All Forum Posts by: Jennifer Creager

Now that its December, and San Diego did not receive enough applications for the lottery, Tier 3 and Tier 4 permits are still open, until all have been allocated. I found a deal and will 1031 exchange into a STR in Pacific Beach, so I am hopeful I will be able to get a permit in the coming weeks.

@Haythem Abid we purchased in South Kihei, which is just north of Wailea. I searched for months, ran the numbers on many properties, and none were cash flow positive. Our realtor found this listing that had been on the market for 8 months, which was larger than I was looking at, we put in a lowball offer, and it was accepted. 

In my research, 2 bed/2 bath penciled out better than 1 bed/1 bath, but I was concerned about the larger purchase price/larger risk.  It worked out great so far. I can private message you the realtor if you're interested.

Jennifer

Mike, thanks for your input. I didn't say 7 days, I said 7K meaning $7,000 cash flow for the entire year. And yes, that isn't much, but given that we have listed this STR for only 2 months, being cash flow positive and 80% occupied is a tremendous win. Also, we discounted our rates significantly for the first 10 bookings so that we would get positive reviews, so Aug and Sept were cash flow negative. I have gradually increased the nightly rate in line with other properties, so any additional bookings will be pure profit.

So in summary, I will continue to do STR in Hawaii, but thanks again for your vote of confidence /s.

Thanks everyone for your replies. Now that we are 3 months into this adventure, we are 80% rented for the year (Aug 2019 to July 2020), and will net 7K for the year. This is after: mortgage payment, transient taxes, HOA, electric bill, cleaners, resort fee, insurance, on island agent, etc. So, our goal was to have it break even, as we are looking more for wealth preservation than cash flow (as noted in some of the conversations above). Any more reservations for the year will be additional profit. It has been a side job, taking a couple hours a week of my time to manage it, but I have learned a ton and it has been interesting and fun.

Thanks everyone for the responses. For the 2 bed/2 bath, its in a condo complex that is zoned for STR in Kihei, and many units can be found on AirBnB and VRBO.

For the house that I was dreaming about, that is a very good point about the zoning rules being different. I found a very similar house on VRBO in the same neighborhood for the comps. What I meant about only needing to rent for 7 days means that based on the high ADR that I found on VRBO, the expenses would be completely covered by the time you had rented it for 7 days, and after that it would be pure cashflow. It makes sense that larger units have bigger ADR, but the VRBO unit was renting for an average daily rate of $1700 a day, which is insane revenue!

Maybe after a year or two of experience with managing this unit in Maui, and learning more about Maui neighborhoods, we will go for a bigger ocean view unit with even higher cash flow. Thanks everyone for the good wishes, I am very excited!

We are purchasing a STR in Maui. I had wanted to start small, a 1 bed/1 bath, but the analysis showed they didn't cash flow very well at the purchase price. We put in a low ball offer on a 2 bed/2 bath, and it was accepted! It will cash flow nicely, and I am excited to self manage.

On a whim, I did an analysis on a 1.9M house on Maui that is in the STR zone. Using average numbers from VRBO, this would start cash flowing after renting it for just 7 days. For the first investment, I didn't want to risk that big of a purchase. My question is: is it a rule of thumb that the bigger the place, the higher the cash flow? I'm including the mortgage costs, which are higher with the higher purchase price, but I wanted to get other perspectives for a future purchase down the road.

I used it for a while to analyze short term rental rates in Maui. I found the data was averages, rather than specific to the properties that it was listing. I used it as one source of data, but ended up doing my research directly in AirBnB and VRBO to be more accurate.

Thanks, I also have a spreadsheet to analyze revenue potential, thanks for the tip of how to approximate a daily rate. Your analysis showed that you could be increasing your rates, and also helps you have the confidence that you are making the right decisions between STR and LTR tenants. Great job!

We are looking at STR condos in Hawaii, and really like a 1 bed/1 bath partial ocean view unit recently remodeled, offered for 500K. The agent pulled comps from the same resort, and the 6 1 bed/1 bath units sold in the past year sold for an average of 400K. The one unit that matches the same square footage and same view sold for 409K. The listing agent says the resort just paid an assessment and the unit was just remodeled, and the owner wants to recoup those costs. I get it, but pricing the unit 100K over other units does not seem sustainable. I was considering offering 450K, but even that seems high. There is no rental history available as the resort just completed construction, according to the listing agent, but I was able to search listings in VRBO to see that it would pencil out at 450K. Advice?

Looks amazing! Great job taking the plunge, and it looks like you have thought through the contingency plans as well. I would definitely stay there!