All Forum Posts by: Isi Nau

Aloha @Lorna Kaaloa

Good job on doing the legwork!

Personally, I don't care for minimum draw criteria, but if you're using it to invest then you will probably be taking out more than $10k anyways.

I think the best option will depend on what your plans are with the money.  Whether you will be using the money for short stints (flipping) or longer periods (buy and hold).

Also, I believe HELOC rates will be going up later this year and into the next. The one year option may be vulnerable to higher rates shortly after the initial one year term. So the two or three year option may be better, so your rate is locked for longer, even if it is a slightly higher rate.

@Raj I. Sounds good.  There are a lot of options for vacation rentals here.  Some things to be aware of:

General Excise Tax (GET)

Transient accommodation Tax (TAT)

Nonconforming Use Certificates

The management fee will vary depending on the type and location of the property.

I can discuss further if you'd like and bounce some ideas/options around.  Just send me a private message.

Aloha!

Aloha @Andrew Olmstead  Her unit was at the Waikiki Banyan.  I'd be more than happy to discuss further if you're interested.

@Christina Brown Big Island is great too.  Good luck!

Aloha @Christina Brown

For Hawaii vacation rentals, there are a few primary things to be aware of.

General Excise Tax (GET)

Transient Accommodation Tax (TAT)

Nonconforming Use Certificate

We have seen noticeable increases in tourism (arrivals and spending) since 2009/10, hitting new records recently.  Local economists are predicting mild growth over the next 2-3 years.

A safe assumption for current occupancy rates on Oahu is 80%, but a number of places are seeing more than that.  We have a client who recently purchased a vacation rental in Waikiki.  We touched bases with her three months after closing and she informed us that her unit was rented 27 days per month since closing.

There are other things to take into consideration as well.  Personal use, target clients, duration of ownership, etc.

Aloha @Andrey Bolokhovskiy

Moving from Illinois to Hawaii sounds like a great idea.  :)

Flipping in Waikiki is a little tough, as far as buying right.  It is virtually all condos/hotels that are targeting tourists.  So the units are kept in pretty descent condition.  Kind of tough to find a deal very far below market price.  It's not impossible, but you are much more likely to find a deal elsewhere on the island.

Oahu, compared to the neighbor islands, has much more opportunity for a wide range of real estate investing strategies.  For example, on Oahu, there about 350k housing units, while the next closest island is Hawaii with 80k units.  But, deals can be found on any island.

The market overall has been strong.  Local economists are projecting 10% appreciation (cumulative) over the next 2-3 years.

Good job Jason V.  It takes some work to sniff 'em out and dig for details, but it helps to keep people from getting ripped off or mislead.  Thanks for speaking up.

Aloha Raj!

For the Hawaii option, you provided some fairly specific numbers, so I am assuming you've done some research already.  Good job.  What neighborhood are you looking at?  Are you wanting to rent the property as a vacation rental or to a long-term tenant?  I think the answers to these questions will help to answer your original question; which is better the Hawaii plan or mainland plan?

Thanks @Dede Christensen for the article.  Definitely an interesting bill for Hawaii where education is not funded by property taxes.

As a quick side note, Hawaii teachers are not paid enough.  They could make $80k and still not be paid enough.  Anyone who has chaperoned on a school field trip could attest!  :)   God bless teachers!

Without getting too political, and to keep it brief, I do not think the bill will make it out of the subsequent committees.  Hawaii can be a funny place some times.  The teachers union and education in general often get some pretty raw deals from the legislature here.

Now to real estate.  Should the bill pass as is, you are right, the implications on residential real estate could be significant.  With current property prices and a threshold of $500k for the tax hikes, the majority of properties could be effected.

I think two things could save us (in Honolulu/Oahu).  First, a large portion of condos are still below the $500k mark and would remain unaffected.  Second, the bill states "residential" properties, which may allow for a loophole for multi-unit properties of 5+ units, which could be categorized as commercial properties.  Should these two items be true, then the large majority of the properties being effected would be single family homes.  

From my experience, most people here renting out a single family home have a significant amount of equity and/or purchased years ago, meaning their monthly expenses are low enough, that they could (although they wouldn't want to) absorb this tax increase. Let's assume I am totally wrong about SFH owners. Then those owners renting out a SFH may choose to sell due to the increased taxes, but these homes would be picked up quickly by owner occupants, due to the absurdly low housing supply. Allowing prices to remain fairly unchanged.

Overall, I am bullish on the issue, but definitely something to keep an eye on!  Maybe I will change my tune depending on how the bill progresses through the other committees.

Aloha @Varinder Kumar.  Loren is correct about the deposits.  The link is helpful as well.

I would definitely recommend having the tenant and property manager complete an inventory and property condition form together when placing a new tenant.  These forms will then be used when the tenant vacates.  These forms will help in covering repairs during occupancy, repairs after vacating, and making sure your tenant doesn't lay claim to your appliances/furnishings.  I have a very good property manager on Oahu I can recommend if you're interested.

Aloha

Aloha @James Jones.  Some of my thoughts for your Ewa Beach home:

-Will you be in the red each month if you rent it out?

-Can you afford to cover those losses, and still afford a mortgage at your new station?

-I agree that your home will likely appreciate 5% ($30k) in 2017, barring any major political of financial issue.  I also think your home will appreciate a few percent ($13k) in 2018

-Into 2019 and beyond, I'm not sure.  Local economists' predictions are unclear/uncertain.  Based on historical cycles in Honolulu, the market may take a breather around 2019/2020.

So, some investors in Hawaii are willing to eat the monthly losses in light of significant gains in appreciation.

Assuming the home could rent for $2,700 (depending on where in Ewa), I would imagine you'll be about $700 a month in the red (based on my assumptions for mortgage, property tax, insurance, maintenance and association fees, property management).  This would be $8,400 for 12 months (8/17 to 8/18), compared to an estimated $21,500 in appreciation during the same time period.  Just based on these figures, I don't think keeping the home is worth it, since you'd only realize a $13k gain.  This does not include closing costs when you sell or repairs and maintenance.  Considering these aspects as well, I think selling the home in August would be the best decision.

There are more details we could cover, but for a quick analysis, this is pretty good.  If you have more questions feel free to message or email me.

Aloha