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Jonah K's stock market example is a very bad one because all shares are exactly the same (see Fungibility - Wikipedia, the free encyclopedia) and although sales prices are not guaranteed, the volume of transactions in the market means you'll get close to the current price. Real-estate, on the other hand is non-fungible: every detail of the property affects its value and makes it unique from other transactions. Also, by the time you want to sell, there can be a million other factors that change the price compared to previous sales (comps). Also, with the market for real-estate being much smaller, if you have a set window for selling, you are not guaranteed to get your ideal buyer. That's why whtviper1 says you don't know the sales price until you have a buyer. In other words, a comp in this economy is not a reliable indicator.
Regarding valuation, honobob is being at best optimistic, at worst, obtuse. honobob obviously has a comp that says he's 80K above where he bought. But is it really a comparable property, or is he being optimistic. Also, you have to look at the original condition: did he buy at a discount (short sale or fixer upper), not to mention if he had to invest additional money to make the property comparable (renovation). Timing-wise, when was the comp, and is it reasonable to expect the same value today. There's also the possibility this is a 10M property, so 80K is just loose change. So the ball is in honobob's court to give us some more information: what area or complex is in general selling 80K above 2008 (so we can verify those prices for ourselve), or under what conditions (discount or renovation) was the property cheaper. I could understand if you didn't want to tell us, but then just say so instead of beating around the bush with this thread.
PS: I am not an economist or a financial adviser, as if that wasn't obvious, but I like to play one on the internet.
Bought 3/14/2001 for $850,000 and sold 11/23/2011 for $1,650,000!!!!!!!!!!!! Made about $80,000 a year plus the living or rents.
Seriously, nobody making money?
Bought 3/14/2001 for $850,000 and sold 11/23/2011 for $1,650,000!!!!!!!!!!!! Made about $80,000 a year plus the living or rents.
Seriously, nobody making money?
Did you miss the entire discussion - this was about units bought/sold since 2008.
Unit 304, bought 3/2007 for $1,625,000 now listed for $1,328,000
Or how about this one
Unit 704
Listed in 2009 for $2,950,000 now listed for $999,000
Oh my
I'm sure if we search all night we'll find something - my point all along is, property bought in the 2008 timeframe has not appreciated, in most cases.
I'm off to happy hour - I've chimed in enough on this one.
Did you miss the entire discussion - this was about units bought/sold since 2008.
The OP stated:
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.
you're the one that kept going off on tangents when you were challenged about your statement "what's the rush?"
So is the market a little softer since 2008? Depends where and the type of property. Are some people making money on properties they bought since 2008? YES! Are they giving away houses on Ala Moana Blvd cause they're worth nothing? MMMM Are houses so cheap now that people are buying two? Actually the smart people are.
I tried to find the comic video that you remind me of. A guy out bids himself at an auction and when they tell him he won the auction they ask him what he wants to do with the item he states he wants to put it back on auction. Seriously funny.
Unit 304, bought 3/2007 for $1,625,000 now listed for $1,328,000
here's how i addressed unit 304 in an earlier post:
Coral Strand exact unit sold 4/4/2003 for $750,000!!!! OK, they did a remodel but someone that WAITED until 2007 when the market was HOT HOT HOT threw money at the owner (say $875,000 more) four years later and then that owner tried to flip 3/11/2008, not even a year later, for $1,965,000!!!!! Duh!? Yeah, wait until the market gets hot again, or the day before what is that date again?
It's a perfect example of why NOT to wait until the market is HOT! I know people that were in the market 2003 and didn't buy until 2007 when they got caught up in the market and threw money at properties just trying to outbid all the other idjits who waited.
Now I like how you're making VALUE assumptions based on ASKING prices! Geez.
Back to the OP: the rent to retire or investment owning is causing havoc with "locals" trying to buy places to live.
Out of the 5 condo complexes in Ko'Olina (where I live) only one qualifies for FHA or conventional loans, due to the low owner occupancy rate. In our complex, the rate has dropped to 30% owner occupied. And the absentee owners are having to turn these condos into vacation rentals to keep making the payments, which in turns disrupts those living here full time and drives the lease prices out of range for those who already live here and need affordable living.
Back to the OP: the rent to retire or investment owning is causing havoc with "locals" trying to buy places to live.
Out of the 5 condo complexes in Ko'Olina (where I live) only one qualifies for FHA or conventional loans, due to the low owner occupancy rate. In our complex, the rate has dropped to 30% owner occupied. And the absentee owners are having to turn these condos into vacation rentals to keep making the payments, which in turns disrupts those living here full time and drives the lease prices out of range for those who already live here and need affordable living.
Hi Joliefille,
Do you find this problem with rent-to-retire owners occurring everywhere on Oahu or is it primarily limited to more the "destination/resort" area's such as Ko'Olina, Waikiki, etc) ?
What I found when I was researching the Waikiki area was that as you move away from Waikiki, owner-occupancy rates went up. You pretty much just need to cross the Ala Wai and then most of the buildings have much better owner-occupancy rates.
I would normally think if all these units are being turned into rentals (lang-term rentals at least), that you should see rental prices drop if the supply of rental units begins to exceed demand because so many people turn their units into rentals.
But I know Hawaii is not a normal market. In a normal market, demand for property is largely driven only by the local population. And prices then become reflective of local wages and demand. Same for rents. But property demand is Hawaii draws from a world-wide population. So it distorts pricing relative to local wages and demand.
On the mainland, I've seen condo associations adopt rules that require owner-occupancy. They do not allow unit owners to rent their units. They adopt these rules into their by-laws to combat low-occupancy rates and preserve favorable financing for those looking to buy or sell their units. I've not spent any time looking to see if this has an effect on the pricing for units but I would assume it would lower demand for the building and thus lower pricing. But that's just speculation.
Anyway Joliefille, I appreciate your comments in the thread and it does add a perspective that most people looking for a rent to retire property may not consider. I find the Hawaii market very interesting because it is very unique in my opinion.
Another reason why buying is good. Rents up 50% since 2005!
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