All Forum Posts by: Mike Neubauer

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. 

Aloha @Carrie Giordano

I'm doing it full time, from here on Maui.  They do very well for me, however there are some caveats.  I can go over them in detail with you if you like, but essentially 1) You have to know where to buy.  2) You have to be very aggressive when something comes up that meets your buy box.  3) You have to play the long game.

The market is still red hot for STRs out here. At any given time there's only a dozen or so STR properties on the market that I would even look at. Of those there are usually between 0-3 that I would pull the trigger on (Usually closer to 0). I think right now there is one.

I have the link for Brandon's listing, but I'm not going to share that out of respect for his privacy.  He doesn't manage his own listings anyway.  If you have any more questions, I'm happy to share what I know.  Just shoot me a DM.  Mahalo!  

 Smart move, @Carlos Ptriawan. I've been telling people for awhile that regulation is a good thing for STRs. Personally, I wouldn't buy anywhere but Maui and maybe some places in Florida like you mentioned, but that's just me. Careful on the BI, they have more regulations that need to fall in place, and will fall in place, but I've been investing on Maui for about 5 years in STRs, and they've been fantastic for us. Kauai can be a little more spotty, but can be good too. The key is understanding the right areas and knowing the pros and cons of what you can and cannot do with each property type. Essentially, in Hawaii in general you're limited to condos if you want to STR anything. Don't even think about trying to STR a SFH.

Aloha Lisa,

A lot of us get together randomly, but @Zasha Smith sometimes puts stuff together.  I haven't seen anything planned coming up, but I'm not on social media very often.  You can get notifications for keywords here on BP.  I would recommend setting one for "Maui Meetup" or something.  There's an events section too that lists anything coming up too.  

Aloha @Lisa DeAquino! Welcome to Maui real estate investing! I'm sorry to hear about your mom, and unfortunately, I feel like I've heard that story so many times. I live on Maui as well and invest here. It can be tricky, but there are ways to tap into that equity in order to use it to expand your portfolio. And even if you couldn't, there are ways to get involved with REI that don't cost money. You should come out to one of our meetups and meet some of the people doing deals out here on Maui.

I agree with a lot of what others have said here. If the property meets my buy box, and I'm in the position to pull the trigger, I'll buy it. Plain and simple. Sure, I underwrite with current interest rates, but I'm not afraid of them. I also don't think they're going to be around forever. Also, I've seen sellers who understand the market is changing, offer to buyers to buy down the rate so instead of 7.5% or whatever they can buy down a couple points. So whether I'm getting a property at 7% or 4%, as an interest only for 10 years, as an ARM or whatever, I operate taking into account my risks and my being able to refinance or sell in a few years, and does that make sense with the price. There are 3 main components of the deal: Purchase price, Interest rate and Time. If I can pull the levers to make these three elements play nice together than I'm all for moving forward...

 OK, there's a lot to unpack there, but we invest in short term rentals and live on Maui.  My wife is a realtor here on Maui and has associates on Kauai that she could connect you to, if you don't find one, but it's very difficult to find realtors that are also investors.  Most are not and they don't know all the things you want to look for and questions to ask to get your best investment. 

For an STR on Maui you'd be looking at condos in buildings approved for transient accommodations. Not all are. Forget single family homes. You won't get a permit for it. You'll need 30% down on just about all of them. If anyone tells you otherwise, beware. We've been doing this for a long time, that's the way it is. Most are considered "condotels." Banks can't sell those loans so there are only a few that will lend on these properties on Maui. Make sure you use a local lender. I can give you a few if you are interested in. There's a couple reasons for this, one, a local lender on an offer sheet looks a whole lot better to a seller's agent than a mainland bank, which all seem to promise they can close on a loan, but time after time they seem to fall through. You want to use someone that has closed "condotels" on Maui if you go that route.

Using hard or private money is certainly an option for the down payment or the entire purchase. I have a good HML company I'd recommend too if you are interested.

Occupancy rate and cash flow are going to be dependent on who is managing the property and where the property is located.  If you are self managing your property and it is in a good location you can expect 90%+ occupancy if you do it right.  We average close to 95% and we keep a 4 night minimum on our units.  If you're using a property management company you'd be looking at paying them about 25% of your gross on average so you probably wouldn't cash flow much if anything at the end of the day, and you could probably expect about an 85% occupancy if they're a reputable company.

Hope this helps!  

Aloha Kristen,

My wife and I have lived here on Maui most of our lives and invest here as well.  I agree with what @Mark Waite said about not having trouble renting anything long term.  You most likely won't be able to cover your expenses with a long term rental, so if you are looking for cash flow, that might be tricky, but if you are looking at it just as an investment for something you'd like to have then that's great.  I also agree with Mark's sentiments about investing on Oahu, especially if your intention is to Airbnb it.  I would stay away from anything that is not intended to be long term rented over there.  If you have any questions about Maui or investing out here, I'm happy to talk further.  Just DM me if you have questions.

Aloha!

Nice @David Bruce!  Next time call me for resources on Maui!  Nah, not sure I would've been much help on that project.  Looking forward to the Mastermind next week with you here on Maui!

Aloha Sarah, 

Thanks for the DM. I just shared a few things with you but definitely think your goals are realistic. I went from zero to leaving my W2 in less than 5 years. You can certainly do it in 10, but it will take some work and sacrificing.  Please let me know if I can help or guide your journey in any way!

Aloha!