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Just coz you can doesnt mean you should. Buying 700k on household median salary is stuppit. Esp with only 10% down.
So what house do you buy? $700k is what a normal tiny house costs on Oahu. In some areas you can find a $600k house. There's nothing below that. Maybe a condo with a very high maintenance fee that means you're always losing money
You are missing a bit of the bigger picture. This isn't a thread to cheer a 14% jump in rents, although disclaimer here, I own several single family home and condos I rent on the island, so in full disclosure, I benefit from the rent increases - for which I need not be apologetic as I made an investment, need to handle downswings in the market (2008 was not that long ago), take risks with my tenants, and need to maintain my properties.
With that said the takeaway for the thread should be (especially #1):
1) If you are on a fixed income and thinking about moving to Hawaii (especially Honolulu) and cannot afford to buy a home/condo, you should immediately cross Hawaii off of your list. On a small island, with limited options to build (much like Manhattan and San Francisco) - rent over the long term will continue to go up far outpacing inflation, and it is unlikely your fixed income will keep (or, more likely impossible). If you can afford to buy, at least you are price protected with a fixed mortgage.
2) If you are thinking about moving to Honolulu - breaking news - it is expensive to rent. And it is getting more expensive. It is a competitive landlord market. If you see the diamond in the rough on craigslist - you might be competing with 20+ people for the unit - and if you don't have great credit - a bunch of kids, pets, no job yet - it isn't likely you'll get that unit. And that $3,000 unit today may well be over $3,300 next year......
3) If you live here and rent - live under your means - save money for a down payment - and buy (if you are going to be here at least 10 more years after you buy)
I'm a landlord with multiple properties just like yourself so a healthy rental market is not a bad thing for me. But the 14% rent increase "data" was literally a realtor saying "hey I have a 3 bedroom that is renting for 14% more than it did last year!". I was amazed that story was even on the news. There was literally no statistical value to that 14% figure. 100% out of someone's arse.
Landlords should be wary of 14% rent increases... it usually is a harbinger of a bubble. Completely unsustainable.
High end condos in Kakaako will probably see some rent weakness once those thousands of condos come online.
I don't think there is much money to be made by taking the condos in Kakaako and renting them - most of the Kakaako condos are going for premium square footage and have high maintenance fees - and they'll shoot themselves in the foot if the owner occupancy level gets to low - it'll screw up resale prices as bank lending will be much harder.
So what house do you buy? $700k is what a normal tiny house costs on Oahu. In some areas you can find a $600k house. There's nothing below that. Maybe a condo with a very high maintenance fee that means you're always losing money
Buy what you can afford. Thers no law forcing you to buy a home.
Nothing wrong with condo with high fees, . many condos have tripled or doubled in price over the past 10-15 years, you not always losing money.
I don't think there is much money to be made by taking the condos in Kakaako and renting them - most of the Kakaako condos are going for premium square footage and have high maintenance fees - and they'll shoot themselves in the foot if the owner occupancy level gets to low - it'll screw up resale prices as bank lending will be much harder.
I agree with you but many investors don't. Most of the high end buildings don't have a high percentage of units with owner occ restrictions - they put those restricted units in completely separate towers. Lots of foreign investors in particular just want a place to park their money. Many have no plans to ever occupy the units. You can bet there will be a lot of rentals coming online once these units close in escrow. I'd guess at least 20-25%. Maybe more.
801 South which is workforce housing has over 30 listings on CL in 2 days. Many could be repeat listings but those units are competing with everything else in Kakaako. An ugly building with tiny windows (some with no views), dirt cheap finishes, zero amenities and non-reserved parking has 800 SF 2 bdrm units asking $2,800 + utils. Proof people will pay a lot more for new even if it's not remotely luxurious.
801 South which is workforce housing has over 30 listings on CL in 2 days. Many could be repeat listings but those units are competing with everything else in Kakaako. An ugly building with tiny windows (some with no views), dirt cheap finishes, zero amenities and non-reserved parking has 800 SF 2 bdrm units asking $2,800 + utils. Proof people will pay a lot more for new even if it's not remotely luxurious.
Holy smokes - if any potential "renter" wants to be depressed, take a look at the 801 South listings - the "Penthouse" is 860 sq ft - ugly ugly ugly ugly - all for the low low price of $2,800/month - ugh. (But you do get 2 parking spots
Holy smokes - if any potential "renter" wants to be depressed, take a look at the 801 South listings - the "Penthouse" is 860 sq ft - ugly ugly ugly ugly - all for the low low price of $2,800/month - ugh. (But you do get 2 parking spots
Yup. Ugly beyond comprehension. The studios literally have maybe 10 square feet of window to open, ventilate and look out of in the entire unit. They even frosted the lanai glass. Maybe the windows are miniscule to make up for the fact that there is a building staring right into them on the east side and likely another that will be built right across the street on the west side. It will be sandwiched between two high rises with zero privacy in any units. They'll have a gorgeous view of either other people or curtains. Low rises are more appealing... at least you don't have to deal with long elevator rides and a mile long parking garage.
Pretty soon there will be no appeal or benefit to high rise living. It's just a way to pack more people into a smaller footprint.
I don't think there is much money to be made by taking the condos in Kakaako and renting them - most of the Kakaako condos are going for premium square footage and have high maintenance fees - and they'll shoot themselves in the foot if the owner occupancy level gets to low - it'll screw up resale prices as bank lending will be much harder.
Generically I agree with you but I think there will be at least one stand out building that will have at least short term panache that will command high rents. I think the Vida might be the one Vida at 888 Ala Moana | 2 Bedroom Honolulu Condo | Type 00
Very nice floor plans. And owner occupancy will not hurt these few buildings. Look at the co-ops on the Gold Coast that have limited financing. Rich people don't have to worry about financing. It will be interesting to see the morning commute when everyone is trying to make a right onto Ala Moana.
And owner occupancy will not hurt these few buildings. Look at the co-ops on the Gold Coast that have limited financing. Rich people don't have to worry about financing. It will be interesting to see the morning commute when everyone is trying to make a right onto Ala Moana.
I disagree - Lots of people, rich or rich or not, don't want to live in a building with a low owner occupancy ratio to renters, it makes for a transient community, and renters don't seem to care about taking care of a place (like common area/bbq-pool) that a resident would).
And a lot of people stay rich by taking advantage of low interest rate financing and not paying cash. Money is still practically free right now - and anyone with decent wealth can do a far better on their rate of return by investing cash and taking a mortgage.
I disagree - Lots of people, rich or rich or not, don't want to live in a building with a low owner occupancy ratio to renters, it makes for a transient community, and renters don't seem to care about taking care of a place (like common area/bbq-pool) that a resident would).
And a lot of people stay rich by taking advantage of low interest rate financing and not paying cash. Money is still practically free right now - and anyone with decent wealth can do a far better on their rate of return by investing cash and taking a mortgage.
Well I'm basing my statements on my experience here since my 2008 purchase. I am not big rich like most of the people in my building. I did pay cash because of the expensive co-op financing but got the cash from financing other properties I own. The big rich in my building are connected and call up their banker friends to give them a portfolio loan if they want to finance. These are second homes to a lot of them. My upstairs neighbor has two cars worth over $700,000 I'm told. My building allows 30 day rentals and most of the vacation renters are repeat renters from expensive areas of CA and Canada and the 24 hour management keeps any low lifes that might infiltrate in check. LOL
We do have the working rich as owners and renters. Mostly doctor couples and we had most of the Lost mucky mucks. Are you a Pacific Club member? The old GM was a long term renter here.
Now I agree that most of the Kaka'ako towers will be mostly working rich but I do believe that a building or two will catch on and uber rich will buy and use/rent and owner occupancy will not be an issue.
Are you still thinking of locating Diamond Head? Will you go apartment or stay with single family? Would any of the New towers entice you?
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