Investor · Parkland, FL · Member since 2020 · 15 posts · 3 votes
A few years ago I visited Waikiki, an easily immediately, it became one of my favorite places on Earth. I could see living there at some point in time, it could be interesting just to own a condo, and rent it out, but use it on occasion as well. All the same I find it interesting that actually you can find some relatively affordable condos. https://www.zillow.com/homedet... I live in Florida at the moment, but I was curious about anyone's experience, or if anyone invests in Waikiki knows any common pitfalls. I've ordered the 'long distance investor' book and going to read the advice from there. I'm wondering also if contractors/renovations are super expensive there, like everything else. I know condo's aren't traditionally the best investment, but regardless I do like the simplicity of them.
Rental Property Investor · Honolulu, HI · Member since 2018 · 335 posts · 251 votes
5y
Hey Tyler, I just took a look at the property you posted. This is something a lot of people who are not from Hawaii are not familiar with, but the reason why a lot of properties are "cheap", (and yours in particular) is because they are Leasehold. This means that you don't own the land under the condo, and you have to pay a monthly fee to "lease" the land. This is in addition to your property taxes, insurance and HOA. On top of that, when the lease runs out, the lease owners get back the house and you own nothing. So its almost like a depreciating asset. The closer it gets to the end of the lease, the less the property is worth, unlike most properties which appreciate over time. Just something to research more on your own and look into. Either way, good luck!
So I live out here on Oahu and my only advice at the moment is to call that place. Condos will be cheap priced but then stack on a $5000 hoa fee making it super expensive
So I live out here on Oahu and my only advice at the moment is to call that place. Condos will be cheap priced but then stack on a $5000 hoa fee making it super expensive
Rental Property Investor · Honolulu, HI · Member since 2018 · 335 posts · 251 votes
5y
Hey Tyler, I just took a look at the property you posted. This is something a lot of people who are not from Hawaii are not familiar with, but the reason why a lot of properties are "cheap", (and yours in particular) is because they are Leasehold. This means that you don't own the land under the condo, and you have to pay a monthly fee to "lease" the land. This is in addition to your property taxes, insurance and HOA. On top of that, when the lease runs out, the lease owners get back the house and you own nothing. So its almost like a depreciating asset. The closer it gets to the end of the lease, the less the property is worth, unlike most properties which appreciate over time. Just something to research more on your own and look into. Either way, good luck!
Rental Property Investor · Honolulu, HI · Member since 2018 · 335 posts · 251 votes
5y
@Terevarevahaunui Jacobson Since HELOCs are a bank-specific product, every bank has its own criteria for what they will or won't allow.
I know for Fannie/Freddie the lease must be for at least 5 years more than the requested mortgage. So a 30-year loan will need the lease to be for at least 35 years, a 15-year loan will need a lease for at least 20 years, etc. Of course, banks can overlay their own stricter requirements.
You really would have to ask bank to bank, but my guess would be that if the lease is long enough, the bank would consider offering a HELOC on it.
Investor · Honolulu, HI · Member since 2017 · 45 posts · 20 votes
5y
@Tyler Henry
Like the others have said, the lowest priced condos in waikiki are the ones sitting on leasehold land. I was a realtor way back in the mid-80’s when many of the waikiki condos were on leasehold land. Over the next few years many of the landowners sold the land to the condo associations and in turn each condo unit owner purchased their % of the fee interest. But not all did-I can’t remember how it all played out years later, back then the lease rents were so cheap like $10 a month but every time they were “renegotiated” the new rates were much higher. I remember the condos lease rents back then listed as renegotiating in early 2000’s —that seemed so far off and expirations were in 2035, 2040 etc. —most of my clients eventually either sold the property or or bought the fee by the time I left my real estate “career” (I wish I stayed in!—but I had moved on to my next “business venture”- owning and running a retail store. Wish I never sold the waikiki condo I lived in back then either—it’s selling for $450k plus today. Unfortunately being young and impatient and wanting to start a new business I sold it for $165k two years after I bought it for $65k)
Today, the vast majority of condos are on fee simple land —same goes for homes. It’s rare to see leasehold homes now but back when I was selling real estate, it was quite common. I remember one of my clients had a home in Hawaii Kai —at the time I think he paid around 180k (leasehold) for it, and bought the land under it when it was offered for around $15k a few years later, (and complaining about the cost!) but had he waited a few more years, the price would have been 50k plus. Today that same home is worth around 1.2 million.
We don’t have the crazy appreciation like the Bay Area in California but our real state market here has been a steady increase year after year of around 6%-8% on average. In the last 20 years our own property has more than doubled, nearly tripled in value when we had it appraised almost 2 years ago. (20yrs ago we paid 300k +250k to build new home, in January 2019 it appraised at 1.5 mil)
So basically Hawaii real estate is a good investment for appreciation but I invest out of state for rentals (cashflow) and for flips. I’m priced out of the market here but if the right investment came along and I had funds to invest hell yeah I would here too!
Investor · Parkland, FL · Member since 2020 · 15 posts · 3 votes
5y
Thanks for starting this thread. I was exposed this concept like 8 years ago. A large company bought up all of the land under downtown St. Petersburg, Florida, and all of the local business owners lost their bars/restaurants overnight.
Hey Tyler, I just took a look at the property you posted. This is something a lot of people who are not from Hawaii are not familiar with, but the reason why a lot of properties are "cheap", (and yours in particular) is because they are Leasehold. This means that you don't own the land under the condo, and you have to pay a monthly fee to "lease" the land. This is in addition to your property taxes, insurance and HOA. On top of that, when the lease runs out, the lease owners get back the house and you own nothing. So its almost like a depreciating asset. The closer it gets to the end of the lease, the less the property is worth, unlike most properties which appreciate over time. Just something to research more on your own and look into. Either way, good luck!
A few years ago I visited Waikiki, an easily immediately, it became one of my favorite places on Earth. I could see living there at some point in time, it could be interesting just to own a condo, and rent it out, but use it on occasion as well. All the same I find it interesting that actually you can find some relatively affordable condos. https://www.zillow.com/homedet... I live in Florida at the moment, but I was curious about anyone's experience, or if anyone invests in Waikiki knows any common pitfalls. I've ordered the 'long distance investor' book and going to read the advice from there. I'm wondering also if contractors/renovations are super expensive there, like everything else. I know condo's aren't traditionally the best investment, but regardless I do like the simplicity of them.
Real Estate Agent · Honolulu, HI · Member since 2015 · 450 posts · 196 votes
5y
I agree with Daniel. Most of the cheap listings are leasehold, which are not good investments in my opinion because the value goes to zero upon expiration of the lease. I would stick with only Fee Simple for investment purposes.
I agree with Daniel. Most of the cheap listings are leasehold, which are not good investments in my opinion because the value goes to zero upon expiration of the lease. I would stick with only Fee Simple for investment purposes.
Developer · Honolulu, HI · Member since 2018 · 111 posts · 93 votes
4y
@Tyler Henry long time investing is certainly feasible, as long as you partner with a solid property management company that has a good track record. I'd be happy to recommend some on Oahu if you're interested.
Remote ownership of something like a condo is much easier than a house since there are many less maintenance items you need to worry about (lawn, roof, siding, plumbing etc).
There are some new short-term rental laws that have been put in place, though there are several investment opportunities to own short-term rentals. This gives you the ability to have some income to cover operating expenses, and also gives you your own property to vacation too when you visit. Best of both worlds.
To make the numbers work, you do need to bring some down payment to the transaction, but if you, or if you partner with some people, are able to make the purchase, Hawaii has one of the most robust and stable real estate markets there is.
I'd be happy to chat more about how to find a good deal in Hawaii.