All Forum Posts by: Sayed Jaffar

Scott,

As @Alex P. mentioned leasehold and fee simple are the two main reasons for difference in prices. Additionally, vacation rentals is a very sensitive issue here in Honolulu these days. Every building in Waikiki is governed by their own owners associations, and a big majority of these associations actually despise short term or vacation rentals in their respective buildings. If you are considering buying ANY property in Waikiki and turn it into a vacation rental, I am afraid that would be a big mistake and a very costly one.

There are buildings in Waikiki which falls under resort zone, and those buildings will allow you to operate short term rentals lawfully. Keep in mind, short term rentals here means between 30 days and 180 days. If you are considering doing daily rental, you have to again look for another type of building which will allow you to do that.  Again, there are a very few buildings which legally allow you to operate daily rentals.

I am a vacation rental operator and I am doing this for the past many years. If you would like to get more information about the type of buildings suitable for the kind of investment you are intending, send me private message. Aloha!

Peter,

I am operating few STR and LTR in Waikiki for years. First, buying or operating a STR in Waikiki is not as simple as it may appear. You have to understand what constitutes a "legal" vacation rental. In my personal assessment, a good majority of STR in Waikiki are not lawful. If you want to be fully satisfied, then you have to look at properties that come with "nonconforming use certificate" which city had stopped issuing since 1989. In other words these are the properties that can legally operate a STR. In addition to this group, another group of properties which fall under "X-6 Resort…" zoning would be the second best option as they are also entitled to operate STR. There is also difference between "short term rentals – min 30 days" and "short term rentals – daily rentals", as it make difference over the revenues or how you envision to run your STR.

The point I am trying to make is that ROI or other ratios/averages may not be the only items you want to look while looking for investment property in Waikiki. Additionally, there are other aspects that you may want to look at, such as vacation rental tax bill that will have implication on how STR will be governed in Honolulu County.

@Raffy Pasion, did you meet anyone who would be interested in working with you? How was your experience at the event?

@Angelo Wong I think your idea is good, but I think your execution needs different approach. I have been doing the same, and in my assessment subleting a unit makes more sense that actually investing in a similar kind of property. Before getting into any numbers, what you should do is to eliminate your biggest risk or to some extend minimize it. You are on the hook to pay a fix rent every month, irrespective of your occupancy rate. If you think the STR is a great deal, try to sell this to the landlord. Ask them to come on board, and show them how they can get more money every month as compare to long term rental. And if they are fully on board, then offer your services as an operator and take your 20% or more cut plus the cleaning fee.

Aloha Simone,

Congratulations on buying your investment property in Hawaii. I have been doing Airbnb/STR in Waikiki for sometime. I am leaving few questions and comments for you to consider:

1. Is the property currently in a STR program? If it is Airbnb ready, then it makes your job lot easier and there is a good chance you can list the property on Airbnb or other platforms.

2. If the property not in a STR program, or you planning on doing major or minor upgrades to the property, my suggestion is to get everything ready before you list. You may not receive revenue right away, but I think it is better than having guests in the unit who are complaining about things and leaving you less than a satisfactory review.

3. Personally, I don't put properties in rental program, unless I am certain that the unit is "fully" ready for a guest to occupy.  

4. Are you planning to get professional pictures of the property? You may want to take these pictures once you have furnish the place per your ideas or requirement. And most sellers do not allow buyers to perform any work in the property which is still in escrow.

I am glad that you are considering starting your own STR business. Following are my two cents:

• This business requires your full attention and effort. You will be reviewed on six different categories by every guest, and your goal is to maintain all stars on these categories. My point is you can't be complacent  in this business.
• If you don't have prior experience of property management or being a landlord, it is worth working with another (super) host for a short term or long term basis. This is not the business where you want to make mistakes or learn from your mistakes as if you get negative publicity upfront, those reviews will be there for a long time, and a huge majority of guests read these reviews before they decide on a property.
• I would also consider staying at another airbnb, especially by those who have high ratings and super host, to find out how they communicate or deal with their guests. 

It depends on the type of property you have, and how your operation is setup. If you are required to meet your guest prior to check in, I think any lock would work. But if your operation doesn't require you meeting your guest, then key-less entry is a good investment. These locks are usually pricey so you can justify the investment if it is really going to save you time to deliver key each time.

I usually allocate about 1% to 2% of my monthly revenues for supplies for bath & kitchen. Your cleaning and laundry expenses should be covered by your "cleaning fee" especially if you are planning on using someone else to perform these tasks.

This is not common at all for a Airbnb host handing over a rental agreement as you mentioned. I have seen cases, where it is the requirement of the building (condo association) to have a rental lease agreements for all rentals. However, the way you have described, it looks like your host is trying to go extra length for no obvious reason. Has he or she offered you explanation for this process? Your host has already setup the cancellation policy on Airbnb, and if you cancel it, Airbnb knows how to get the money. Looks like he doesn't trust Airbnb at all!!

The key is to find a landlord or property management company who would agree to allow you sublet. In my experience, majority of the property management company, by default, will not allow this. I think your best bet would be to deal directly with a landlord and clearly explain him all pros and cons. If he is on board with your idea, then it would be a win win for both of you.