All Forum Posts by: Dana R.

I've owned two vacation rental condos in Waikiki since 2011. I decided to invest in Waikiki for a couple of reasons-- One, Oahu gets the most visitors out of all the Hawaiian islands and when people come to Oahu, they generally stay in Waikiki; two, Waikiki is a very international destination so if the US economy isn't doing well, then I'm not too worried since I get visitors from all over the world staying in my units. 

Once I narrowed in on Waikiki and a few buildings that I liked, I watched the MLS every day for a year before I bought my first condo. When it came on the market, I snapped it up because I knew it was a good deal.

So, I think you're smart to not jump in to the market until you know more about it and know what's a good deal and what isn't.

As for financing, in Hawaii anyway, condos are treated the same whether they are vacation rentals or not. The bank just sees property as a condo, not as a business venture. Since your condo would be an investment and not a personal residence, you'd probably have to put 25%-30% down.

Awesome! Thanks, Karen. Count me in for participation. I've got two successful vacation rental condos in Waikiki. It's alway interesting to hear about VRs in other parts of the US.

I've been hunkered down lately working on a new business venture. The business doesn't have anything to do with real estate. :  )    However, it's because OF my real estate investments that I've had time to pursue this idea.

Ain't real estate great!?

Aloha Jon,

I own two vacation rental condos in Waikiki and have renovated them both. Why? Mainly, because I wanted the units to look nice for my guests and yes, I could command more money per night for them, too. But that's just how I chose to run my vacation rentals. There really isn't a right way to go--renovate or not renovate--as long as the unit cash flows.

You could run some numbers and see what makes the most sense to you in terms of renovating your unit, or not. VRBO is a great place to check out the competition to see what kinds of nightly rents the renovated units get, what kinds of rents the un-renovated units get, and how full their calendars are.

Best of luck!

Aloha@Jeremy Baker , Thanks! I'll send you a message today.

@Curtis Bidwell I will definitely look up John Dobrovich. Thank you. I bought my first house in Olympia in 1989. I was teaching in Elma at the time. Now I'm happily up in Bellingham.

I'm looking for a contractor who could do a kitchen/bath/floor renovation on a 2/2 vacation rental condo on Maui. If you are that person or can recommend a person, please contact me. Mahalo!

Hey Brandon,

I've owned two vacation rental condos in Waikiki since 2011 and have had a great experience. In fact, I'm in the process of pulling equity out of those condos to buy a third! No, I don't have the third picked out yet. I'm hunting around for good deals in Waikiki.

Aloha Matt,

I live in Bellingham, WA and have owned VR condos in Waikiki since 2011. I'd be happy to answer any questions you have about owning vacation rentals in Hawaii, if you want to send me a private message or colleague request.

One item to consider when you are running numbers on possible properties in Hawaii is the cost of electricity. If the electrical cost isn't covered by HOA fees (if you are buying a condo), then it's hard to control your costs. If a guest decides to run the A/C all day during his week-long stay, ouch! Spendy.

Karen,

I’ve been renting my Waikiki condos as vacation rentals since 2011. I answered your questions below and then added some more things to think about at then end of the Q&A.

Is there a site you look at to determine vacancy rates?

I use VRBO and look at the calendars of several comparable rentals to see how many nights the units are booked. One calendar could be misleading since the owner might book her own place for a couple months at a time.

What number of weeks do you rent your VR out?

My condos are booked 85-90% of the year.

On the off months, what do you do with your property?

There are no off months in Waikiki! The fall is often slower so I lower my rates to attract the people that do travel.

Do you manage your units yourself or pay manager?

I do all my own bookings through VRBO and then hire out housekeeping and maintenance.

What has your overall experience been in renting VR?

I love the experience! I get to rent to guests from all over the world who are tickled to be traveling to Hawaii.

What do you think of your location as it relates to VR?

It’s the best! A block from beaches, shopping, and restaurants. The bus stop is right outside.

Would you buy another VR?

Yep.

More things to think about when deciding to rent out your unit as a vacation rental or as a straight year-long lease.

Pluses of VR

The biggest plus of renting out a unit as a vacation rental is that you receive a much higher monthly rent on the place! And, if your VR is in a place like Hawaii with no off season, then you can be making good money every month.

Downsides to VRs

You have to deal with 25-50 people and their move-ins/move-outs per year instead of just 1 long-term renter.

The owner pays for utilities in a VR as opposed to a renter. Since I own a condo, all my utilities are paid for in my HOA fee. If they weren't, then I'm not sure how I would handle a guest who left the A/C on 24/7 and I got a shocker of an electric bill that month.

The owner has to furnish the VR with high quality beds/towels/kitchenware, etc to attract the best guests as opposed to a renter bringing her own belongings.

Items do have to get replaced more often due to wear and tear.

Lastly, I’m not sure the legalities of renting out a place as a VR. My units in Waikiki are zoned for VR so I’m fine. I have a business license and pay taxes.

So, bottom line is that VRs are a great option if

They are legal.

They can be booked enough nights to cover all the costs associated with a VR.

You can find dependable cleaners and maintenance staff.

You don’t mind dealing with lots of people per year instead of 1.

Aloha,

Dana

Interesting article in the Seattle Times today about a growing number of lenders who have begun offering mortgages with more flexible terms designed for borrowers who don’t quite fit the mold... People like self-employed professionals and business owners or Investors with multiple properties, for instance!

Here's the link to the article if you want to check it out.

Seattle Times Article 

Hi Marcus! And welcome to BP.

I grew up in Seattle but now live 90 miles north in Bellingham, a college town. I've still got friends and family in Seattle so I go there several times a month. For kicks, I like to look at the real estate listed on the MLS. Seattle is booming right now. Lots of jobs and new construction going on.

If you want a multi-family in a part of Seattle that you'd feel comfortable living in, then expect to pay at minimum (and if no one bids you up with all cash!) in the low 500s. I recently saw a place on the MLS that was a duplex, 1700 square feet, built in 1900, price: $515K, taxes: $5K.

If you put down 3.5% on $515K (18K), then your mortgage at 4.5% interest would be $2,400. Add in $415/mo for property taxes and let’s say $100/mo for insurance. So $2915/mo. A renter in part of the duplex would certainly help subsidize that payment.

Not sure what rent you could get for both units if you moved out, though. Maybe $3500/mo rent for both units. Maybe. If you use the BP 50% rule, then that $515K duplex is a lousy deal.

Seattle’s kinda expensive right now.