Pros and Cons of VRBO Investing in Maui

[Gloria R Lowen]

Do you own an investment property in Maui?  If so, I am interested in hearing about your experience with property managers, as well as rental income.  I am considering 1031 exchanging a townhome I own in Southern Cailfornia for a condo in Maui which would be rented out as a vrbo.  The research I have done so far indicates I could double my monthly cash flow doing this and have a free place to stay when I go on vacation in Maui and be able to write off any travel expenses incurred to 'check on' the condo.  Sounds almost too good to be true - what am I missing?  Thanks in advance.  :)

[Mark Waite]

@Gloria R Lowen You can do very well with a vacation rental property on the island. As @Alex Bekeza stated, HOA fees are high but it is what it is, you cannot avoid them. You can still do very well even after taking them into consideration. Like everything in real estate, location is critical. There are some areas that will have a lower average nightly rate and occupancy rate because they are farther away from the local amenities. But the price point is also lower.

Also, when doing your research, steer clear of leasehold properties. They will is a significant monthly expense on top of your HOA fees.

Decide if you want to manage the rentals or if you are going to hire a local property manager. When doing analysis for my clients, I use a conservative estimate of 25%. You can get close to 20% but any lower and you run the risk of sacrificing service for a few dollars, and that results in bad reviews.

It is possible to cash flow positive on a property here but you have to really look at the numbers. It is a strong sellers market for vacation rental condos due to lack of inventory. That being said, I have clients who continue to be buyers because they can still make the numbers work well.