I am currently in Seattle but moving to Kona in six months or so, and that is why my profile lists Kona as my location. I just lost my IT job that I held for 14 years and after 20 years in Seattle we are ready to leave the gloomy skies and crowded city. My wife's father is a long time resident of Kona (25 years) and my wife has previously lived and worked on Oahu. I am 58 years old so I have my eye on retirement, but do not have enough savings to retire comfortably. I do not see much in the way of IT work in the Kona area so I am not sure if I can get an IT job or not but I am looking at real estate investing to start creating income and take us into retirement on the island. To my surprise there is practically no information on BP about Hawaii investing, especially the big island. I have made two post inquiring about it and have received 0 responses. It makes me wonder if it is a difficult place to succeed in investing. I would love to hear comments from you about it.
I'min Portland and also have an eye on a Hawaii retirement (although that's 20 years out, still). Back to your point, I was also surprised to find little to no info on Hawaii here on BP. I have keywords set for many things Hawaii and I get very few hits. I suspect that unless you're on the island, it could be difficult to make deals. Lots of people do out-of-state investing, but perhaps that is too far...The houses that I've seen for sale are priced high enough that it's hard to pencil out rental income to cover the payments and expenses. Areas south of Kona have many leasehold instead of fee simple listings. That is a turn-off for me. Are you up for managing condos and/or vacation rentals or do you prefer single family? Can you find a place with a separate building (an ohana) on the property? That could help to offset your costs. Is there anyone in your network that would have closer connections to Kona properties? It's easy to view MLS listings, but having someone local to scout out potential deals would be very helpful. I have communicated with an agent in Kona. He's knowledgeable, but I don't think that he is an investor. I did the makings of a REIA group, but I don't know if it gained any traction. (http://www.westhawaiireia.com/)
At any rate, I hope that you can make some headway and get more info. Come back and post if you do!
Hi Randall, sounds like we are in the same boat right now. I am really up for whatever niche makes sense, although starting small scale. I am thinking condos to get started, especially if there are rehab opportunities. I am just now starting to work the numbers for vacation rentals. Obviously a lot of investors are doing it, but some to make income and others to subsidize there own vacation home. I am on board for managing vacation rentals if they pencil out. It looks like there may be a shortage of long term rentals for all the tourism employees, so I am thinking about that too. I do agree with you, being there is probably necessary. I think we will be there in about six months. Thanks for the REIA info, I had not known about that. I have been in contact with an agent, I'll let you know how that pans out. Let's keep in touch.
Hey all there is a REIA on Oahu, and the Renatus meet ups all over Oahu and Maui. I am not sure about the big island but I do know an Agent over there in Kailua Kono that I could introduce you to if you want me to.
There are deals on the big island, but you have to by smart, Kona area has limited opportunities for flipping, more for long term hold, especially since in Hawaii we have seen an 8% per year in increase of home sales.
For flipping would look more towards the Puna area, about 2 hours away. Have helped a few investor in that area acquire and turn for a profit.
Great minds think alike! I live in Seattle today and am looking to expand my rentals into Hawaii, specifically the Big Island. My goal is to have a small portfolio of rentals on the Big Island, so that much of travel to/from Hawaii is a tax savings via a business expense.
Thanks all, good info. Jeremy I have an agent or two that I have talked to so I am good for now, at least until I get closer to moving.
Mark, thanks for confirming what I was thinking. After watching the market for a couple months I have seen very few rehab opportunities, at least that make it to the MLS or Craig's list. I imagine once there and networking more opportunities could be found. I'll take a look at Puna.
Hey Barry! Can't help much about Hawaii real estate (other than cash flow is likely squeezed on basic rental properties), but my brother lives in Kona and loves it! If you are ever piddling around the main shopping center there and see a fast-walking handyman barreling through, that's probably him! :)
Thanks Ali! We are looking forward to Kona.
I was over in the Kona area looking at RE twice in the last 12 months. It's an interesting market. We were not looking at condos but the SFR market looks pretty tough. One realtor we talked to said that most new listings are way overpriced and the sellers finally come back down to reality after a few weeks. We saw that quite often ourselves where a home would list for something like $475,000 and first price drop would be $25K then another $10K a few weeks later (and then even more price decreases depending on how far out of whack things are).
We also drove a lot of the neighborhoods in the Kona area and my first impression was that everything seemed to be divided into newer developments (0 - 20 years old) that were priced pretty tightly and older neighborhoods which were very hit and miss and valuations were all over the place. One property would be a beautiful 30 year old home and next to it would be a disaster and the prices would be within 10% of each other. Sometimes the disaster would be selling for more than the renovated house because you could see a small sliver of the ocean if you stood on the balcony and craned your neck in the right direction.
If you're looking to rent to locals, you might want to venture out from the Kona area a bit. Waikoloa Village, Waimea, etc. That said, the entire Kona side of the island just seems overly oriented towards vacation homes, retirees, etc.
Also, be cautious with any deal that sounds too good (especially any MFR and especially large SFRs that have been converted into MFR). I noted several MFR properties that seemed to be on the market for a long time (6+ months). Spoke with a realtor about one of them and it wasn't zoned correctly which means you could run into problems.
The Hilo side of the island seemed like it would have more opportunities. A lot more variance in pricing and neighborhoods. Prices are also considerably less than the Kona side.
Thanks for the great info. Kona certainly looks to be a unique challenge. I am keeping an eye on other areas, as you suggest. I did recently learn about the Lava zones and the impact they can have on financing and insuring a home.
I have been studying the condo market for vacation rentals and they are all over the place. Two weeks ago my search for 1bd condos pulled up properties averaging 100 - 135 a night. The same search now pulls up a lot of units going for 80.
More work to be done!
I'm from Hawaii and invest in rental properties, but not in Hawaii. I've run numbers in multiple locations, on a few islands and I've found that the ROI on SFH and even duplex investments is depressingly low. Rents are high but so is the cost of buying. Best bet is to look for multi family dwellings that need a little work and run rehab, down payment, and rental estimate numbers accordingly. If you're looking at condos, check out monthly maintenance fees and research what major capital expenditures the condo is planning. Look in established, more desirable neighborhoods, as many new residents have a propensity to move or leave the islands, sometimes without notice. You can find these places by talking to a local rental property manager.
Also, you're right about vacation rentals. Many people use them to subsidize their vacation homes, and not necessarily to bring in cash every month. Vacation property managers charge 35% of rents on up and you have to have one locally if you don't live on island. Since you live in Kona, you can always rent and manage it yourself, but that's a whole 'nother line of work.
Good luck to you.
Hi Catherine, thanks for jumping in on this thread. Our move to the Island has unfortunately been delayed due to some medical and cash flow issues but I am still keeping an eye on investing there and moving in a couple years now. That 35% property management fee sounds like it could put a property in the red every month so it may not work out to invest from the mainland. I am also considering the Hilo side to get a foot on the island.
Thanks for your great information.
@Barry L Hohstadt recently spent time on Oahu and Kailua. I was looking into properties but found property management to be my issue. Especially for small owners 1-10 units. May be a good area to start your own operation, if you are serious about the move. I am sure other investors would also pay to have eyes and ears locally.
@Ibn Abney my plans were based on being there, so now that my move is delayed I am kind of in a holding pattern. We'll be visiting my in-laws in Kona later this year so I am planning to visit some property managers and realtors to get a first hand account.
I've lived in Hilo 5 years, came here from the mainland.
I've been watching for SFR properties with no luck that whole time.
I did buy one condo and have it rented short term. I have it managed, they take 25%. It's almost worth it, though I end up doing repairs, etc. It would be shoddy if not, imo.
I just bought a 2 house property in Hilo, and am renovating. Termites. Cesspool. I'll let you know more once it's rented.
Please be aware that the County has introduced a bill to disallow most new vacation rentals, don't know where that will go...
I think there is money to be made with flipping.
Arla C Meyer
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