Buying in Hawaii is difficult.

[rya96797]

agreed. It's already enough of a challenge to operate a newly purchased rental at $0 loss. Now you add the risk of being an illegal rental on top of that, and it compounds the risk much higher.

Operating an illegal rental is kinda like evading taxes. Everything is all good until you actually get caught for it. Then the hammer comes down and places you in a VERY tight spot.

Say you have a $1 mil property with 300k in equity. The City fines you 300k, you can't pay, and your property goes to foreclosure. They sell the property for $900k, after paying off the bank, they net $200k. So you're $100k short on the fine. At this point, maybe they'll come after your primary residence for the $100k?

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City seeks crackdown on illegal vacation rentals - Hawaii News Now - KGMB and KHNL

KAILUA, OAHU (HawaiiNewsNow) -
Over the past five years, the city has issued more than $300,000 in fines against the owner of an illegal vacation rental in Kailua.

Now, the city is seeking to initiate foreclosure proceedings on the home after the owner has failed to pay the fines.

"The city needs to make an example of folks who continue to thumb their nose not only at the city but also at the community," said City Councilman Ikaika Anderson.
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Atta says the city is also considering increasing the maximum fines from $1,000 a day to $5,000

[TwoByFour]

There is a difference between a vacation rental and a long term rental. You do not need a permit for a long term rental, at least not in Maui County. You make more money off short term renting but it is kind of pain to deal with.