll shoot you a DM with my number. Feel free to give me a shout and let’s see what you’re looking at!
1. In my experience, being on the beach is not worth the premium you pay for it. That is, the additional x% purchase price will not equal the same percentage vacation rental income.
2, Beach erosion is a huge issue, especially in W Maui.
my two vacation rentals are rented long-term presently, but I did recently have a small Gap between tenants in one that got 65% occupancy versus my usual 80%. Hope this helps!