Rookie investing in Hawaii, need some advice!

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Rookie investing in Hawaii, need some advice!

YuYing Chen
Member since 2021 · 3 posts · 0 votes

Hello everyone, 

I'm finishing up school in Boston and thinking about relocating to Oahu, Hawaii in September ( I know, literally across the whole country). But I think it's good to get myself out there and get some new experiences. Anyways,
I would also want to use this opportunity to start my real estate investing journey since I've been following bigger pockets for a while now. I don't really have much money laying around, only enough for a downpayment. Talked to a loan officer, he said I can probably get a loan of around $300K 

After doing a little research about the housing market I was quite surprised. A lot of the real estate is leasehold (which means you will never really own the land and you will have to give it back after a certain amount of time) but yet, but these properties are still being listed in the 200k range and most of them are studio/ 1bedroom apartments... 

Aside from that, a lot of these apartments have crazy HOA fees! which definitely adds up to the mortgage payment...

I'm wondering if there are any properties around $300k that I could maybe do a BRRR?

Would it be better to buy a property at that price range and use it for air b&b rental? and I would just rent with some roommates? 

What would you do if you were in my shoes? 

-YuYing :) 

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Bryan Vukelich
Real Estate Broker · Kaneohe, HI · Member since 2020 · 193 posts · 163 votes
4y

Aloha @YuYing Chen

Congrats in finishing up in school.  If you want to share, what are you majoring in?  And also curious, what attracts you to O'ahu compared to the other islands?  Whatever the reason, applaud you for putting yourself out there and getting new experiences.  Only thing I really regret about moving to Hawaii is that I didn't do it sooner. 

Regarding your real estate questions - It will be difficult but you can find a BRRR property on O'ahu for that loan amount. One example is I had a client last year buy a 3 BR townhome in Ewa for $286k. He did a fix and flip and sold it after a handful of months for $450k cash. It could have been a decent long term rental but he wanted to free up his cash.

I'm also a fan of vacation rentals.  There is quite a bit to know here about rules and regulations and City Council is going to soon vote on some new regulations - so things may be changing.   There are a few decent 1 BR legal vacation rental units that sell in the high $300k's and gross around $4-4.5K a month.  But there are also studios between $220K-$350K that might appeal to you and gross around $3k+.  Just know there are some buildings that are better than others to own a legal vacation rental unit.   You are welcome to call me at your convenience, if you'd liked to chat more about the real estate market here as well as living in Hawaii.

So if I were in your shoes, whether it was a BRRR, or a vacation rental, I'd definitely try to buy real estate here. And I'd only look for "fee simple" property. Leasehold works for some and I've had some clients look into leasehold but all eventually end up buying "fee simple" property.

Happy to answer any other questions  you have, 
    

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  • Bryan Vukelich
    Real Estate Broker · Kaneohe, HI · Member since 2020 · 193 posts · 163 votes
    4y

    Aloha @YuYing Chen

    Congrats in finishing up in school.  If you want to share, what are you majoring in?  And also curious, what attracts you to O'ahu compared to the other islands?  Whatever the reason, applaud you for putting yourself out there and getting new experiences.  Only thing I really regret about moving to Hawaii is that I didn't do it sooner. 

    Regarding your real estate questions - It will be difficult but you can find a BRRR property on O'ahu for that loan amount. One example is I had a client last year buy a 3 BR townhome in Ewa for $286k. He did a fix and flip and sold it after a handful of months for $450k cash. It could have been a decent long term rental but he wanted to free up his cash.

    I'm also a fan of vacation rentals.  There is quite a bit to know here about rules and regulations and City Council is going to soon vote on some new regulations - so things may be changing.   There are a few decent 1 BR legal vacation rental units that sell in the high $300k's and gross around $4-4.5K a month.  But there are also studios between $220K-$350K that might appeal to you and gross around $3k+.  Just know there are some buildings that are better than others to own a legal vacation rental unit.   You are welcome to call me at your convenience, if you'd liked to chat more about the real estate market here as well as living in Hawaii.

    So if I were in your shoes, whether it was a BRRR, or a vacation rental, I'd definitely try to buy real estate here. And I'd only look for "fee simple" property. Leasehold works for some and I've had some clients look into leasehold but all eventually end up buying "fee simple" property.

    Happy to answer any other questions  you have, 
        

    2Reply
  • Mio Chee
    Investor · Honolulu, HI · Member since 2022 · 51 posts · 41 votes
    4y

    Hi YuYing,

    I am from Honolulu, Hawaii and I agree, Hawaii is very expensive (both price and HOA) and Oahu is not a cashflow market (unless you buy a leasehold with long land lease). Many people I know who invest here are doing either flips or BRRR (or short term rental, if you are willing to do the work or hire someone). You may want to start talking to agents and see they can find something in that range. I would recommend Loren Graham at Graham Properties is very familiar with leasehold properties. He is also very knowledgable with investment properties here on Oahu as well.  

    1Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    4y

    Check out my article about the Cons of remote BRRRs. If you are local to the property then its different but you are not doing things tax smart as its all ordinary income which those who make over 200-300k need to really think about.

    https://www.biggerpockets.com/... this is coming from an Accredited investors POV who used to do turnkey rentals.

    I personally would not do Remote BRRR as there is just a lot of risk with 1) risk of embezzlement with contractors 2) change orders and 3) bank doing bait and switch doing a lower appraisal and/or LTV on the refinance.

    0Reply
  • YuYing Chen
    OP
    Member since 2021 · 3 posts · 0 votes
    4y
    Quote from @Bryan Vukelich:

    Aloha @YuYing Chen

    Congrats in finishing up in school.  If you want to share, what are you majoring in?  And also curious, what attracts you to O'ahu compared to the other islands?  Whatever the reason, applaud you for putting yourself out there and getting new experiences.  Only thing I really regret about moving to Hawaii is that I didn't do it sooner. 

    Regarding your real estate questions - It will be difficult but you can find a BRRR property on O'ahu for that loan amount. One example is I had a client last year buy a 3 BR townhome in Ewa for $286k. He did a fix and flip and sold it after a handful of months for $450k cash. It could have been a decent long term rental but he wanted to free up his cash.

    I'm also a fan of vacation rentals.  There is quite a bit to know here about rules and regulations and City Council is going to soon vote on some new regulations - so things may be changing.   There are a few decent 1 BR legal vacation rental units that sell in the high $300k's and gross around $4-4.5K a month.  But there are also studios between $220K-$350K that might appeal to you and gross around $3k+.  Just know there are some buildings that are better than others to own a legal vacation rental unit.   You are welcome to call me at your convenience, if you'd liked to chat more about the real estate market here as well as living in Hawaii.

    So if I were in your shoes, whether it was a BRRR, or a vacation rental, I'd definitely try to buy real estate here. And I'd only look for "fee simple" property. Leasehold works for some and I've had some clients look into leasehold but all eventually end up buying "fee simple" property.

    Happy to answer any other questions  you have, 
        


    Aloha! Thank you for replying! I'm majoring in Environmental science, and I think Hawaii would be a great place for me to start applying my environmental science knowledge too! I also kind of plan to continue my education at the University of Hawaii Manoa. I think I'm more interested in the BRRR, my main goals are to develop environmentally friendly, energy-efficient, and affordable houses. I'm trying to make my first move here, definitely kinda scary but exciting!

    What are your viewpoints on these leasehold estates? do you think Hawaii will ever get rid of it? and what about HOA? do you think these HOAs' are helping or hurting the locals?

    0Reply
  • YuYing Chen
    OP
    Member since 2021 · 3 posts · 0 votes
    4y
    Quote from @Mio Chee:

    Hi YuYing,

    I am from Honolulu, Hawaii and I agree, Hawaii is very expensive (both price and HOA) and Oahu is not a cashflow market (unless you buy a leasehold with long land lease). Many people I know who invest here are doing either flips or BRRR (or short term rental, if you are willing to do the work or hire someone). You may want to start talking to agents and see they can find something in that range. I would recommend Loren Graham at Graham Properties is very familiar with leasehold properties. He is also very knowledgable with investment properties here on Oahu as well.  


     Hi Mio,

    Thank you so much for replying! there's definitely a lot to learn in this market and thank you for the connection! 

    0Reply
  • Mio Chee
    Investor · Honolulu, HI · Member since 2022 · 51 posts · 41 votes
    4y
    Quote from @YuYing Chen:
    Quote from @Bryan Vukelich:

    Aloha @YuYing Chen

    Congrats in finishing up in school.  If you want to share, what are you majoring in?  And also curious, what attracts you to O'ahu compared to the other islands?  Whatever the reason, applaud you for putting yourself out there and getting new experiences.  Only thing I really regret about moving to Hawaii is that I didn't do it sooner. 

    Regarding your real estate questions - It will be difficult but you can find a BRRR property on O'ahu for that loan amount. One example is I had a client last year buy a 3 BR townhome in Ewa for $286k. He did a fix and flip and sold it after a handful of months for $450k cash. It could have been a decent long term rental but he wanted to free up his cash.

    I'm also a fan of vacation rentals.  There is quite a bit to know here about rules and regulations and City Council is going to soon vote on some new regulations - so things may be changing.   There are a few decent 1 BR legal vacation rental units that sell in the high $300k's and gross around $4-4.5K a month.  But there are also studios between $220K-$350K that might appeal to you and gross around $3k+.  Just know there are some buildings that are better than others to own a legal vacation rental unit.   You are welcome to call me at your convenience, if you'd liked to chat more about the real estate market here as well as living in Hawaii.

    So if I were in your shoes, whether it was a BRRR, or a vacation rental, I'd definitely try to buy real estate here. And I'd only look for "fee simple" property. Leasehold works for some and I've had some clients look into leasehold but all eventually end up buying "fee simple" property.

    Happy to answer any other questions  you have, 
        


    Aloha! Thank you for replying! I'm majoring in Environmental science, and I think Hawaii would be a great place for me to start applying my environmental science knowledge too! I also kind of plan to continue my education at the University of Hawaii Manoa. I think I'm more interested in the BRRR, my main goals are to develop environmentally friendly, energy-efficient, and affordable houses. I'm trying to make my first move here, definitely kinda scary but exciting!

    What are your viewpoints on these leasehold estates? do you think Hawaii will ever get rid of it? and what about HOA? do you think these HOAs' are helping or hurting the locals?


     That's so cool! My son goes to UHM and he is super into environment/science/law stuff as well. Good luck with your schooling and investing!

    1Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    4y

    HOAs are essentially an expense. Rent minus HOA is essentially what the income is. Some people say you can lower the expense ratio because the HOA helps alleviate it but I would still run it with 40-50% expenses off income (minus HOA).

    0Reply
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