Pros and Cons for Investing in Hawaii

[Armand P.]

Hello,

What's are the pros and cons for investing in Hawaii? I've done some research and have a good base on knowing the difference between Fee simple vs Leasehold. However, most investments have a really low cap rate. Just curious to hear people thoughts and ideas. 

Thank you

AP

[Lane Kawaoka]

Hawaii is a primary market. Too much international money prop-ing up prices up - despite lower and lower middle class "locals" not being to afford a home on their own.

San Francisco, Hawaii, Los Angeles, Seattle, Boston are examples of primary markets which are NOT ideal for cashflow investing.

A lot of people argue that Hawaii is paradise and thus will always be in demand and therefore will always have good prices. If you are an outsider doing business in Hawaii is very difficult since there is a lot of archaic regulation where the locals know and who to contact to get around things or they totally disregard them - call it the lax attitude. For example assisted living homes have a lot of regulations more so than the mainland but Hawaii has so many illegal mom and pop operations. Part of the reason is that local Hawaii don't sue each other at a high frequency of our mainland counter parts. Of course my accounts are totally personal anecdote but I own over 3500 units on the mainland and grew up here in Hawaii so I tend to have a decent amount of awareness.

So going back to the argument that Hawaii will never go down in value... well it could appreciate but I consider that gambling. I'd pref to invest for cashflow so I can benefit from the rewards NOW instead of waiting to that magical day comes.

I like to invest remotely on the mainland in south and southeast for cashflow and choose to live here in paradise.