Kaanapali Maui, Hawaii VRBO pros & cons

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Iv'e been in real estate for 15 years in Utah and have seen the ups and downs over that time. I have a group of investors looking to buy a 3 bed, 3 bath condo, ocean view in Kaanapali but I am concerned at the ability to properly do a VRBO style rental business long distance. Also seeing what the local SLC market is doing right now I am concerned how hot the Maui, Hawaii market is right now knowing they can rise and fall a bit more dramatically and if this is closer to the peak of their pricing.

In addition to this as a general questions what are some things to look out for when buying into a condo HOA in Maui that may be different than in other parts of the country?

Aloha @Blake Capson !

Iʻve been on Maui for 16 years and know the island pretty well. The VRBO market on Maui is insanely good, but not always great for out of state investors. The toll of property management on places like this tends to drive most serious out of state investors away. We tend to see an average of about 35-50% being taken just from management fees. With numbers like that, even though the market is great it is not hard to find similar ROI on properties in your local area.

I do have a good friend who is an excellent realtor and property manager whose company only charges 25% and they kill it. Theyʻre the lowest price Iʻm aware of on this island. 

Some other things to be aware of, especially on the West side of the island (Kaʻanapali), is to make sure the unit is in a fee simple complex. Many condos over there are leasehold, meaning you only own the condo for so many years. Stay away from those, in my opinion. 

Market-wise, we have very low inventory and investors are buying up good properties quickly. No one knows if this is top of the market or not, but if you look at pre-2007 numbers, most of our places are not even at those numbers yet. Most of my friends in the industry here think we still have a few years to go, but that said, who knows. 

Iʻm happy to put you in touch with a great resource for you and the buddy I mentioned earlier. Just DM me and Iʻll give you his information.  Good luck Blake!  

Aloha

I had no idea they even had a leasehold style never really heard that too much here in Utah. How reasonable is it to find a good cleaning service a good handyman and a fairly removed property manager just to check on things from time to time.

Also do they use title companies in Hawaii for closings?

To make the numbers work out well enough we would need to self manage/schedule it on VRBO remotely.

This particular unit three bedrooms three bathrooms 1100 ft.² and they’re asking 950,000. That seems really high I know about six years ago they were selling in the 500-600k range.

Aloha @Blake Capson .  I think I can provide some insight for you.  Your assessment of the market is pretty accurate.  Yes, things are somewhat hot here and values are up are fair amount year/year (7.3% for Maui Condos).  With that being said occupancy & nightly rental rates are also up so the higher values don't dramatically effect your cash-on-cash return.  There are still good buys in the market, they are just harder to find.

I have several clients that do manage their properties from the mainland and do very well.  The key is to have a good team here on the ground handling things for you when they come up.  This would be your cleaning company, maintenance company and your on-island contact (required by state law).  If you thoroughly vet these key people they can save you from a lot of headaches.  Then you are able to just handle the bookings  from afar and save 25-50% of your gross rental income.  If you have any questions feel free to reach out anytime.  

      

Sorry I just saw your most recent post after I already responded.  Yes we use title companies here for escrow.  There are plenty of options here for cleaning and handyman services,  you would just need a few good references.  

I know the 3 bed your are referring to and yes they were much cheaper 6 years ago but so was everything else.  If you bought in 2011-2012 pretty much anywhere you are sitting pretty right now.  I would recommend focusing on your return and see if that makes sense.  That $950 unit should generate at least about $90,000 in gross rental income for it to be a good buy.  Hope this helps.  

@Blake Capson good insights from @Patrick Franta too. I’ve known him for years and can vouch for him being one of the best and most knowledgeable realtors on island. Give him a shout!

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