Want to retire in Hawaii? A 20 year plan;(updated)

[KauaiPono]

The banks are offering such terrible interest rates right now that keeping my money in them is a losing proposition. The stock market is too inflated because of it and too risky to put my money in.

Real estate in Kauai is unlike other real estate. Limited land due to zoning laws, no new building projects. Population is growing. It is hard to find rentals and as such the rental rates are high. I am making around 3% on the total investment per property per year in rent. (this does not account for the rising prices of real estate over the last few years and coming years so my money is growing but not liquid.)

This original plan was born out of a love for Kauai, the subsequent plan of the extra rental properties came about my influx of money, from the low interest rates the banks offer and inflated risky stock market. I was making money off the first rental from day one, so it made sense to buy more.

I again realize that this is not an option for everybody.

[Travelassie]

Originally Posted by KauaiPono

Yes Hotcatz that is true, I was not giving my example as an example for all. I am speaking directly to someone who is affluent; looking to retire in their golden years and want to start planning now.

By the way even if the real estate markets tank again, my properties are all paid off, except one which will be soon, so I am not worried. I do not need the rents to pay off mortgages.

The sad thing about Hawaii is that it is very hard to make a lot of money on the island(s). It is easier on the mainland. It is almost as though a person born on the island has to leave, go to college on the mainland and start a successful career on the mainland and make enough money just to get back. Sad but true.

Well, I'm just curious here. I'm retired and already where I want to be, but I've heard via the grapevine that my estranged sister and her husband are in the process of purchasing a house and moving to Hawaii- I have no idea where it's located or any details. Anything I know is based on my sister's bragging to her neighbors who've told my mother about it, so I'm hearing it from mom..

I know they've had a timeshare in Hawaii for years, and loved it, but I also thought one had to be very wealthy to live in Hawaii. I don't know what my sister and BIL's finances are, but he's a plumber who's apparently done fairly well in the business he started after he lost his job with a local company about 10 years ago. My sister's a nurse but has always been much better at spending money than making it-always considering a regular job beneath her. I hope they do ok in Hawaii but I know that despite my sister's claims, they aren't millionaires ( I seriously doubt they have a 6 figure income). They would have the money, I assume, from the sale of their house in central Pennsylania, but it's a depressed area so I don't know how much they'd get for it.

So my question is, would it be possible for my BIL to make enough money as a plumber/handyman in Hawaii to support them, even modestly? I know he also gets SS (not sure my sister does), and I'd guess they have some savings, but with expenses reportedly so high in Hawaii I'm kind of skeptical about my sister's grandiose plans to live as a Queen in Hawaii, LOL. But who knows?

Thanks in advance for any information you can provide.

[MauiPartTimer]

Originally Posted by Travelassie

Well, I'm just curious here. I'm retired and already where I want to be, but I've heard via the grapevine that my estranged sister and her husband are in the process of purchasing a house and moving to Hawaii- I have no idea where it's located or any details. Anything I know is based on my sister's bragging to her neighbors who've told my mother about it, so I'm hearing it from mom..

I know they've had a timeshare in Hawaii for years, and loved it, but I also thought one had to be very wealthy to live in Hawaii. I don't know what my sister and BIL's finances are, but he's a plumber who's apparently done fairly well in the business he started after he lost his job with a local company about 10 years ago. My sister's a nurse but has always been much better at spending money than making it-always considering a regular job beneath her. I hope they do ok in Hawaii but I know that despite my sister's claims, they aren't millionaires ( I seriously doubt they have a 6 figure income). They would have the money, I assume, from the sale of their house in central Pennsylania, but it's a depressed area so I don't know how much they'd get for it.

So my question is, would it be possible for my BIL to make enough money as a plumber/handyman in Hawaii to support them, even modestly? I know he also gets SS (not sure my sister does), and I'd guess they have some savings, but with expenses reportedly so high in Hawaii I'm kind of skeptical about my sister's grandiose plans to live as a Queen in Hawaii, LOL. But who knows?

Thanks in advance for any information you can provide.

I have a tough time imagining a plumber who's done "fairly well" owning his own business and a nurse not making six figures.

Not nearly enough info to make much than an informed guess, but both of those jobs are ones that do exists on the islands and ones for which there will always be demand for good ones, so it's totally conceivable that they could afford to live there. How well they live probably depends on where they're living. Prices vary dramatically between islands and cities.

[MauiPartTimer]

KauaiPono,
Great stuff and thanks for sharing. Your original post contained lots of good advice and your story isn't too different from ours. We're in our late 40s, bought a condo on Maui in 2010 that is now free and clear, and are to the point where we'll be able to (modestly) within the next three years. (Our investment guy says we can do it now, but we're conservative and will probably go another year or so before moving full-time.)

We might differ in opinion on the details as we've had success with stocks and bonds as well as real estate, but the idea is the same; self-discipline is the key.

The "save save save" part is excellent advice and one that many people miss. I'll add that one thing people miss is the tremendous power of two things:
* Saving early - The power of time when investing is awesome, especially if one has the opportunity to participate in a retirement plan with employer matching. I started doing that from day one in my career and because it came out of my pay before ever seeing it in my paycheck, I never felt it.
* Living below your means - My wife and I are in professional jobs and are paid fairly well, but we've always made an effort to stay well within what we can afford. There have been bumps in the road like a failed business during the recession and depressed home prices, but we plugged along and never felt the need to have the most expensive house (or mortgage) for which we could qualify and stayed out of debt. Way too many people complain about their finances, yet feel the need to get a new car (and car loan) every five years or get a bigger house when the one they're in is plenty big.

Congratulations of your success thus far and best of luck in the future.

[kauailover]

Originally Posted by KauaiPono

The banks are offering such terrible interest rates right now that keeping my money in them is a losing proposition. The stock market is too inflated because of it and too risky to put my money in.

Real estate in Kauai is unlike other real estate. Limited land due to zoning laws, no new building projects. Population is growing. It is hard to find rentals and as such the rental rates are high. I am making around 3% on the total investment per property per year in rent. (this does not account for the rising prices of real estate over the last few years and coming years so my money is growing but not liquid.)

This original plan was born out of a love for Kauai, the subsequent plan of the extra rental properties came about my influx of money, from the low interest rates the banks offer and inflated risky stock market. I was making money off the first rental from day one, so it made sense to buy more.

I again realize that this is not an option for everybody.

Thanks for the reply,

I agree that the rental housing market is limited right now on Kauai for both sides, investors and renters alike and I too feel better about real estate investing vs stocks.

We are on a slower path than you even though we purchased a home on Kauai as a place for future retirement back in 2003. Its been a good investment with just a few bumps (repairs) along the way. OK tenants and only 2 months of lost rent in 11 years, not bad!

Keeping the dream alive!

Aloha, Kauailover

[KauaiPono]

One of the biggest problems with being a landlord on Kauai is the rate at which you have to replace appliances. The island is tough on them. They break down quite a bit and the air is tough on them aesthetically too (rust). Those have been my bumps.

In three years, I have bought four dishwashers, two stoves, two refrigerators, two washers and dryers, and three microwaves for my units.

Even if something simple breaks down, the fix is too costly per hour and too timely for the part. It is easier just to buy new ones even if it is more expensive.

I tried one time to fix a dishwasher and it costs about 50% of what a new dishwasher would cost, only to have it break down a few months later and end up buying a new one. However, that is all part of the costs of being a landlord.

[whtviper1]

Originally Posted by KauaiPono

In three years, I have bought four dishwashers, two stoves, two refrigerators, two washers and dryers, and three microwaves for my units.

When they ask, would you like to buy an extended warranty - I'd give some serious consideration to that question.

Between my rentals and my residence, I've never had to replace an appliance the past 6 years.

[KauaiPono]

I agree, but I am mostly replacing appliances that have been part of the purchases of the rentals, so I did not have the option. Only the dishwasher in one rentals has caused me the most problems and I failed get the warranty. I have not and will not make the mistake again.

Thanks

[kauailover]

I really liked it when Sears was on the Island. I could shop online for appliances and order over the net and even set up delivery. They had a lot more to choose from vs Home Depot. HD doesn't have as much stuff in stock when you need it but we bought our last fridge through them.
I usually check reviews on appliances and opt out on the extra warranty. But sometimes ya get a lemon!

Yeah, the salt does take its toll on anything metal...lol I'll be replacing some aluminum frame windows at some point.

I finally got around to having a new roof put on this year. Found a great roofer through a buddy that lives part time on Kauai. PM me if you ever need a roofer referred to you. I could have went with a fly by night roofer and saved $, but its better to have a quality job done and get a guy with insurance, especially on a 2 story house IMO.