Feedback on Hawaii Investment Property Needed!

5 Replies

Aloha All!  I'm a Realtor on Oahu and have a 3 duplex (6 separate TMK's) rental compound listed in Hauula, HI (Northest Oahu).  It's been slow going so I'm looking for feedback from investors on where this needs to be price (and/or other wise) to make it more attractive.

Owner hasn't given 2017 totals yet but  in 2016 the units netted $224,549.08 as rentals.  That's after paying management and cleaning fee's of $69,718.78 (which could potentially be reduced) along with other fees like maintenance, insurance, etc...Gross revenue was $352,959.56.  I know 2017 brought in less revenues as the owner turned over management to a rental management company that wasn't performing as well with it when we listed the property for sale mid 2017.  Prior to that, he had a full-time manager taking care of it but pulled her into a separate business that was bringing in more profit.

Any advice / feedback would be welcome!

Updated about 1 year ago

Sorry, list price is $3,650,000. There are 2 4/2's and 2 3/2's, one 3/1.5 and a 3/1. About 34,000 sqft land and 7,444 sqft home.

Viewed the property and ran some numbers. Pencils out to be decent cap rate and cash-on-cash return. Property is also nice. Any indication it is just a lack of investors in this space? $3.65MM is a hefty price tag which will limit your buyer/investor pool. Have you tried to sell the units as duplexes? You could get $600M each and open you pool to residential home buyers before interest rates rise any further.

Yew Elijah!  Yeah, that's what I was thinking.  I do think there's got to be some flexibility on the price and you're probably right that as single units the sales would be a lot easier.  However, once we sell one unit like that it may lose its higher profit potential as having various owners in there that may not all be into short term rentals would put a cramp in that.  Owner would rather keep it together so a buyer could come in and run the whole thing as a rental property.  

Is it a legal short term rental.  I know Oahu is tolerant of quiet short term rentals but it is hard to make them legal. 

Not a legal short term rental.  Probably 90% of the "short term rentals" you'll find advertised are illegal. So you're right that Oahu is quite tolerant of them and the general rule of thumb is that you're ok as long as neighbors don't mind.  Though I haven't seen it done for any property out here, it's possible renting it as a short term rental could be off limits in the future

Hey @Jeremy Moncur

Great property!  I remember seeing this one when it first came up.  Definitely unique.  A few quick thoughts:

-selling the units individually would not yield as high of a return.  I would assume they'd sell in the low to mid $400s.  Also it would be a lot more work for the seller.

-selling as an owner-occupant property would be tough since it's not on the water or across the street, which I think would be necessary in order to justify the price.  Also the configuration doesn't look like it would work.

-I think the best option is to sell it as it currently is.

-I'm not overly concerned with how long it's been on the market.  There are relatively few sales in that area and homes over $1m sit for 6 months or longer.  Most local families in the area can't afford a $1m+ home, so you'll have to wait for someone from the mainland to come in.

-The property is unique.  With few buyers in the area as it is, the uniqueness of the property will only add to the time on the market.

-The numbers from an investment standpoint seem ok.  But it's a tough area for that size of an investment.  You may have to adjust the price to reflect a cap rate similar to areas on the Westside.

-I'd try and market the home in nearby areas with high Mormon populations.  Utah, Southern California, Arizona.  Someone there may want to pick it up as an investment and a place to stay when they visit.

Overall I think the biggest obstacles are not being on the water and not being able to be used as a single-family home.  Based on this I think the price will need to be reduced.

Hang in there.  That'll be a nice property to have under your belt!

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