All Forum Posts by: Mike Neubauer

Investment Info:

Condo buy & hold investment.

Purchase price: $450,000
Cash invested: $40,000

Welcome to the longest escrow in history. This off market deal brought to us by an out of state investor consisted of a total of 3 people dying (literally) in sequential order and having to get title transferred that many times in order to finally close on this thing. It's a small ocean front studio condo that we will rehab and rent nightly. At the end of the day it should bring in around $6-$7k conservatively per month (gross). Not a home run, but a solid base hit.

What made you interested in investing in this type of deal?

We are always looking for good deals on STR condos in south Maui. This one was brought to us off market and while it is not normally a location we would go after, the timing was right and we were looking to take something down. This property was available at the right price to make it worth the investment.

How did you find this deal and how did you negotiate it?

Brought to us off market from an out of state investor that we actually met here on Bigger Pockets.

How did you finance this deal?

Conventional financing. For STRs on Maui there are only a handful of lenders that will fund on these things. Most lenders steer clear because they are considered "Condotels." It's difficult for banks to sell these loans, apparently so they are very hesitant to lend on them. They typically require at least 30% down, as this one did.

How did you add value to the deal?

The tenant who was living in here had been in the unit for 30 years. Nothing had been updated at all. Day 1 we came in and pulled out everything to get the unit down to the studs. It will be built back up to have a modern and open feel.

What was the outcome?

This will be added to our portfolio as a nightly rental. We will collect data on it for at least a year and then make a decision whether to hold or 1031 out of it.

Lessons learned? Challenges?

Challenges here are that we had this moving closing date. Because of that we lost a lot of our labor that we had in place. Because sellers kept dying off (!!!), the closing date kept moving. So upon close it was a real struggle to find laborers, contractors and handymen to get the project pulled off in the timeline we have allotted for it.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Because this was off market we worked directly through a probate attorney on this. I was so grateful to have my wife Caroline lend her expertise as a realtor in making sure all of our bases were covered.

Aloha @Michael Flower,

I'm an investor over here on Maui and am always open to connecting with other investors.  I'm pretty much focused on STRs over here, but am always interested in a deal if one pops up.  Please let me know how I can provide value to you.  Aloha!

Hey Lisa,

I'm happy to share what I know with you.  My wife and I own and manage 6 STRs on Maui right now and are still buying when we can get under contract on units that meet our buy box!  Feel free to DM me.  

Aloha!

 Aloha Eric,

I have several STRs here on Maui and I like the way you are looking at it. You are correct in some of your observations and your idea of buying as second home is great, but probably won't work out here. I say probably because in order to get a second home loan here on Maui you'll need to buy a place that is not being short term rented and has no history of it. The only STR properties here are going to be condos that are zoned for it. Don't try to go the SFH route and make a STR out of it. Won't work. DSCR loans can work too, but I haven't found anyone that will use short term income for DSCRs out here. They use long term rental income for that. So, you can get those loans, but plan on putting down 30% on any STR on Maui. Can it be done with less? Yes, maybe. But there's not a lot of lenders that actually lend on STRs on Maui. Several reasons behind that, most mainland lenders don't. You have to use a local bank, and there are only a few that lend as most STR condos are considered Condotels. I'm not trying to discourage you, just trying to give you the facts for this location. I'm happy to talk through what you're looking at if you like and give you my thoughts and connect you with the right lenders, realtors, managers, etc. Just DM me. We've been in this market for 20+ years, own several and manage all of them. We're still buying and putting down 30% on all of them.

Nice job, buddy!!!  

@Kris Jolls. Hey Kris, I've been living on Maui for 20+ years and invest out here.  Happy to connect with you if you're still on island.  Aloha!

 Those are just agents who pay for leads.  It doesn't mean they are "investor friendly."  While some of them may be, there is no vetting process that takes place as you know. The best referrals are from other investors in the market doing deals. 

Thanks @Patrick Franta.  I second the Maui Brewing meetup.  And don't let Patrick Franta fool you, he's a wealth of information with a ton of experience here on Maui too.  Another great resource!

Aloha again Patrick,

I got leads for you for investor friendly realtors and lenders.  Especially with STRs you want to make sure you use someone who also has STRs and knows what an investor is looking for.  It's not the same as the average buyer.  DM me and I'll connect you to some solid resources.  Aloha

Aloha Patrick,

Wow, yeah this thread is pretty old.  I've been living here on Maui for 20+ years and am an active real estate investor.  I live up in Waikapu, and if you have any questions or find yourself on this side of the island and want to connect, let me know!