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For those of you who currently own rent-to-retire properties or investment properties in Hawaii ... or those of you who have looked into it and decided not to pursue one ... I would be interested in hearing about your experience.
Whatever you what to tell us about you experience would be appreciated but a few questions that pop to my mind are:
Did you buy a a house or a condo ? What year did you buy ?
What was your goal in purchasing the property?
Has it turned out the way you originally thought it would ? Has it been better or worse ?
Are you able to generate a positive cash-flow or do you run a negative monthly cash flow?
What challenges have you faced ? Do you rent long-term or short-term vacation rentals ?
Or did you look into purchasing and find it just couldn't pencil out so you decided not to buy ?
We built our house on the Big Island in 2005 and rented it out as a vacation rental until we moved into the house in 2010. It was a very positive experience for us.
We decided to do vacation rentals for several reasons: (1) people using it are on vacation, so they are usually out most of the time and it gets very little wear and tear. (2) the house was cleaned and checked by our housekeeper after every use, so we could keep on top of anything needing repair or replacement. (3) most people on vacation to Hawaii with their family treat a house with care (because we aren't right on the beach we didn't get groups of college age kids).
The cash flow didn't cover all the bills, but did make a major dent in our mortgage payment. As the owner, you have to pay electric, water, cable, etc. Of course cash flow can fluctuate depending on the economy -- in a down economy people are not going to be vacationing in Hawaii.
State real estate taxes are pretty high on second homes. Once we moved in that went way down, and we also claim the senior exemption.
If you have a long range plan of retiring in Hawaii, it seems that now would be a good time to buy with prices so low. Well, they are low on the Big Island. I don't know about Oahu.
For those of you who currently own rent-to-retire properties or investment properties in Hawaii ... or those of you who have looked into it and decided not to pursue one ... I would be interested in hearing about your experience.
Whatever you what to tell us about you experience would be appreciated but a few questions that pop to my mind are:
Did you buy a a house or a condo ? What year did you buy ?
What was your goal in purchasing the property?
Has it turned out the way you originally thought it would ? Has it been better or worse ?
Are you able to generate a positive cash-flow or do you run a negative monthly cash flow?
What challenges have you faced ? Do you rent long-term or short-term vacation rentals ?
Or did you look into purchasing and find it just couldn't pencil out so you decided not to buy ?
Hi, new to the forum for just this reason: have decided to rent to retire (I like your phrase). After 3 visits in the past 5 years to the Big Island, decided to investigate purchases and it did work out that we could buy.
Our goal has been to get into the market when prices are somewhat affordable and spend more time here in about 6 years. So far, we have rentals lined up well, but will hold our breath through the low season. We will be doing s-t rentals through a property manager.
Challenges - Closing costs and set up costs were way more than we budgeted. We were turned down for bank financing at first, and then the bank threw a bunch of conditions at us at the last minute that would've derailed other folks.
I'm really surprised at the cost of electricity on the Big Island, and curious as to the cause. Anyone know?
I saw another comment on the forum that mainland people think those living in Hawaii sit around and drink Mai-tais. Our last two trips have been kind of like that --- all work and no mai-tai! People hear 'Hawaii' and don't think about the effort/work that takes place to make someone else's vacation. But at least the 'work' of setting things up is taking place minus -29 degree weather (no ice and snow).
So far have to say I appreciate the people living and working on BI so much: friendly, very courteous and knowledgeable. I have heard about and take into account that there are different systems in place, requiring different amounts of time in big mainland cities; so while this might be an irritation to some, I'm taking it with a grain of salt. Have lived in an island country before, though, so this isn't a surprise.
I talked to a lady living near Hawi about making a living, and have a new awareness about how our (collective) purchases of goods and services contribute to the local economy and jobs.
Interested in how your analysis works out: will you go for it?
Nice to hear that it worked out well for you Dreaming of Hawaii and you're now enjoying the home as you intended.
Bellisama: It sounds like you were determined to get the purchase to work and it finally did. I would be interesting in hearing an update down the road to see how the rental aspect is going along. Hopefully it will work well.
I am currently working on my first rent-to-retire property and in escrow now. Hopefully it will work out and I'll be able to report more on my experience in the future as well.
this was an interesting post for me as well.. my husband and i are actively looking for a place on Hawai'i that we can buy now, rent out, and move into permanantly in about 10 years. it's a whole new world for us
Having just been through the process, Karen, I'm happy to pass along more details of our search/purchase process if you like.
every little bit helps! we know there are questions that we have not even thought about asking, so yes, any information you want to share would be appreciated.
we have been to the BI just the once but we stayed in a rental house in a residential district specifically to stay away from the touristy draw and experience as much as we could the local flavor. we did our grocery shopping at Target and found Da Poke Shack (ok, so that is kinda touristy) and did some limited driving around.
we started out hoping for a place in the Kona area but we cant really afford it there. we started eliminating other areas based on numbers and such that you can get online from crime statistics and property values and volcano zones for insurance purposes... but that doesn't give 100% of the reality of living there.
our intent is to retire there so we are not looking to be in the middle of the city. we are also not looking for a huge house and landscaped yard to maintain. we want to be able to go to Kona at least once a week for scuba diving and go to some places a little further south more often than that.
that's how we somewhat settled on a small house in Ka'u that is 1 1/2 hours away from the nearest decent grocery store. we've had experience living in an area where it was 40 mins to the nearest "anything" store and it does require planning but we managed.
but while we are setting ourselves up to retire there, it is not possible for us to move right now. our jobs would not move with us and neither of us has anything we can market online.. that we know of..
we've gone back and forth between buying just land and building when we retire, to buying a house and trying to rent it out over the next 10 years, to buying a condo and hoping we can sell it and move to Ka'u when we do.
there's still quite a few options open so yes, anything you can share would be appreciated!
What's the hurry everyone? The fed already said rates are staying low thru 2014. If you bought in the last 10 years you aren't ahead. If you can't pay cash - you are lilkely to have a negative cash flow.
On the Big Island - there is so much excess inventory its kind of sad - all those properties that got built up and never occupied - and for whatever reason, they sitting right on top of each other (like those complexes by the Fairmont).
In Oahu - a lot of landlords don't want to be a landlord since they lose money every month. They can't sell their property. They can't sell because of tight lending standards - most properties aren't FHA loan eligible since they aren't 51% owner occupied - a lot aren't even conventional loan eligible because of litigation like the Moana Pacific - so buyers need a full 20% down.
Use caution - if you have all cash there are some deals - but get a deal - in most cases, the property will still be there in 10 years and even if the price went up you are net even by skipping the negative cash flow.
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