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Old 10-23-2008, 01:57 PM
 
1,811 posts, read 7,093,788 times
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What are your opinions on investing in a rental/vacation property in Hawaii? Specifically:

1) Has the market declined to the point where there are bargains to be found?
2) Where would you invest?
3) How does one go about marketing a property for the vacation rental market?

We would be doing this for the long-term, not to flip the house. So it seems to me that Hawaii is a great long-term investment, even if real estate is down in general, since they are not making any more land on the Islands (well except for the lava flows on the Big Island). My wife has relatives on Oahu and the Big Island, so we would be looking to come each year for a couple of weeks ourselves, and then rent the unit out for the rest of the year.
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Old 10-23-2008, 02:43 PM
 
Location: Kailua, Oahu, HI and San Diego, CA
1,178 posts, read 5,449,018 times
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Quote:
Originally Posted by coolcats View Post
What are your opinions on investing in a rental/vacation property in Hawaii? Specifically:

1) Has the market declined to the point where there are bargains to be found?
2) Where would you invest?
3) How does one go about marketing a property for the vacation rental market?

We would be doing this for the long-term, not to flip the house. So it seems to me that Hawaii is a great long-term investment, even if real estate is down in general, since they are not making any more land on the Islands (well except for the lava flows on the Big Island). My wife has relatives on Oahu and the Big Island, so we would be looking to come each year for a couple of weeks ourselves, and then rent the unit out for the rest of the year.
It sounds like you are talking about a vacation rental, not a long term rental, since you want to use it yourself for "a couple of weeks". The following is based on that.

I have some well-researched opinions:

1) The market has not declined as much as it is going to.
2) I would invest where running a vacation rental is legal. At the moment, that is NOT on Oahu (unless you buy one that already has a permit - they are not issuing more) or Maui - Don't know about the Big Island - On Kauai, I know it is legal if the property is in a Vacation Destination Area (VDA) and has been running a while - Don't know about new ones - Princeville is one VDA, I know, and Poipu might be another - check to be SURE!

Here is some info about Kauai:

Kauai Vacation Rentals

3) Join a group made up of Vacation Rental Owners to find out about marketing - it is a very complicated subject, but two important parts are a) Build or buy your own web site, and b) advertise on Portals, like VRBO.com. A great place to learn from owners is:

vacation_rentals : Vacation Rentals- For Owners & Renters

More advice: Study the tax code before you decide - get IRS Pub 527, here:

http://www.irs.gov/pub/irs-pdf/p527.pdf

Hank
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Old 10-23-2008, 03:22 PM
 
Location: Big Island of Hawaii
1,375 posts, read 5,831,857 times
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There are some situations on the Big Island where there are high inventory levels and slow sales, making for a good environment for finding (or negotiating) a well-priced property.

If you know the island, you know that there are a lot of factors to consider when buying here....so research is key.

As for predicting the market...I try to stay away from that--there are no absolute guarantees on an island such as ours. Once you've made the decision to buy, then my real work is to be sure you are getting the best possible price in the current market!
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Old 10-23-2008, 03:48 PM
 
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Thanks to both of you for your advice.

I don't really know the Big Island well, but I do know prices are significantly less than the other islands -- maybe for a reason. I know there are some pretty poor areas. My wife's relatives live in Volcano and sometimes complain about the vog. What factors are important to consider?
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Old 10-23-2008, 09:54 PM
 
45 posts, read 163,331 times
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I have been researching (many hours every day!) the big island of Hawaii for several weeks now with the intent of moving there in the near future. Since we have not visited yet, my findings are based only on internet and forums information.
Research IN DEPTH the various properties you find for sale. The terrain, weather, services available, subdivision fees, regulations, road conditions, elevation, vog, lava zones, insurance, property taxes, zoning, etc., all vary greatly, often even within one single community.
I have discovered a lot of properties are built and sold as "not permitted". This may mean that you will not be allowed to reside in the property building until it has been brought up to code. Some portion, or all, of the building may have to be torn down because it is deemed inhabitable. (don't know much about this yet). Check the building codes..here is one site I found that reviews the codes:
Information Sheet for Residential Construction (http://www.co.hawaii.hi.us/permits/info_const.html - broken link)
I would really spend as much time as you can afford to check into every little aspect possible before considering a purchase. There is a reason some of the properties are inexpensive and not just due to the weak real estate market.
Personally, I have not yet found any real "bargains" when it comes to getting what you are paying for. Those might come up in the near future as more people advertise their homes for sale because of pending foreclosure or anxiety and fear of the upcoming recession. They might bail out and fire sale their home. With the unstable economy it is a "crap shoot" as they say when it comes to real estate. I am just going to keep watching and see what happens.
Good luck to you!
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Old 10-24-2008, 01:54 AM
 
Location: Kilauea, Hawaii
211 posts, read 818,405 times
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I don't think having a property for a vacation rental is the best idea. In the long run you really will not be making that much money. Consider you use an agency they take half and of course there is all the other expenses. A lot of people market it themselves on CraigList and trying to remember the other something like owners rent. You will be lucky to rent it out for 3 months of the entire year. My friend has a really nice 3 bedroom brand new high end house in Hanalei Kauai which he rents out and so far this year it has rented for 3 weeks.

Good luck..
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Old 10-24-2008, 07:31 AM
 
Location: Kailua, Oahu, HI and San Diego, CA
1,178 posts, read 5,449,018 times
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Quote:
Originally Posted by bresdo View Post
I don't think having a property for a vacation rental is the best idea. In the long run you really will not be making that much money. Consider you use an agency they take half and of course there is all the other expenses. A lot of people market it themselves on CraigList and trying to remember the other something like owners rent. You will be lucky to rent it out for 3 months of the entire year. My friend has a really nice 3 bedroom brand new high end house in Hanalei Kauai which he rents out and so far this year it has rented for 3 weeks.
I beg to differ.

Here are some actual calendars, showing weeks booked ahead, in Hanalei:

Taj Ma Hale - Vacation Rental Availability Calendar

Hale Lu Ya - Vacation Rental Availability Calendar

Hale Lu Ya - Vacation Rental Availability Calendar

Hanalei House - Vacation Rental Availability Calendar

NamiNori House - Vacation Rental Availability Calendar

Hank
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Old 10-24-2008, 11:19 AM
 
1,811 posts, read 7,093,788 times
Reputation: 1018
Quote:
Originally Posted by bresdo View Post
I don't think having a property for a vacation rental is the best idea. In the long run you really will not be making that much money. Consider you use an agency they take half and of course there is all the other expenses. A lot of people market it themselves on CraigList and trying to remember the other something like owners rent. You will be lucky to rent it out for 3 months of the entire year. My friend has a really nice 3 bedroom brand new high end house in Hanalei Kauai which he rents out and so far this year it has rented for 3 weeks.

Good luck..
Thanks for the advice. I’m not sure if I will buy, but am just exploring to see if the Hawaiian market is on sale now like the mainland market.

Again, I wouldn’t be doing this for short-term profit. As long as I could basically break even, that would be acceptable. I don’t have a mortgage on my house on the mainland, so I could afford to make a payment now and then if it didn’t book. Of course I wouldn’t want to do that every month.
I don’t know that I’d want to live there all year round right now, because my job is not really transferable to the Islands, but we sure enjoy visiting.

I’d mostly look at it as a long-term opportunity to gain a foothold in Hawaii. My wife’s dad was born on Oahu around 1940, but left when he was in his early 20’s. Her aunts and uncles who stayed all ended up with amazing places that us mortals can’t afford anymore.
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Old 10-26-2008, 01:55 PM
 
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The market will continue to go down, but no one knows how far and how long. The key is to buy preferably in the bottom third or so of a bell curve of going down/bottoming out/going up. And no neighborhood is back out the other side on the "going up" side of the bell curve. That is not known until a market is past the bottom.

Start researching neighborhoods you might want to buy, pick your potentials, and then start following them in particular, because every neighborhood will have their own timeline on that bell curve, will reach their bottoms at different times, perhaps as far apart as a year. Once you have your neighborhoods picked out, start following a few addresses in particular, on sites like Zillow (which are not accurate for a particular address but are accurate to show trends in a neighborhood -- doesn't matter if they have an address correct, just use it to show the trend). For example if 123 Main St is worth 600,000 today, check back in 30 days on the same address and see if Zillow or another like site has devalued it. Also watch recent sales, click on those properties on the map, and it will show a "sold" amount and a "Zillow value" amount, and if the Zillow amount shows higher than the sold amount, the neighborhood is moving down. Other copycat sites will work the same.

Also, watch the real estate values here on City Data showing trends. Search cities from the home page and scroll down for the Market Value graph, and you'll see some cities are showing sharp downward trends and some are not, probably still to come.

Also, watch for when the credit crisis begins to ease. Right now finding money, ie., loans, is waaaay harder than a year agao, and even much much harder than 2 years ago.
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Old 11-02-2008, 02:16 AM
 
242 posts, read 1,079,669 times
Reputation: 209
Default Is now a good time to invest in Hawaii Real Estate

I have to tell you this, but if you can do the MATH about how the economy crisis is going. I would not touch Hawaiian Real Estate with a ten foot pole. It is really bad out there, people are LOOSING JOBS on Maui, I know that for a fact. Hotel occupancy is really down. This economy will never be UP TO PAR.. I would not invest there. Do your math and connect the dots. You will eventually lose your money. MY TWO CENTS, we are entitled on here to Voice our Opninions. That is exactly what I am doing here.

Last edited by 7th generation; 11-02-2008 at 02:34 PM.. Reason: Please visit this subject on the politics and Other Controversies forum.
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