All Forum Posts by: Mike Morehead

Hi Mike, Local Floridian here! What part of Florida are you in? Is this a purchase or a refinance? Happy to help answer any questions.

Just a follow up to my post. Mbanc is a lender I used for a DSCR loan here on Maui. They offered a 30 fixed rate note, with the first 10 yrs being interest only. Lower down payment than the traditional lenders require.

I think it's funny that the vast majority of people responding to this thread on Maui STRs aren't from Maui. All the different islands have different rules and regulations.  Unless I'm wrong, @Mark Waite and I are the only investors here that live on Maui and have rentals on Maui.  

I'm not interested in getting into a spitting match with anyone, but Mark's info is the most valid of all the posts in here. There are hefty regulations here. 30% down is the going rate for a CONDOTEL, which just about every STR in Maui is considered, so yes, plan on 30% down. Don't try to get around it. Maui's not a place for everyone to invest, if you can't afford the down payment, there are other markets to consider. Not every STR is hotel zoned, some are apartment zoned. A good realtor can tell you the difference and help guide you. Unfortunately, not all realtors on Maui are good realtors or really know that much about STRs. Heck, some can't even spell STR. Other than Mark and my wife, I don't know too many that actually hold STRs and are active Maui investors.

Understand that rehab costs are going to be significantly higher here than other markets as well.  And probably take longer.  And may not be as good quality as you're used to.  Also, a lot of investors that buy out here are not as concerned about cash flow.  This is a big point. I know everyone is seeking that, but not everyone NEEDS that.  A lot of people who buy out here do so because the appreciation is so good compared to other markets.  Over time that treats you very well, especially if you have other investments in other areas.

Can you cash flow?  Yes.  Can you get double digit returns? Yes.  Is it easy?  No.  Work with a good realtor and they can help get you there though.  And as far as the local lender goes, it is a good idea to have a local lender for a couple reasons.  1) Only a handful of banks in Hawaii lend on Condotels.  That's because condotel loans can't be sold to Fannie Mae or Freddie Mac. Banks have to hold them in house.  Because of this they typically want big down payments. Hence the 30%.  2) Good local agents know the banks and lenders who can close on said condotels.  If an offer comes in, and we're still in a very competitive market here, for full ask but the lender on the offer is an outside bank, the seller's agent won't put as much stock in that as a full ask offer with a local lender, someone they know can close the loan.  Not saying it can't be done from a mainland bank, but the local lender looks better on paper.  And as Mark and I can both attest to, MANY TIMES a mainland lender thinks they can close on a condotel in Maui and at the last minute they let their clients know they were wrong.  Condotels are not common in non-touristy areas and therefore many lenders aren't that familiar with them.  They see Condo and think they can close on them, because they've done so a hundred times, but if their bank doesn't want to hold the notes, they won't be able to close.  This happens a lot.

Sorry to go off like that, but always look at your sources.  Local knowledge matters.