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If hotels on Oahu are running at 80% occupancy maybe it's time to demand they set aside rooms for long term rentals. If they set aside 10% of hotel rooms dedicated to local residents in areas they actually work then that would help alleviate LT housing issues.
First of all this is ridiculous. Secondly, it is illegal. Hotels are not allowed to rent their legally defined "lodging" units as long term "dwelling units" without having to make major physical improvements to the units and likely the property itself -both of which are either impossible or entirely cost-prohibitive.
On the other hand, Airbnbr's want to have the luxury of having a property that they can rent long term if they wish... or short term if the tourism market is hot. All without having to do much of anything other than modify their internet ads. Sounds fair to me.
Amen to that. And they should be representing the interests of the majority of residents first, and the tourists second. This bill seems to do that on the surface.
The majority of residents are completely dependent on tourist. Every road, every home, every business, the whole lifestyle owes it all to tourism. Be careful what you wish for, Chinese tourism is already down 25% from the same period last year. At least we will always top the list for the worst state for small business in the country. Too much regulation.
screws tightening on illegal rentals. So instead of paying no taxes, looks like they may be forced to remit TAT & GET to the State. The illegal activity is still hugely profitable, even with the taxes. But the playing field is a bit more leveled with legal condotels and hotels.
screws tightening on illegal rentals. So instead of paying no taxes, looks like they may be forced to remit TAT & GET to the State. The illegal activity is still hugely profitable, even with the taxes. But the playing field is a bit more leveled with legal condotels and hotels.
I’m not sure I understand how this senate bill would interact with 89. I think 89 pretty well regulates everything and allows for a good crackdown. The Senate bill seems like it simply is a way to get GET and TAT from illegal operators ... which seems almost like turning a blind eye to the illegal activity as long as they pay tax. From what I read, I think I’ve should veto the senate bill and Caldwell should sign 89.
The majority of residents are completely dependent on tourist. Every road, every home, every business, the whole lifestyle owes it all to tourism. Be careful what you wish for, Chinese tourism is already down 25% from the same period last year. At least we will always top the list for the worst state for small business in the country. Too much regulation.
I get it. There is high dependence on tourism. But I don’t think losing the illegal operators will itself have a big impact on the overall economy.
The bigger impact will be when the economy in general takes a cyclical downturn and we see a few years of diminishing tourism visitors. Like happened after 911 or after the hurricane in Japan knocked out the nuclear reactor.
As for the Airbnbr's, as far as I'm concerned they can go pound sand. If they paid the same commercial property taxes (four times what the illegals are paying), GET and TAT, they wouldn't lift a finger and even bother with renting their homes out to transients because the profit delta (vs renting long-term) would be laughable. But they want their cake and eat it too - artificially dirt cheap operating costs with windfall revenue. I don't always agree with the general public because the average person has the mental capacity of a toaster... but with this, there is very little to argue. If you want a legal Airbnb, there are THOUSANDS of condotel units on resort-zoned land you can buy in Waikiki. As Jeers stated, go at it.
I rarely see anyone take this point of view but I largely agree. I own a condo unit in a popular vacation building in Waikiki. When I perform an analysis of renting to a long term tenant vs turning it into a legal vacation rental unit, I just don’t think it’s worth it to go to vacation rental. Unless I just want access to use it myself. As you mention my property tax would increase 4x over what I pay now. My property management fee would increase from 8% to 21%. My electric bill would increase because tourists use the a/c a lot. Versus a long term tenant who pays their own electric bill.
Anyway, by my analysis I’d need to rent it 21 or 22 nights per month as a vacation rental to break even on a net basis with a long term tenant.
Before they changed the property tax on vacation rentals to the much higher amount, the numbers were better and if I self managed the numbers would be better but it might be harder to get consistently high occupancy over time.
As an illegal operator, I could charge less (because no GET or TAT charged to guests) and my property tax and management fees would be lower so I wouldn’t need as high occupancy to break even. Heck, I could even add a GET or TAT to the final bill and just not remit it to the state as an illegal operator.
The only way I’d switch from current long term rental to LEGAL vacation rental is if I needed or wanted to use the unit myself.
I rarely see anyone take this point of view but I largely agree. I own a condo unit in a popular vacation building in Waikiki. When I perform an analysis of renting to a long term tenant vs turning it into a legal vacation rental unit, I just don’t think it’s worth it to go to vacation rental. Unless I just want access to use it myself. As you mention my property tax would increase 4x over what I pay now. My property management fee would increase from 8% to 21%. My electric bill would increase because tourists use the a/c a lot. Versus a long term tenant who pays their own electric bill.
Anyway, by my analysis I’d need to rent it 21 or 22 nights per month as a vacation rental to break even on a net basis with a long term tenant.
Before they changed the property tax on vacation rentals to the much higher amount, the numbers were better and if I self managed the numbers would be better but it might be harder to get consistently high occupancy over time.
As an illegal operator, I could charge less (because no GET or TAT charged to guests) and my property tax and management fees would be lower so I wouldn’t need as high occupancy to break even. Heck, I could even add a GET or TAT to the final bill and just not remit it to the state as an illegal operator.
The only way I’d switch from current long term rental to LEGAL vacation rental is if I needed or wanted to use the unit myself.
Your analysis is wrong. Say you get $1,300 long time tenant. Short time the unit it wouldn't be outrageous to think u could gross $4,000.
Remember u already pay Get on long time. Short time adds 9% TAT tax.
I'm an Evil capitalist. I'm converting my unit in a resort zoned building to STR. Show me the$$$$$$$s.... Lol. I'm projecting Net of way more than what I get NOW.........
Your analysis is wrong. Say you get $1,300 long time tenant. Short time the unit it wouldn't be outrageous to think u could gross $4,000.
Remember u already pay Get on long time. Short time adds 9% TAT tax.
I'm an Evil capitalist. I'm converting my unit in a resort zoned building to STR. Show me the$$$$$$$s.... Lol. I'm projecting Net of way more than what I get NOW.........
Jeers, in what building will your short term vacation rental be located in ? Kapiolani Terrace as you’ve mentioned before ? I’m interested in your analysis. What occupancy rate are you expecting ? Will you be managing yourself and using Airbnb or hiring a management company already working in the building ?
To gross $4,000 you’d need to average 25 nights each month at $160 nightly rate (unless the 4K includes the get & tat.
Anyway, I’d be curious to know your analysis and expectation ?
Just use Aqua Palms of Aqua Surf as example. Long time boy or girl is $1,300 /$1,400. Short time should be 2.5 to 3 times the long term rent.
Yes your expenses will go up but no way 2.5 to 3 times.
Mines not operating yet. My real life napkin analysis.Yearly tenant $2,100. STR gross of$5,500-$5,700. Looking at 89% occupancy.
Incremental revenue goes up huge. Incremental expense doesn't go up huge. Property tax goes from $120 to $300 or so. Management goes from 10% to 15%.TAT tax is 9%-only new expense.
Down n dirty LT tenant I nett $750. I'm projecting easy nett of at least $2,000. State happy. I'm happy. Tourist happy. Win win win. .lol.
Last edited by Jeers McGee; 06-21-2019 at 07:22 PM..
I have 2 regular rentals, both rented out by couples long term, one is 4 years, the other might be 6-7 years. I thought about the short term rental thing (very) briefly, years ago before it blew up this year. I rejected converting them on principal, even though I'd make a lot more money. Illegal tvu is not pono. You literally are profiting at the expense of the rest of the community.
I remember some illegal rental supporters saying that they have no negative affect on hawaii's housing issue. OREALLY? So if myself and tons of other landlords converted to tvu and kicked out the tenants, that's not going to have a negative effect on them?
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