Orders to Hawaii. Does it make sense to buy?

25 Replies

Depends on what your strategy is. The VA loan is great because you can get anything you're approved for with no money out of pocket. However, Hawaii is an EXPENSIVE market. Are you buying just to own your own home? Or are you looking to do vacation rentals or military rentals when you leave?

If you're going to just live in it and sell it when you leave then probably not.  You'll almost always lose money after closing costs, realtor fees and interest payments unless you get lucky and experience some significant appreciation or if you find a GREAT deal.

If you're going to keep it and rent it when your done then it'd be a good idea to check out the airbnb market and speak with a local property manager in the area and figure out what kind of returns to expect from the business.  

I'd start by identifying your WHY and then moving forward from there.

Good luck!

I would echo what was said above,  first identify your why,  and evaluate possible exit strategies if your plan doesn't work.  For example,  if you plan to sell when you PCS on the assumption that it will appreciate significantly while you are there, what would you do if it doesn't? Your exit strategy could be to rent it out,  but you would need to evaluate weather a property would cash flow as a rental (either short term or long term).

We live in Seattle and had considered buying. Ultimately we decided against it because if the market didn't continue to appreciate we didn't have an exit strategy we were willing to implement. For our area, market rent prices are comparatively low and don't even come close to the 1% rule (the rent to value ratio here is often more like .5%, causing it to negative cash flow). The only other option would have been to rent it as a STR and for us personally that doesn't fit our current business model and we don't want to do it.

Basically,  I would suggest you evaluate your plan with the house and evaluate the viability of exit strategies if your plan doesn't work.

Best of luck!

Thanks to both entries!  Great advice.  My plan would be to keep the property and try to rent it out after I PCS from Hawaii.  

I'll search around for property managers in the area to figure out what kinds of returns can be expected.  Thanks again for your advice.  

I'm guessing you'll be on Oahu.  More often than not, the rental market is not cash flow positive here, unless you're looking at 2-4 plexes, and even then maybe not.  The real estate prices are just too high.  If you're looking to turn it into a rental I'd definitely crunch your numbers, you might be better served investing that money in other locations or avenues.  Just do your due diligence and run the numbers, run the numbers, run the numbers.

If you decide to buy here with the intent to keep it as a rental after you PCS, I would recommend running the numbers on any home you are looking to buy as if it were going to be a rental from day 1. It's pretty tough to find properties that cash flow here. I'm still looking...

Sounds like this might be a little more challenging than other areas.  Any success stories out there for Oahu?  Recommended areas to look?  I'm looking in Kailua and just north of Waikiki at the moment.  

Thanks Cassie and Keane for the advice.  

There are some secondary markets on Oahu that offer better rental returns. Look at Waipahu, Wahiawa and Kalihi. I have found that the Waianae coast offers some good values still, but most people shy away from that area, which in my opinion creates potential opportunity, but also risk. You will have to be very selective in your neighborhood choice if you look at Waianae.

The key is to look at multiplexes, or what we call multi-gen homes. You will be giving up a little in appreciation over Kailua or Honolulu, but the rental return makes up for it. 

You will find it very hard to meet the 1% rule here, but you make up for that with the fact that you will be putting 0% down with your VA entitlement. You can PM me and we can talk about some of the properties I have seen recently and share my analysis.

When do you PCS over?

Just my two cents but I'm assuming you'll be receiving COLA and a fair amount of BAH? Hopefully so! My personal advice would be to live minimally and hold onto that money to invest in a cheaper market. So the reason I bring this up is that PCS orders to Hawaii offer such a unique advantage if used right. It's not my intention to steer you away however I feel like you could grow a substantial amount of savings and use this opportunity to your advantage. VA loan is awesome however I personally feel as though home prices and rentals are ridiculous and unless you're throwing down a decent downpayment or staying here long term, it's not worth it. Everything from HOA fees sky rocketing, taxes raising, 10 percent property management fee's plus repairs mixed with your monthly taxes on net income received. While you're away that could drain you. I feel it's only a matter of time before Hawaii says enough is enough and starts punishing out of state owners lol.

Hey @Adam Gregory , hope all is well.  Definitely, want to make the BAH and COLA work for you while you are in Hawaii. One of my favorite places to live, and was a great place to build capital for the move back to the mainland.  

With the VA loan, you have access to a lot for a little less. Hawaii is a good place to hold on to properties if you get them, but like Alex said - you can put the "excess" income to work in the mainland immediately.

A friend and a battle buddy of mine (still on the island) is a realtor and actively invests in the Oahu market.  Would love to connect you two if you think it will help! 

Best wishes, 


I second Alex's 2 cents.  That's good advice.  Don't know about the punishing out of state owners part, personally I'd like to see it become far more difficult and expensive for non-US investors. 

I am the contrarian in the thread (I live here too).

Unless you plan on living on base you will want to buy. Even if you decide to sell when you leave. 

Avg rent is going to run you $2,200. If you rent and you are here 3 years before you PCS out you will drop $79k in rent, paying another Biggerpockets members mortgage :) 

What others failed to relay is the benefit of homeownership such as Mortgage Tax Deduction.

Even if you don't turn it into a rental and end up selling when you PCS out you will save $$$. It is very, very rare that renting is more advantageous than owning.  

I help tons of Active Duty secure their VA financing, feel free to ping me if you have questions. I would be happy to help.

Oahu statistics 



To clear up the punishing out of state investors comment. Really it was somewhat of a joke and it wasn't. It stems from my concern that the short supply of homes eventually contributing to policy/tax changes in favor of in-state investors & regular home buyers. There is always something on the news riling up it's viewers about the housing shortage, even if the thoughts being pushed out are misguided. You consider the 3K+ BAH received from even just lower enlisted (with a base on each side of Oahu), foreign investors, government workers, shortage of non degree requiring jobs, etc. It's essentially (in my opinion) pricing it's own members out of the market which has and will continue to create anger. Many locals, including relatives of mine are staying home with their families to split rent, working several jobs or forcing families to move out of state. I don't think Hawaii will do anything immediate or crazy to out of state investors, but I do think we will be putting a little more money into it. Also, although nothing may be happening soon, he needs to hold onto his property for a few years anyway to just break even. All this is coming from a guy whom is not a millionaire by the way so take my advice with a grain of salt haha.

@Adam Gregory Awesome idea! I tried convincing my wife to do that near Ala Moana but she wasn't having it. I know military members that have came stateside and lived in an RV. I don't think anyone makes enough state side to make it worth it but have seen it happen and would loved to have experienced it just to say I did.

This is not to discourage you from buying, I just want to make sure you're making the best financial decision for yourself.  Do your due diligence and crunch the numbers. 

There's a lot of factors to consider in deciding between renting and buying. A helpful tool is the NYT buy vs rent calculator, it's not the be all end all, just a tool to help you analyze your personal situation. Single? Married? Kids? How much space do you need? Location? Sure, the mortgage tax deduction is great, but will your mortgage interest be greater than the standard deduction? If the mortgage interest + all other deductions is greater, than great, if not, then it's a moot point. There's also the cost of HOA fees if you're buying a condo or townhouse. The cost of maintenance, home owner's insurance, property taxes, etc. With a short time period of 3 years, if you sell, appreciation of the property may be wiped out by realtor fees, closing costs, and the difference paid for the 3 years above what you would have paid in rent for a similar property. You may come out ahead renting and banking excess in short term investments or you may come out ahead buying and having significant appreciation, but who knows how the real estate market will perform in the next few years with interest rates rising and such. Run the numbers and decide what's best for you after that.

I PCSd to Hawaii two years ago and bought. The market appreciates well above the national average but we are due for a correction even in Hawaii. I would suggest buying especially a house
You can find an ohana or something similar where you can find a renter to offset some of your costs. You’d be surprised where people will live here since it’s so expensive.

Even if you PCS again I would recommend holding onto it as an investment. Yea you may eat some coats out of pocket initially since your rent won’t offset your costs but your tenants will be paying off your loan and you will be appreciating and you can write off a monthly loss as a tax deduction at the end of the year.

I’ve also known people that have bought and sold their primary residences here within 24-36 months and made 6 figures. Hawaii is unreal

Hello, I would get there and analyze the market and where you may want to buy. If you have a high BAH >3K/mo then I would consider buying. Here are some things that I would consider.


VA loan is a huge plus with no money down and no PMI, but look at your cap and make sure stay within it

Air BnB can be good but make sure your association (if condo or townhome, or even SFH in community) allows it.

Properties is Hawaii more reliably appreciates over time almost anywhere compared to other states.     



Traffic can and will affect the market prices and also your rental prices when you leave. 

You will get taxed on the amount that you rent for regardless of profit. Higher rents equals higher taxes.

depending on your income you may be relegated to a condo which the association fees will cut drastically into your costs and eventual profits.

If you are going to buy I would check with other military people who are considering selling and buy directly (assign or attorney) without a realtor. 


In addition to the association allowance if you plan on doing Air BnB or short term vacation rentals don't forget that there is an additional Transient Accommodation Tax, bringing your total tax requirement to ~14%

@Adam Gregory  

I think the VA loan can be one of the greatest tools to build wealth here on Oahu, especially if you buy right. I think just buying a retail type property might get you the equity growth from just the overall market appreciating, which is not always a sure thing. However, another strategy is to buy something that can pass VA appraisal, but might be a little dated. One of my clients did this, and has extensively remodeled her home. When she does decide to sell, she should be looking at quite a bit of equity from the forced appreciation. This is much more secure than predicting what will happen to the market in the next couple of years.

Too much risk for my tastes. When I was stationed there my old crusty 1st Sergeant in the Army said for those of us living off base, that we should look into purchasing a house. He knew some lower enlisted that split a house and before they PCSed they sold the house for $100k profit. My 1SG ended up purchasing a $540,000 house 12 years ago, that he probably ended up losing money on, since he lives in GA currently. I'm glad my friends and I did not end up purchasing a house back then because the mortgage interest costs, insurance, and property management fees would have likely led to net losses overall. Plus it would have tied up a large portion of our finances. When we got orders to deploy, we walked away from the house we were renting with no worries. You cannot do that if you own your own house. You have to find tenants and store your belongings. Splitting a rental house 3 ways and banking the extra BAH was the best scenario IMO. BAH is tax free and the tax savings of mortgage interest won't offset your income enough to make the risk worth it.

What's up guys... picking this conversation back up... 

Any Oahu / Hawaii experts out there? I'm currently looking into potential rental properties out there. I'm thinking I might buy with VA load, hold on to it for about 5 years, and then sell for an upgrade. I used the Bigger Pockets Rental Property Analysis Calculator to run the numbers on a place and was curious of the accuracy of the numbers that I am inputting. When I used the calculator, i'm getting a negative cash on cash yearly return, but that gets more than made up for after 5 years of appreciation on the place.

If Hawaii experts could comment on my input, thanks! Below is what I input:

This is for a place on Haiku Road, Kaneohe, HI, 96744

  • Total Gross Rent - $22,500 (estimated based on Craigslist places in same area)
  • Other monthly income - 0
  • Fixed Landlord Expenses:
    • Electric - 0 (assuming renter would pay for it)
    • Water and Sewer - 0 (assuming renter pays it)
    • PMI - 0
    • Garbage- 0
    • HOAs - 0 (assuming renter pays it?)
    • Monthly Insurance - 106 (google Insurance plus flood insurance)
    • Other Expenses - 157 (taxes based on MLS)
  • Variable Land Lord Expenses
    • Vacancy (% of monthly rent)- 112.5 (5% of rent, Bigger Pockets recommendation)
    • Repairs and Maintenance (% of monthly rent)- 112.5 (5% of rent)
    • Capital Expenditures (% of monthly rent)- 182.75 (8% of rent)
    • Management Fees (% of monthly rent)- 247.5 (11% of rent)
  • Future Assumptions
    • Annual Income Growth % - 1% (i just looked up Honolulu’s inflation rate)
    • Annual Property Value Growth % - 5.59% ([CAUTION] https://www.neighborhoodscout.com/hi/kaneohe/real-estate [CAUTION])
    • Annual Expenses Growth % - 1% (same inflation number)
    • Sales Expenses %- 7% (bigger pockets estimate for a real estate agent’s sales expense % which included closing cost and price for a deep clean of the place prior to selling)

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