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It sounds like the OP hasn't visit the Big Island yet, judging from the posts. Putting a 300 square foot shack on a $300K to $500K lot doesn't make a lot of sense to me. However, some people are happy living in very small homes. If retirement is in a few years, I can understand the desire to buy a retirement property. If the OP hasn't visited yet, the first scouting trip should be scheduled to get a better grasp if retirement in Hawaii is viable.
Investing $300K at only 4% return is a very low return rate, only suitable for someone with a pretty extreme aversion to risk. Over the longer term of a couple decades, it's pretty easy to average 8% to 10% return. In recent years, you can get a return of about 20%. Of course, during downturns, like in 2007 - 2008, you can lose a lot of money on paper, and you need to have the grit to hold your position in the market, until the market recovers, which can take years. We had huge losses in 2007 - 2008 downturn, we didn't sell, we held our positions, and gained it all back, plus a lot more. Your return is dependent on your comfort level with risk and if you need the investment income for your current living expenses.
I think it would be a wise idea to start off with visits and renting vacation rentals in different areas to find out if you like it. Renting will give you a much better idea if the whole idea of living in Hawaii is good or bad. If you decide living in Hawaii is for you, renting in different places will likely improve you decision what property to buy.
It sounds like the OP hasn't visit the Big Island yet, judging from the posts. Putting a 300 square foot shack on a $300K to $500K lot doesn't make a lot of sense to me. However, some people are happy living in very small homes. If retirement is in a few years, I can understand the desire to buy a retirement property. If the OP hasn't visited yet, the first scouting trip should be scheduled to get a better grasp if retirement in Hawaii is viable.
Investing $300K at only 4% return is a very low return rate, only suitable for someone with a pretty extreme aversion to risk. Over the longer term of a couple decades, it's pretty easy to average 8% to 10% return. In recent years, you can get a return of about 20%. Of course, during downturns, like in 2007 - 2008, you can lose a lot of money on paper, and you need to have the grit to hold your position in the market, until the market recovers, which can take years. We had huge losses in 2007 - 2008 downturn, we didn't sell, we held our positions, and gained it all back, plus a lot more. Your return is dependent on your comfort level with risk and if you need the investment income for your current living expenses.
I think it would be a wise idea to start off with visits and renting vacation rentals in different areas to find out if you like it. Renting will give you a much better idea if the whole idea of living in Hawaii is good or bad. If you decide living in Hawaii is for you, renting in different places will likely improve you decision what property to buy.
Thank you for taking the time to give advice. Let me share more of my situation, and I appreciate your continued tips.
My family has been to Hawaii twice. First time we stayed at a resort on the west side; the ocean was lovely, but the whole resort concept was torturous. They basically try to keep you in the resort as prisoners, forcing you to buy $15 burgers. I could walk faster than their shuttle train; it took about 30 minutes to get out of the resort if you add up the time for the train wait/train ride and all the walking.
The second time we stayed in a regular hotel in Honolulu, and rented a car to visit various beaches. It was lovely. My family really enjoyed the sand beach and the warm water.
My family is not foreign to ocean. We live in San Francisco and it is a very marine city. We love the sea. I am a scuba diver and a free diver. I make about 10 diving trips in Sonoma and Mendocino counties every year. The water temperature there is a constant 48-50 degrees year round; not comfortable but we wear wetsuit and get used to the drill. We always enjoy being in the sea no matter what.
We love the sea so much, that in fact for 10 years I had been planning to buy an oceanfront property 4-5 acres in Mendocino as a family retreat, and in the long run to use as a retirement homestead. The primary purpose is so I can go diving every day if the condition allows. Unfortunately nothing has worked out so far. Oceanfront properties there are either very big or very small; and all are expensive! People often ask for outrageous prices that they later slash in half. I suppose this is common for 2nd home areas, but SF bay area is particularly crazy; 2nd home prices also fluctuate with the tech bubble.
After our vacation trips to Hawaii, I started thinking about the possibility of shifting my target to Hawaii. The two places seem a bit different. First thing I noticed, of course, is the marine life.
In Northern California, the cold water produces lots of food fish and other seafood. I take fish, clams, abalone, dungeness crabs, sea urchin, lobsters, occasionally octopus, even seaweed from that water. Our family never bought any seafood in SF. In my two Hawaii trips, where I dove in 15' of water (was with son so couldn't go too far out), I saw mostly tropical fish. I was also quite surprised by the lack of vegetation in Hawaii's waters. In SF we have kelp forests down there.
But I think Hawaii offers an ocean environment that is more enjoyable for my kids 7 and 10. My older son is already free diving; the second still just wade near shore. We won't have to bother with wetsuits, and the ocean seems calmer on average. The white sand beaches are, of course, spectacular.
We won't be able to afford white sand beachfront properties. Big Island will have to be it. I need to still work for at least 10-15 years in mainland, therefore, we will only use the Hawaii property for vacation perhaps 4 times a year. I wanted to build a small house as a start because I don't want to invest too much money for fear of property crime. When I am able to move to Hawaii for good, I will build a bigger house.
Yes I do understand for most people a property so far away is unmanageable, and risky. That's true for us too. Therefore I carefully weigh the risk and constantly think about the worst case scenario. What is the worst that can happen if I buy 4-5 acres of land, put up a 300' house, and just leave it deserted for 10 years? Punatics break in? Lava cover my land? The house is worth only 50K max; and the land will still be there. My biggest fear is lava extensions taking away my oceanfrontage -- that can turn a 400K property into 40K. But I tell myself, even if that happens, I will still call myself lucky to be in such historical event.
Hence, the plan is moving forward. I have enquired about a few suitable properties, and will be there this Christmas to look at them, then make a selection.
Thanks for the informative post about your situation. Retirement that is 10 to 15 years away is a long time to go! I started counting down to retirement over 10 years ago. I think the best way to visit Hawaii is with a vacation rental property, rather than a resort or hotel. A vacation rental home, even a condo, gives you much more of a feeling of living there, even if it's a very short time, like a week or two.
Your tough to be able to dive in cold waters! You mentioned you live in the San Francisco area, so your used to living in a high cost area. I understand what you're thinking about in the longer term, since the real estate prices in the distance future 10 to 15 years from now might become out of reach. I could have bought a retirement property 5 years ago, about 8 years from retirement in SW Florida for about half price during the housing downturn. But I didn't want to pull the trigger that far from retirement, although it would have been easy to buy a second home. I could have had a brother in law live in the property and take care of it while I was stuck in Minnesota most of the year.
RVs aren't common in Hawaii like they are in Florida. If I wanted to buy some acreage in Florida and only live there a few weeks a year, without someone to watch the property, I could just buy an RV, live in the RV a few weeks a year, then put the RV in a secure storage place in Florida while I'm not using the RV. But that idea wouldn't work in Hawaii because RVs don't seem to exist in Hawaii, although it should be possible to ship an RV to Hawaii.
You might think about buying raw land, and staying in a vacation rental nearby during your visits. Or, maybe you could build or buy a house and rent part of the house, so that the property would be occupied year round.
When we visited Kauai, we stayed in a condo only about a block from the ocean, and maybe 10 feet or less, above sea level. If there was a tsunami, those condo buildings would be wiped out, and if people were in the buildings, they would be killed. It's somewhat disconcerting to live too close to the ocean, which is powerful enough to reach out and destroy your property and kill people. You might have to periodically evacuate your ocean front home if there is a risk of a tsunami. Personally, I would look for higher ground, and simply drive to to the ocean. Land farther from the ocean is probably going to be more affordable too.
Put a bid in today!!! Fingers crossed but the best I am hoping for is the seller willing to discuss. This property which has the ideal size I am looking for, but is twice the per-acre price as others, so I hope seller will come close to where the market is....
My property hunting experience so far is, local real estate brokers are not too eager to spend time and effort to do much of anything besides writing offers. And even when writing offers, they are not enthusiastic when the price is too far from asking price. But the reality is many properties slash price 20%, 30% or even greater! Is it that easy to be a real estate broker in Hawaii?! Or maybe they have dealt with too many out-of-state pretenders?
Put a bid in today!!! Fingers crossed but the best I am hoping for is the seller willing to discuss. This property which has the ideal size I am looking for, but is twice the per-acre price as others, so I hope seller will come close to where the market is....
My property hunting experience so far is, local real estate brokers are not too eager to spend time and effort to do much of anything besides writing offers. And even when writing offers, they are not enthusiastic when the price is too far from asking price. But the reality is many properties slash price 20%, 30% or even greater! Is it that easy to be a real estate broker in Hawaii?! Or maybe they have dealt with too many out-of-state pretenders?
You put in a bid on property sight unseen? I thought you said that you were going to come out at Christmas, look around, and then decide what to do. Do you have someone on-island looking at property for you, or are you just going off of the pictures you see online? If the latter, that is very risky! I think you said that you've been on the BI once, and you stayed in a resort on the west side. So it sounds like you've never even been to the place where apparently you are willing to buy land without even seeing it. That is something that we've advised against over and over on this forum.
And, yes, local realtors have dealt with far too many out-of-state pretenders.
Put a bid in today!!! Fingers crossed but the best I am hoping for is the seller willing to discuss. This property which has the ideal size I am looking for, but is twice the per-acre price as others, so I hope seller will come close to where the market is....
You put in a bid on property sight unseen? I thought you said that you were going to come out at Christmas, look around, and then decide what to do. Do you have someone on-island looking at property for you, or are you just going off of the pictures you see online? If the latter, that is very risky! I think you said that you've been on the BI once, and you stayed in a resort on the west side. So it sounds like you've never even been to the place where apparently you are willing to buy land without even seeing it. That is something that we've advised against over and over on this forum.
And, yes, local realtors have dealt with far too many out-of-state pretenders.
Bid already rejected! This Puna parcel's per acre price is more than double other comparable options. I don't quite understand this pricing logic. The parcel is small thus the investment is small, plus I have been looking at land for 10+ years, so I feel comfortable bidding for it.
Oh well, back to hunting and December trip is still on.
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