Landlord Question - Go Traditional Rental or Vacation Rental? (renter, eviction)

[Green_Mountain]

I've been looking at properties on the big island and some of them have a main house, plus multiple other houses. I haven't really looked into the issue of being a landlord in Hawaii much (yet) because it's not a requirement and not the driver behind the move. However it would certainly be a nice bonus, and I've got some intital questions before I do further research.

1. Assuming that the additional house/s are appropriate (location and build quality) to serve as vacation rentals, why does someone choose long term rental versus short term vacation rental? I am guessing a heavily booked vacation rental has the potential for more income but also requires a lot more work? Is that a fair assessment? Any other deciding factors?

2. I know it can be hard to get permits for things such as a B&B, but is it hard to get permits to do vacation rentals? I'd want to do everything by the book, I have 0 interest in trying to fly under the radar.

3. With regard to traditional long term rentals, how easy is it to evict non-paying renters in Hawaii? In some states a renter can drag out the process for half a year or more.

4. I know Hawaii has some rules such as no more than one month security deposit. Are there any other unique Hawaii rules a landlord needs to be aware of? For instance, limits on lengths of leases etc. One property I just looked at I was surprised that all 3 rentals were month to month.

Only thing I'm not really interested in hearing about is the stresses landlords have to deal with, those go without saying. I'm more interested in regular rental versus vacation rental; and Hawaii specific advice.

Otherwise, thanks for any/all advice.

[Dreaming of Hawaii]

I can answer #1 because we used our house as a vacation rental for five years. We decided that a vacation rental would actually be less wear and tear because usually people on vacation are out sightseeing most of the time and only use the house as a "home base" for sleeping and some meals. Additionally, every time the renters leave at the end of their stay, the house got a thorough cleaning and inspection by our housekeeper. We didn't expect that we would make a profit, but we did make enough to make a dent in our mortgage payments.

We had a very good experience, with nothing ever getting broken or stolen. In fact, many people who rented would buy things for their visit, like boogie boards, beach towels, etc., and then just leave the items at the house because they had no use for them at home. We even had renters who fixed things and "battened down the hatches" when a hurricane was threatening.

Question #2, I think it is very hard to get a permit for a B&B that serves meals. It is not hard at all to get a permit for vacation rental. We just went to the state office and registered and got a tax i.d. # (I think this can be done on-line). You are required to collect and pay transient accommodations and general excise taxes. Also, if you have an HOA, they may not allow short-term rentals.

[whtviper1]

Originally Posted by Green_Mountain

1. Assuming that the additional house/s are appropriate (location and build quality) to serve as vacation rentals, why does someone choose long term rental versus short term vacation rental? I am guessing a heavily booked vacation rental has the potential for more income but also requires a lot more work? Is that a fair assessment? Any other deciding factors?

A vacation rental does have more income potential - while long term rentals often give peace of mind. A vacation rental does take more work (it needs to made spotless for the next renter, potentially answer questions from prospective renters, replace missing items (like towels disappearing), and dealing with a new renter potentially every week or more - you never know who you are going to get. A long term rental can give you better peace of mind of not having to continually market the property, a known person over the lifetime of the rental, and hopefully a regular and known income stream.

Originally Posted by Green_Mountain

3. With regard to traditional long term rentals, how easy is it to evict non-paying renters in Hawaii? In some states a renter can drag out the process for half a year or more.

It isn't like San Francisco, the process will not take 6 months or more. But, like anywhere - it is a pain.

After you demand rent in writing, preferably certified mail - you can take them to court (although they have 5 days to pay the rent) - court dates generally aren't that far of a timeframe away - in court it comes down to, does the tenant acknowledge not paying rent - if so, they need to pay or the judge will write an order to evict. The tenant may simply dispute the eviction and another court date will be set. It is the next court date the eviction would happen if there was no reason to dispute the eviction. Once you have the judges order - you get the Sheriff to evict them out of the unit.

Originally Posted by Green_Mountain

4. I know Hawaii has some rules such as no more than one month security deposit. Are there any other unique Hawaii rules a landlord needs to be aware of? For instance, limits on lengths of leases etc. One property I just looked at I was surprised that all 3 rentals were month to month.

Read this:

http://files.hawaii.gov/dcca/ocp/lan...t-handbook.pdf