All Forum Posts by: Isi Nau

Props @Melody Kushi!  You took those comments like a champ!

It's unfortunate that the skill needed to express an opinion with tact is so lacking.

I apologize, I should have added more detail.  There are definitely forecasts out there.  I wouldn't be surprised if there are some here on BP.  The problem with many of them is they focus on "Honolulu", which is too broad. Honolulu is a big, little city. It has a population over a million, qualifying it for most lists and reports, but the problem is these reports include the whole island of Oahu as Honolulu (which it technically is). It does not decipher between Waialae or Waipahu. There is no way those two neighborhoods will see the same price adjustments in equal proportions at the same time.

As far as reliable forecasts, I am not aware of any other than those produced by local economists. Even with those forecasts, you'll need to focus on neighborhoods, and property types within those neighborhoods.  For example, townhomes in Mililani have been performing differently than single family homes in Mililani.

Title Guaranty branches provide monthly brochures with neighborhood stats that are pretty good, but the reports are month-old snap shots.  You'll have to do more in-depth research, but the reports are a very good start.

Hi @Tyler Winchell

There aren't any specific reports that I know of that forecast housing prices in Hawaii.  The best sources are local economists and think tanks.  They'll have projections for the economy overall as well as by sectors.  The most recent reports are projecting 1-2% appreciation into 2021.  for us and our clients, we're going into our investments with an assumption of 0% appreciation for the next few year.

Yes it is possible to make $50k on a flip in the next 12 months.  There's a lot of variables in order to make it happen.  Let me know if you're interested and we can discuss in more detail.  Aloha!

Hey @Joel Florian

Wow, you've received quite a bit of input across the board!  There are a hundred different strategies for making money in real estate.  Syndications, STRs, flips, Hawaii, Indiana, etc.  Which is the best?  It depends.  It depends on the investor, goals, abilities, resources, comfort level, etc.  I know Hawaii in and out.  I think it's one of the best markets for long term wealth.  It's not the only place to invest, but it is a great place to invest.  The majority of people on BP will say it isn't possible.  My clients and I are proof that it is possible to invest in Hawaii.  I don't know of any other proof more compelling than that.

To the comment about stretching the truth just to earn a commission.  There are some who do that.  I am not one of them.  I am financially secure and morally secure.  There are a lot of things in life more important than money.

In regards to turning a $500k house into a $1m house, that will be tough.  But it is definitely possible to make a $100k-$150k profit.

I really like your five investment guidelines!  Some great wisdom there.  There's some heavy hitters on BP that preach some of these exact guidelines.

Hi @Joel Florian

Great questions.

1. Should I sell my $400k home in Alaska or try to rent it out?

Depends on how much cash flow or appreciation the home will generate in Alaska, and if $400k could do better for you in Hawaii.

2. Should I buy a 4-plex in Hawaii?

The best performing 4-plexes will be non-conforming homes.  Most legal 4-plexes will be in Waipahu, Honolulu, or the West side.  Numbers wise, the West side 4-plexes will have the best numbers, but Waipahu has some occasional deals.

3. Should I buy a SFH in HI?

I would definitely recommend doing a live in flip here, especially since you have a good track record doing live in flips.

4. Should I rent for 6 months first?

You could, to help you get to know the area.  If you'll be at Schofield, then Mililani is the likeliest place to end up.  One of the best neighborhoods on the island.  It wouldn't take 6 months to get a good feel for it.  Just a few days probably.  Good opportunities for live in flips come up regularly.

5. How restrictive are building permits and inspections in HI?

I would avoid building permits if at all possible.  It is insane how slow the DPP is at reviewing and issuing permits.

6. Can I get financing since I have not had a steady job for the last 10 months? ( sold share of contracting business and have been consulting, doing home inspections, and rehabbing a flip)

It would likely need to be a private lender.  I have one we use regularly here, 8.5% and 2 points.  But I would at least explore the possibility of getting traditional financing.

7. Will the recent changes to AirBNB legislation in HI affect home prices in the next few years?

I don't think so.  Most Oahu units were in Waikiki.  The single family homes are scattered throughout Oahu, but mostly on the North Shore and Windward side.  I don't think there are enough to cause price drops across the island.  If anything it will be specific to certain buildings and neighborhoods.

8. Should I even buy property on Oahu if I intend to move to the big island in 3 years?

If you do a live in flip, then I would definitely buy vs rent.

9. Are there deals in central oahu I could get for less than $500 k cash?

Minimum to get into Mililani will be about $675k.  You could get into Wahiawa for about $575k.

10. Should I use a realtor? If so, please recommend one who likes biggerpockets.

I like BiggerPockets.   ;)   I've worked with quite a few BP members over the years.

11. Should I apply to become an appraiser in HI to learn more about the market?

I'm not sure all that's involved in becoming an appraiser, but I don't think it would be necessary to learn the market.  You'll likely want to stick to Central Oahu for live in flips.  If you're looking for a rental, then it will most likely be the West side.  You can learn these markets pretty quickly.

12. Should I sell my tools and furniture and buy replacements in HI, or ship everything over?

If you're going to ship anything, ship a lot of things, to make it worth your money.  Different companies have different sized containers.  You'll want to fill whatever container you get.  With military moving regularly, there is usually a pretty steady flow of used items being sold.  It might be a hassle to hunt it all down when you get here, but it will save on the shipping costs.  Also, check to see how long it will take the container to arrive, you might be without your belongings for a few weeks to months.  :)

13. If a house is listed as a "tear-down", how hard is it to get a permit to rehab it?

Tear down is a pretty broad description, subject to the specific realtor's opinion.  Lots of them are not actually tear down condition.  Permits are a beast.  There are a ton of homes here that are remodeled without permits, especially if the floor plan isn't being changed.  Flooring, paint, cabinets, counters, sinks, toilets, etc.

14. What is the most economical solution to extensive termite damage? Epoxy injection?

Depending on how extensive and if it's structural, the wood will need to be replaced.  Termites are a real issue here and buyers will get spooked quickly and walk away, or request to have it replaced.  It's better to replace it upfront before listing.  If it is something like fascia boards, then there are wood putty-type products that can be painted.

@Bill Brandt

THANK YOU THANK YOU THANK YOU for the enthusiastic response.

I hope to be at a point one day when I can say $60,000 in taxes is next to zero.   ;)

Hey Travis.  One thing to consider when they sell is the tax liability.  Take $1.2M and subtract the associated costs of the home (i.e. purchase price, closing costs (purchase and sale), and remodel costs).  If I had to guess, I'd estimate the total associated costs at about $250k-$300k.  Let's assume it's $300k.  This would leave them with a $900k gain.  I assume they've lived in the home for 2 of the last 5 years, so that's another $500k reduction bringing them to a $400k gain, which will be subject to tax.  How much tax depends on a lot of personal/unique factors.

If we assumed a 15% tax rate, that'd be $60k in taxes.

If they aren't planning on moving for a year or more, they could do a HELOC or cash out refi for $400k or more, and use the money to buy their first Vegas property for cash. This will allow them to sell their Hawaii property tax free, or close to it, because the $400k loan will reduce their gain when they sell.

You'll want to consult a mortgage expert and tax professional, since I am neither.  :)  They can help provide concrete numbers to this option.

I agree.  It's hard to believe that all of Waikiki isn't Resort zoned.  In light of Kakaako bringing in a ton of new housing, the City should provide a variance for all of Waikiki.

I recognize the City's goal of easing the housing crisis, but I'm not sure Waikiki is the answer.  I can't recall any client we've worked with that wanted to live in Waikiki, as an owner or tenant.  I don't think freeing up a bunch of Waikiki condos will ease the housing crisis.

I've spoken to a few colleagues in the STR cleaning business on Oahu and they haven't seen a reduction in work since August 1st. They have all said that the property owners are honoring the bookings made before Aug 1, but are not taking any new bookings. I'd imagine most good properties have bookings through New Years, so the industry may still have legs to carry it through the turn of the year. We'll see.

@Robert Baltazar

I think most SFHs rented as STRs happened as an after thought. Meaning most were purchased as a primary residence or long term rental and then somewhere over the years the owner turned it into a STR. If this is true, then the financials surrounding the homes (i.e. larger down payments, low monthly carrying costs, the owner could move back in, etc.) are probably good enough that the owner can make the transition out of STR without much financial trouble. Of course there may be a few homes here and there that must sell now, but not enough to effect an entire neighborhood by bringing down prices.

I haven't seen very many SFH be purchased with the original and sole intent being to do STR. If there are very many of these situations then it would be on the North Shore. But we're not seeing very many North Shore buyers coming in with minimum down payments. Rather the opposite, large to 100% down payments. So again, I think most will be able to transition out of STRs with our much problem.

This is all macro stuff. On a smaller level I absolutely believe some individual condos and SFHs will come on the market at bargain rates due to the change in STR laws. Be on the lookout!

It might be worth seeing what happened in San Francisco and New York.  I believe they experienced similar enforcement law changes in the last year or two.