Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I believe you are correct. I didn't factor in the cost basis timeframe AND I went with my point of reference of a recent house purchase in Va. in which I was lucky to purchase a home below market value and associated a higher rent return with that below market price.
Great example! Are you seeing what I'm seeing? A slight diminishing rate of return for higher priced homes? For example, using the above as an example (excuse the sin of comparing a condo and a SFH).
Lets say you had $500k to spend (invest - no mortgage). The SFH in Traditions might yield $2500/mo gross income. -vs- TWO southpointe condos ($500k), yielding, lets say $1700/mo/unit = $3400/mo gross income. Nice $$ income difference considering taxes and insurance are about equal to the SFH.
I wonder where the sweet spot is? Are 2 smaller cheaper SFHs more profitable than 1 larger SFH if the prices were equal? What do you think of those sub <$100k 2br 1.5 ba condos off of Kahului Beach Road? Bad area? College town?
So, in reading everyone's response, the general impression I felt was that investing in Maui real estate may not be too profitable now unless the goal is to buy and hold (break-even), until a future move-in date. What is the alternative? Is there another investment avenue anyone would recommend while living on Maui? (hopefully real estate related)
I feel pretty committed to real estate because it's what I know. I'm too scared of the stock market. At least with real estate one doesn't have to watch the "nest egg" slowly dwindle down -- there is appreciation and even a modest 5% - 7% gain. Suggestions?
Honua Kai is a great investment for cashflow, for single family homes the money is better for a house that has an ohana(extra cottage/in-law suite). 4 star resort, and one of the newest buildings on the Kaanapali strip.
With what's currently on the market
699k for the lowest priced studio at the complex currently.
Occupancy rate here is about 85% (studios at this complex have higher occupancy)
Annual gross revenue is about 80-90k (Numbers vary based on view)
TAT/GET 9.25% +4.166% ($12,150)
Property manager fees is about 30-35% ($31,500)
Maintenance fees $982/month ($11,784)
Annual taxes approximately $6000 or $500/month
There's another studio for sale around $799k. Income would be the same.
Not the 5% you are looking for, but its one of the better values here on island. Keep in mind that some vacation rentals do not include electricity and that will add to your overhead. This is turn key so no work needed.
If you want something with a guaranteed 5% gain there's a special at the Ritz Residences right now.
3 year leaseback for 5% of the purchase price. They pay all taxes/hoa/reserve fees. But cost is higher than what is currently being sold by owners. So you would break even at the end of 3 years, unless prices appreciated significantly, and if prices drop over the next 3 years you would lose equity. Prices there start in the mid 1.5Million range.
As for the House Ohana combo. Going to use a home for sale in Wailuku as an example. Tear down/full gut remodel condition priced at $520k. Decent neighborhood. Ocean view, walking distance to Baldwin Highschool/Maui Community College. Cons are that you are close to the stadium/MACC so outdoor concerts/sport events can be heard at night. Most people like the ambiance, but its not for everyone.
4 Bed 2.5 Bath Main
1 Bed 1 Bath cottage
Rents from $2500-3,000 (ocean view)
Cottage $1,000-1400
Needs significant remodeling, and you would probably have more on costs especially if you are doing it yourself. Depending on what you remodel it with, and its cost you might hit your number if you are renting out both homes. Keep in mind that after all your work, you are probably going to end up with something closer to the returns off the vacation rental. Unless you are renting out both main/cottage. (If you do and you aren't on island you'll have to hire a property manager for about 10% of rental income too).
Again, numbers will vary for individuals, and this is by no means a guarantee of these incomes.
So, in reading everyone's response, the general impression I felt was that investing in Maui real estate may not be too profitable now unless the goal is to buy and hold (break-even), until a future move-in date. What is the alternative? Is there another investment avenue anyone would recommend while living on Maui? (hopefully real estate related)
I feel pretty committed to real estate because it's what I know. I'm too scared of the stock market. At least with real estate one doesn't have to watch the "nest egg" slowly dwindle down -- there is appreciation and even a modest 5% - 7% gain. Suggestions?
If real estate is what you know, I would suggest separating you "residence" from your "investments". At least for a little while until you learn the Maui market.
If you are moving to Maui, purchase a Maui home or condo that you would enjoy living in as your residence first. Then you can become more familiar and more comfortable with the market over time and make a better "investment" decisions.
And if you want "investments" now, invest in markets you know well (i.e. where ever you live now). You can always do a 1031 Exchange of your investment properties once you've learned Maui market. And in the mean time, you will likely make a better "investment decision" in a market you know.
Like others, I purchased a condo in Hawaii not as an investment but for my own future use. It has turned out to be a good purchase, but I don't look at it as an investment. I purchased specifically in an ocean front building that is zoned for Vacation Rental (Waikiki not Maui) so I could rent it out when ever I was not using it. However, I've had the same long-term tenant in the unit for quite a few years. It covers the expenses on the unit and locked me in at a low purchase price (bought a few years ago). That's all I want out of it at present time.
And yes, while the monthly cash flow just covers expenses, I don't care. I have a great local tenant and I'm slowly paying it off in preparation for my own use. And at the same time, units are now selling for a much higher price in the building than when I bought it. So if I were to change my plans, my return would be via increased equity rather than monthly cash flow.
If real estate is what you know, I would suggest separating you "residence" from your "investments". At least for a little while until you learn the Maui market.
If you are moving to Maui, purchase a Maui home or condo that you would enjoy living in as your residence first. Then you can become more familiar and more comfortable with the market over time and make a better "investment" decisions.
Yep, that's the plan in a nutshell. We're also planning on visiting Maui again for a month before moving, renting a week in 4 different areas: Haiku, Kula, Wailuku, and maybe Wailea/Makena (not sure, we know we don't want to live where it is crowded). This is to experience "working life" on Maui and obviously get a better feel for the areas, commute, and proximity to stores/restaurants. etc. My wife and I will likely work near Kahului. If anyone knows of other quiet/spacious niche areas we'd love to hear about 'em. We were focused on Haiku and Kula -- and still are -- but were surprised by the real estate selections in Wailuku: 1-2 acre lots, open space, "some" views of the ocean, proximity to Kahului. etc. Oh, and yes, we've visited both Maui and Oahu before.
Quote:
Originally Posted by MitchTempo
Honua Kai is a great investment for cashflow, for single family homes the money is better for a house that has an ohana(extra cottage/in-law suite). 4 star resort, and one of the newest buildings on the Kaanapali strip.
With what's currently on the market
699k for the lowest priced studio at the complex currently.
Occupancy rate here is about 85% (studios at this complex have higher occupancy)
Annual gross revenue is about 80-90k (Numbers vary based on view)
TAT/GET 9.25% +4.166% ($12,150)
Property manager fees is about 30-35% ($31,500)
Maintenance fees $982/month ($11,784)
Annual taxes approximately $6000 or $500/month
There's another studio for sale around $799k. Income would be the same.
Not the 5% you are looking for, but its one of the better values here on island. Keep in mind that some vacation rentals do not include electricity and that will add to your overhead. This is turn key so no work needed.
If you want something with a guaranteed 5% gain there's a special at the Ritz Residences right now.
3 year leaseback for 5% of the purchase price. They pay all taxes/hoa/reserve fees. But cost is higher than what is currently being sold by owners. So you would break even at the end of 3 years, unless prices appreciated significantly, and if prices drop over the next 3 years you would lose equity. Prices there start in the mid 1.5Million range.
As for the House Ohana combo. Going to use a home for sale in Wailuku as an example. Tear down/full gut remodel condition priced at $520k. Decent neighborhood. Ocean view, walking distance to Baldwin Highschool/Maui Community College. Cons are that you are close to the stadium/MACC so outdoor concerts/sport events can be heard at night. Most people like the ambiance, but its not for everyone.
4 Bed 2.5 Bath Main
1 Bed 1 Bath cottage
Rents from $2500-3,000 (ocean view)
Cottage $1,000-1400
Needs significant remodeling, and you would probably have more on costs especially if you are doing it yourself. Depending on what you remodel it with, and its cost you might hit your number if you are renting out both homes. Keep in mind that after all your work, you are probably going to end up with something closer to the returns off the vacation rental. Unless you are renting out both main/cottage. (If you do and you aren't on island you'll have to hire a property manager for about 10% of rental income too).
Again, numbers will vary for individuals, and this is by no means a guarantee of these incomes.
Mitch, I love your examples! Please feel free to post more -- good stuff!
I believe you are wise in targeting SFHs with ohana's on them for the extra kick in rental income. This definitely seems the way to go -- plus one can avoid what appears to be super high HOA fees.
Incidentally, were you referring to 551 Liholiho St, Wailuku, HI 96793 as the fixer-upper for 520k?
Moderator cut: link removed, linking to competitor sites is not allowed
It does look pretty rough and would need an exceptional amount of work (even for a typical reno) but I renovate about 2 of these homes per year. I love 'em -- for the right price... What would you guess it would fetch after a tasteful remodel? (Granite, hw floors, ss appliances, etc)?
Moderator cut: link removed, linking to competitor sites is not allowed
Blown out interiors, walls (or lack there of), missing appliances, etc does not phase me. Quite the opposite actually -- it means I can reno to my taste. Its the structural and foundation issues that will knock you off your feet. And without any lateral supports or a shear-wall, that deck looks like it would come down if someone sneezed on it.
--
Can you check my math on the Honua Kai property you mentioned?
= $24k net income per year. This is extremely low unless, by living on Maui, I would in essence be my own property manager and not have to pay the $31k (seems unusually high - aren't most management fees 10% of rent?)
I'm strongly looking into the BRRR model -- "buy, renovate, rent, repeat" then sell after a few years, after the property has appreciated some. We've done the "buy, live, and move after 2 of 5 years" to capitalize on the tax-free capital gains income and are now looking to settle down in a home we'd build ourselves. 15 years of renovating fixer-uppers has taught me a thing or two and I have a collection of cool ideas I'd like to implement that few home-builders or even owner-builders have considered.
Yep, that's the plan in a nutshell. We're also planning on visiting Maui again for a month before moving, renting a week in 4 different areas: Haiku, Kula, Wailuku, and maybe Wailea/Makena (not sure, we know we don't want to live where it is crowded). This is to experience "working life" on Maui and obviously get a better feel for the areas, commute, and proximity to stores/restaurants. etc. My wife and I will likely work near Kahului. If anyone knows of other quiet/spacious niche areas we'd love to hear about 'em. We were focused on Haiku and Kula -- and still are -- but were surprised by the real estate selections in Wailuku: 1-2 acre lots, open space, "some" views of the ocean, proximity to Kahului. etc. Oh, and yes, we've visited both Maui and Oahu before.
Mitch, I love your examples! Please feel free to post more -- good stuff!
I believe you are wise in targeting SFHs with ohana's on them for the extra kick in rental income. This definitely seems the way to go -- plus one can avoid what appears to be super high HOA fees.
Incidentally, were you referring to 551 Liholiho St, Wailuku, HI 96793 as the fixer-upper for 520k?
It does look pretty rough and would need an exceptional amount of work (even for a typical reno) but I renovate about 2 of these homes per year. I love 'em -- for the right price... What would you guess it would fetch after a tasteful remodel? (Granite, hw floors, ss appliances, etc)?
Blown out interiors, walls (or lack there of), missing appliances, etc does not phase me. Quite the opposite actually -- it means I can reno to my taste. Its the structural and foundation issues that will knock you off your feet. And without any lateral supports or a shear-wall, that deck looks like it would come down if someone sneezed on it.
--
Can you check my math on the Honua Kai property you mentioned?
= $24k net income per year. This is extremely low unless, by living on Maui, I would in essence be my own property manager and not have to pay the $31k (seems unusually high - aren't most management fees 10% of rent?)
I'm strongly looking into the BRRR model -- "buy, renovate, rent, repeat" then sell after a few years, after the property has appreciated some. We've done the "buy, live, and move after 2 of 5 years" to capitalize on the tax-free capital gains income and are now looking to settle down in a home we'd build ourselves. 15 years of renovating fixer-uppers has taught me a thing or two and I have a collection of cool ideas I'd like to implement that few home-builders or even owner-builders have considered.
can you extend your stay longer? a week here and there really isn't enough time to really know the areas. will your wife be working regular commute hours in Kahului? the traffic getting in and out/past Paia is a nightmare and would add at least 30 minutes to her drive.
if you need commutable to town and work there really are no "quiet niche" areas only places with a bit more land. Wailuku and Kahului are getting more crowded everyday. you may find some lots still in Sandhills Wailuku which has some nice homes. all the lots I find in Wailuku 1 to 2 acres are in "proximity" to Kahului but that doesn't mean they are an easy commute. a very windy road once you pass Waihee town. out past Mendes Ranch.
if you need to work in Kahului the best place to live is either Kahului/Wailuku or Kihei for the easiest commute.
the house you Liholiho is an older neighborhood and not completely desirable area. think your resale dollar would top out quickly even with reno and your resale would be limited to people who want to live and or work on that side. if you do Kahului or Wailuku stick with the newer areas.
there really is no easy solutions here, everything is very expensive or it is in a part of town that isn't all that grand. come stay for as long as you can. you should also Zillow your target areas to get an idea on neighborhood prices and a google map street view can be very informative.
can you extend your stay longer? a week here and there really isn't enough time to really know the areas. will your wife be working regular commute hours in Kahului? the traffic getting in and out/past Paia is a nightmare and would add at least 30 minutes to her drive.
I suppose I could but what more would I learn/experience that I wouldn't pick-up in a week in one spot? We're thinking a month on Maui overall should get us 80% of the way there, picking up the remaining 20% over time. Yes, her hours would be typical I'm guessing (drug/alcohol therapist). She just walked in the door now after spending 1.5 hours on the drive home today -- typically it's 1 hour each way for her even when carpooling. We're hoping the commute (Haiku to Kahului and back) will be better...
Quote:
Originally Posted by hothulamaui
if you need commutable to town and work there really are no "quiet niche" areas only places with a bit more land. Wailuku and Kahului are getting more crowded everyday. you may find some lots still in Sandhills Wailuku which has some nice homes. all the lots I find in Wailuku 1 to 2 acres are in "proximity" to Kahului but that doesn't mean they are an easy commute. a very windy road once you pass Waihee town. out past Mendes Ranch.
Thanks for this! I'll start looking into those areas... nice.
Quote:
Originally Posted by hothulamaui
the house you Liholiho is an older neighborhood and not completely desirable area. think your resale dollar would top out quickly even with reno and your resale would be limited to people who want to live and or work on that side. if you do Kahului or Wailuku stick with the newer areas.
this is good to know - it did seem to be a much larger house than compared to it's neighbors. I've turn down many deals due to the renovations being capped by the price ceiling of the community. The Liholiho house was an example of a project/investment property -- I wouldn't want to live there personally. I'm still very interested in Haiku for an area to build.
Quote:
Originally Posted by hothulamaui
there really is no easy solutions here, everything is very expensive or it is in a part of town that isn't all that grand. come stay for as long as you can. you should also Zillow your target areas to get an idea on neighborhood prices and a google map street view can be very informative.
You nailed it on the head -- exactly what I've been doing. I have been wondering how good/acurate the zestimates on Zillow really were? Both for selling and renting... any idea? Is there a better website which provides a more accurate estimate? Sometimes Zillow can be WAY out there....
I suppose I could but what more would I learn/experience that I wouldn't pick-up in a week in one spot? We're thinking a month on Maui overall should get us 80% of the way there, picking up the remaining 20% over time. Yes, her hours would be typical I'm guessing (drug/alcohol therapist). She just walked in the door now after spending 1.5 hours on the drive home today -- typically it's 1 hour each way for her even when carpooling. We're hoping the commute (Haiku to Kahului and back) will be better...
Thanks for this! I'll start looking into those areas... nice.
this is good to know - it did seem to be a much larger house than compared to it's neighbors. I've turn down many deals due to the renovations being capped by the price ceiling of the community. The Liholiho house was an example of a project/investment property -- I wouldn't want to live there personally. I'm still very interested in Haiku for an area to build.
You nailed it on the head -- exactly what I've been doing. I have been wondering how good/acurate the zestimates on Zillow really were? Both for selling and renting... any idea? Is there a better website which provides a more accurate estimate? Sometimes Zillow can be WAY out there....
what you might not pick up is how the area lives during certain times of the day because you are out somewhere else looking around. might not realize how congested an area really is is you are not driving during rush hour.
living in Haiku and commuting to Kahului/Wailuku will not be a lot better than what she is doing now unless she can manage to go off hours. if your wife has to commute then please drive the roads to and from each area at commute times. I have spent 1/2 hour trying to get into and through Paia town during rush hour and it isn't more than a 3 mile stretch. now add tourist to the mix.
you live up country and your shopping for the most part will be in town, travel the road up and back down that hill several times(it is a trek) and see if it is something you want to do every time you need to go into town or go to work. living and working in Kahului might be a better option if you don't want to waste time on the roads, wear and tear on your car and the cost of gas.
I don't know how accurate Zillow is but on realtor.com you go to the solds and see what they sold for.
Thanks for this! I'll start looking into those areas... nice.
The area Hothulamaui is referring to is Maluhia Ranch acres. Nice area, but a little pricey. We have a waterfall for sale on a 5 acre lot in there for $800k.
Quote:
Originally Posted by CasualEntrepreneur
this is good to know - it did seem to be a much larger house than compared to it's neighbors. I've turn down many deals due to the renovations being capped by the price ceiling of the community. The Liholiho house was an example of a project/investment property -- I wouldn't want to live there personally. I'm still very interested in Haiku for an area to build.
The house up the road (504) was about 1000sqft smaller, better view (it was ocean side of the road), and completely remodeled. Sold at $684k. The higher up the sandhill you go on Liholiho the price goes up. There's one at the end of Liholiho for 1.2M with a pool etc. The house one street below on Nihoa is priced at $720k with a pool, but I have a feeling it will sell somewhere around $680-700k. The house needs alot of work, so like I said depending on the person the remodel costs will vary significantly.
= $24k net income per year. This is extremely low unless, by living on Maui, I would in essence be my own property manager and not have to pay the $31k (seems unusually high - aren't most management fees 10% of rent?)
I was using the resort's in house property manager rate as a basis. Since the unit is a studio the occupancy is much higher through them, you can probably do pretty good via VRBO, but I wouldn't expect an 85% occupancy rate on a non-ocean view studio, and this occupancy rate would be a very large unknown. We typically see the ocean view units with pictures uploaded getting lots of attention on VRBO, while the other units lag behind a little, and have to discount to compete for business.
The property managers there at Honua Kai though, since they do lots of repair/maintenance on the rest of the unit cut your ownership maintenance costs down via a bulk rate so even if the rate is higher its nicer to be worry free. My info might be a little out dated on current owner rates as this was the info I had on hand from when I sold one in the complex. Also the bigger property managers will also pay a traveler agent commission as well.
Aina Nalu I can probably use as another example. Garden view $380kish price range for a 2 bedroom.
$52k gross income 30k net after commissions/before maintenance fees
9600/year maintenance
3300/year taxes
Probably a better return for the money, so it boils down to: Do you want the money or do you want to stay in a 4 star resort that you own a unit in.
Hi folks, I just came across this ad, and was wondering how often renters trash their properties? I believe for this person to take the time and write this then there is some truth to it. It seems sincere.
Tenants dont ruin it for locals
"Im a very hard-working landlord. don't like that name because we think of what were doing is a much needed service for the hard-working local folks on Maui. We only rent to local folks who have a Minimum of 5 years residency. Its only fair and there's enough vacation homes legal or not out there. We choose to rent just long term to families that need housing and give a reasonable rent, never raise or change the terms of the rental contract either. Some places, Example,7 yr old, 3 bedroom 3 bath lovely clean furnished wailuku home for 1600.00. Some more some less. We struggle very hard to give that rate.
Regardless .....of the property taxes, insurance, mortgage payments, equity loan, Maintaiance, utilities,garbage, is so expensive, every month. We lose alot of money every month, but that's ok... Just want to hold on ....if we can....as long as we can.. to give to our kids. But, the tenants we have been experiencing lately?? Not sure now.
Writing this ...... everyone is saying landlords are so greedy, mean, cheaters, etc etc. The rents are so high.... There may be a reason tenants are not aware of... There are very very few tenants that leave the homes in move in condition for the next tenant.
Not talking about minor cleaning... minor repairs...minor patching... painting etc etc...normal wear and tear.
The problem is that most homes are left virtually trashed ....unhabitable... repairs that run into the thousands of dollars.... Plumbing issues... water damages... electrical cross wiring to convert some machines etc...doing auto body work, placing motor cycles in the home etc etc .....oil damages.... flooring destroyed. Could go on and on...and on...
Just asking tenants the next time you hear or see another tenant ruining a rental property please tell them, they are really Ruining all tenants opportunities to rent a nice home. Tell them, because of your disrespect, we will have to pay for this in much higher rents or no place to rent at all. You RUIN it for all of us!!!
It seems some tenants are landlord haters...Its not landlords against tenants, tenants against landlords...What would happen if homeowners just decided not to rent at all? Then what happens? Homeowners don't get any financial incentives from the county or tax breaks..homeowners aren't the county housing service. Homeowners don't have to rent at all. Homeowners are offering a service a valuable service thats being greatly abused. Also, the landlords cannot take more than one month security deposit for damages. The mainland it's a full years rent up front as deposit thats why very few tenants that can abuse the rental market system. Landlords on Maui take huge risks renting their property and for that gift it's recipicated in being destroyed.
Yet, some maui tenants treat homeowners like garbage and especially, The HOME
Alot of landlords who have rented long term for years, are just not renting anymore or just selling, cause of the constant misery, expense, losses.
So Local folks out there...If you haven't noticed???? There is a rental crisis right now! and it's continuing to get far worse! For many of the reasons explained
.. the only way to get the rents down, more available,more affordable is ....
WORD OF MOUTH TO ONE ANOTHER.
DONT RUIN! TRASH !!!! ABUSE!!!! DISRESPECT!!!A RENTAL HOME!!!!YOU SCREW IT UP FOR ALL OF US TRYING TO GET A NICE HOME FOR OUR FAMILIES!! THATS JUST NOT COOL! SISTAH! BRO!
The more tenants that speak out to tenants that are abusing a rental home, lash out about their behavior !!! WORD OF MOUTH A COMMUNITY EFFORT can only help this rental crisis were in and your local brother and sister have a much better chance getting accepted to a lovely rental home for their growing families. Thx for listening.."
we have had vacation rental property and there is a segment of renters, be it for a vacation rental (or long term) that figure I pay the rent I can treat the house any way I want. this is true even for high end rentals. renters will cause a range of normal wear and tear to outright damage. you can get a good renter that treats the home well and other's not so much. only you can gauge if you want to take the risks associated with rental property.
we have had vacation rental property and there is a segment of renters, be it for a vacation rental (or long term) that figure I pay the rent I can treat the house any way I want. this is true even for high end rentals. renters will cause a range of normal wear and tear to outright damage. you can get a good renter that treats the home well and other's not so much. only you can gauge if you want to take the risks associated with rental property.
Agreed. Growing up I got paid by my Dad to clean-out his rental properties which were trashed by renters. As a result I understand that renovations to a home for sale vs. rent vary dramatically. Gotta limit the high end easily damaged materials and go with clean and basic.
I suppose I came across trashed rentals about 20% of the time in VA in the late 80's. I was wondering if this percentage was higher today in Maui? The article made it seem commonplace.
Maybe some young guys watch "The Hangover" and think its funny seeing a bombed-out rental with a tiger in the bathroom (heck I did) but feel incomplete if they don't have a similar experience of their own...
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Are you seeing what I'm seeing? A slight diminishing rate of return for higher priced homes? For example, using the above as an example (excuse the sin of comparing a condo and a SFH).
Are 2 smaller cheaper SFHs more profitable than 1 larger SFH if the prices were equal? What do you think of those sub <$100k 2br 1.5 ba condos off of Kahului Beach Road? Bad area? College town?
unless the goal is to buy and hold (break-even), until a future move-in date. What is the alternative? Is there another investment avenue anyone would recommend while living on Maui? (hopefully real estate related)
Great examples
now add tourist to the mix. 
Trashing Rentals?
