Rental and house hack in Hawaii. What’s next?

4 Replies

Hi everyone! I’m new to BP so please correct me if I use any of the technical terms incorrectly. I have purchased a rental property that I house hacked for 2 years and a second primary residence (both condominiums with HOA) in Hawaii. I just purchased my second condominium this month. I’ll be getting out of Army in a year and I’m looking to purchase a 4-plex in mainland (possibly AZ or NM). I’d be house hacking the 4-plex if I buy it. Should I be trying to buy properties at this pace? Is it too fast, too slow (if that’s even possible)? Am I better off selling my first property, stop paying HOA, take out equity and do something better with it? Is inter-state investing a good idea? When would be a good time to buy my next property? I have 10% saved up for the property I’m looking at but buying it would mean less rainy day fund. But the property also have about $500/month in cash flow which is very attractive to me as someone who is breaking even on my current rental property.

@Shashi Kumar Sharma I have some follow up questions to ask but I also have some tips that might be helpful as well. If you can answer these it would help us make some better recommendations.

1. Your properties in Hawaii, are you using a property manager?  If you are breaking even now and NOT using a property manager, you will certainly be taking a loss when you move and will need a property manager.

2. Do any of your homes currently have a VA loan on them? This is important because you might not be able to get a VA loan on your next property. FHA would be ok with 3.5% down though so if you have 10% down that would seem good....but 10% down of what amount? Are you looking at price points of a certain range? Don't forget that FHA also has PMI where a VA loan would not. So if you do need FHA then calculate that into your formula.

3. In general, breaking even is too much risk.  What if something does go bad?  Now you would be in a loss.  That's why most investors seek properties that need work.  Then they can offer a lower price, renovated the home well under the "After Repair Value", have built in equity, and rent at a profit.  That's the formula that most investors follow.

I hope this is a good start for you but tag me back with any questions.  Thanks!

So do you have 2 condos in Hawaii for 2 units total (1 rented out and 1 you live in)? Or 3 units now?

when you say you're breaking even is that all 3 units with 2 rented out (or 2 units with 1 rented), if do would it cash flow once you moved and rented your unit?

and what happens when property management gets added in, of its not already? 

since the properties are in Hawaii have you looked into STR? air bnb? you would need to set up infrastructure for cleaning etc, but it can be lucrative.

@Shashi Kumar Sharma I do out of state invest but there are pitfalls to it. I suspect you 500 of cashflow you point out does not include cap ex vacancy and other mishaps contingency.

Seems like you are a little all over the place. Let me know if you need to bounce ideas.

@Shashi Kumar Sharma

This might be a good time to develop a relationship with a financial advisor and/or CPA who can advise you on your investment strategy and help you understand the tax implications and benefits of those strategies. 

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