All Forum Posts by: Dana R.

Out my window in Bellingham, WA one evening in August

I took my son and one of his friends to our condo in Waikiki over spring break. We drove over to Lanikai Beach one day so the boys could swim and snorkel.  This is Lanikai Beach.

When I glanced through the list of expenses, I was surprised by some of them. 

For instance, HOA fees in Hawaii are not $50/month. More like $750 for a 2 bedroom.

If the HOA doesn't include electricity, then add in another $300 or so month.

Lodging tax in Honolulu isn't 5%. It's almost 14%.

Property management for vacation rentals isn't 10%. It's typically 30% to 50%.

Also, add in housecleaning fees. Probably $150 - $170 per booking. So, 3 bookings a month would be an extra $450 to $510 in your expense line

My advice would be to get actual numbers for whatever property you are looking at and then run the numbers again. They still might be sweet but you never know until you plug in realistic numbers.

@Reuven Cohen,

I don't follow your advisory, if you follow the laws, pay your taxes, and buy a place that allows for these types of daily rentals, the risks are mitigated.

That's true that the risks are mitigated if you follow the laws, pay your taxes, and buy a place that allows for these types of daily rentals. The key phrase in this sentence is "buy a place that allows for these types of daily rentals."

Most places in Hawaii don't allow for these types of daily rentals, that's the trouble. So, to be legal, you'd have to purchase in a vacation rental zone. You could buy a 2 bedroom condo at the Ilikai in Waikiki that would be legal. Price would start at 1.1 million and go up from there.

The zip codes in your spreadsheet that command the highest per night price are in the Kahala/Hawaii Kai/Portlock areas of Oahu. Check out real estate prices there for a 4 bedroom house and get ready to have your eyes open WIDE. And since those areas aren't zoned for nightly rentals, then whoopsy, you couldn't operate a legal vacation rental biz there. 

I own 2 one-bedroom condos in Waikiki that are zoned for vacation rentals. I've started to look on Maui, Kauai, and the Big Island for other vacation rental condos but here's what I've been finding.... Condos in my price range on the other islands just don't command the same kind of high nightly prices that I can get in Waikiki. Also, I'm not convinced that I could maintain a steady 88-90% occupancy rate on the other islands like I do in Waikiki. Or if I could, then I just wouldn't make as much money since the average nightly rate would be lower. I'm rather sold on Waikiki as a place to invest. :  )

Whoopsy on my part! The meeting is now scheduled for Tuesday, Sept 29 at 6pm. Sorry about that! If you go to Patrick's post and follow the links, you'll get to the correct location and meeting times. 

See you on the 29th!

Frances,

Welcome to BP and Bellingham! There's a Bellingham meetup scheduled for Sept 30 at 7pm. Location to be determined. Patrick Britton, fellow BP member, is the organizer. Here's the link to  his post about the meetup.

http://www.biggerpockets.com/forums/521/topics/225...

See you there!

Dana

Step 1: Intelligently guesstimate how much income your units could bring in. Best way to do this is to get on VRBO or AirBnB and research what kind of nightly rates comparable units are getting and what their occupancy rate is. Once you look at enough comparable properties, you'll get a feel for what's a good estimate of nightly rates and occupancy. Always err on the side of low, though.

Step 2: Figure out the costs of how to book, maintain, and clean the units. I do my own booking through VRBO and hire out the maintenance and cleaning. In Waikiki, cleaning fees are passed on to the guest. In this step, part of the costs of maintaining a vacation rental unit are costs like paper towels, light bulbs, linens, pots and pans, etc. 

Step 3: Now that you have the potential income and costs of booking, maintaining, and cleaning the units, you can plug the numbers into the rental calculator on BP. Vacation rental numbers aren't any different than the numbers for other kinds of rentals, for the most part. You'll still have property taxes, insurance, utilities, maintenance, etc. With vacation rentals, you'll have higher maintenance costs because boy, do those things get used up with all the guests coming through!

Step 4: How do the numbers look? Good? Bad?

I have a 4-night minimum stay and keep pretty booked year 'round. The slowest months are May and September--right before students get out of school and right after they go back to school. Still, slow for Waikiki means the condos are booked 25 days and not 30.

Busiest times (as you can imagine!) are the last two weeks December through mid-April. The condos are usually booked all summer, too, since lots of families take their kids to Oahu in the summer. 

Yes, both condos cash flow well. Keep in mind, though, that I bought them at a low point in the market. It does make a difference. :  )

I do all my own bookings on VRBO and that keeps my condos 88-90% occupied every year so I don't advertise anywhere else.

I hire out housekeeping and maintenance. 

Oh! I forgot to say this in my last post...

My plan is to keep my Waikiki condos. Then, if I want to retire to Maui, I'll sell one of the Waikiki condos and scoop up a much cheaper place in Kihei.

In Kihei, there are a lot of condos close to the beach that aren't vacation rentable. Those condos are priced well below condos that ARE vacation rentable. I like the idea of selling an expensive VR condo in Waikiki and buying a much cheaper non-VR condo in Kihei. We'll see!

Hi Roger,

I like Maui way better than Oahu, too. In fact, the last time I was in Kihei, I looked at a lot of condos and ran a lot of numbers. I would much rather retire to Kihei than Waikiki. However, from a strict investment standpoint, I couldn't pull the trigger on a Kihei condo. The numbers just didn't make as much sense as they do in Waikiki. 

Waikiki properties are more expensive but you can charge more per night and the occupancy rate is higher so you get a better return on your investment strictly from a $ standpoint. Plus, I know that you can never count on appreciation, but hey, property is very limited in Waikiki and it's a highly sought after destination so if any place was likely to appreciate, it'd be Waikiki. Just as @Account Closed

This is hands-down the best site to search for Oahu properties-- www.oahure.com

There's no best MLS search for any of the other islands. Just use whatever site works for you.