Investing in hawaii has become unrealistic and a waste of time

[Andrey Y.]

The last 4 or so offers I made (at or above asking) on condos on oahu were blown out of the water..

1. Like 2 weeks ago on a 1BR in my building. I made a full price offer and bam, they had an above asking cash offer and 2 above asking back-ups cash offers!

2. Cash offer send to lender (on short sale no less), and buyer will pay delinquent fees.

3. My agent told me to wait until after the open house to offer, which I attended, and the agent told me they were expecting (and later received) a full price cash offer. I offered above asking. They also received a back up cash offer!

4. Also another I offered above asking, like 3 days after property on market. Seller receives 'strong' cash offer with 10 day closing. My offer only considered as back-up.

My broker told me its very rare in the area of property # 2-4 to have cash buyers, so he suspects its the same cash back-up buyer on #3 who offered on #4, maybe to do a 1031 exchange. All I know is, what was always fun is turning into tediousness. Don't want to offer cash again as I did on my last property in the area, and it kills CoC returns. I think its back to the drawing board and maybe thinking about out-of-state. Your guys' thoughts?

[Michael Mazzella]

Aloha @Andrey Y. 

Investing in Hawaii has changed my life and afforded my family a very nice living.

But if I wanted to be frustrated, and wanted to waste my time, here's the recipe...

1. Seeking a healthy cash-on-cash return in a high price point market such as Oahu
2. Using a realtor to find good investor deals. Taking investing advice from a realtor. 
3. Being solely a back yard investor, when the local market does not support your goals
4. Forgetting that, at the end of the day, its all about the numbers. 

I say this in a friendly way, Andrey - maybe its good that you've hit this wall. Those are not investor deals you are describing, and you're looking in the wrong place. As your rethink your strategy, and change up your game plan, let me offer a couple of suggestions...

1. Understand your market, and let the market determine your best exit strategy. Are you seeking wealth creation, passive income, or both? Oahu is good for wealth creation, as its not uncommon for us to make $100,000 on a single house flip. I just accepted an offer and put one of my flips into escrow with a $200k profit. No kidding, that's one house, in a high-demand neighborhood. ;-) Honolulu is not, however, a good market for cash flowing properties. If you want to do passive well, you need to seek a market that supports that. I'm a "both" guy - I like to create wealth from flips, then reinvest my profits into cash-flowing properties. For this, I use 2 very different markets - I have a sizable portfolio of cash-flowing properties on the US mainland, and I flip houses in Hawaii for wealth creation.

2. Understand your 'kill zone' as an investor, and work within that zone. Its where we have the upper hand and are most effective. Its not participating in bidding wars with retail buyers. Its not using a realtor as your main source of deals. And its certainly not paying full retail price for anything. Get your 'okole (Definition: Hawaiian word for the gluteus maximus region) out there and find motivated sellers before a realtor finds them. Buy directly from the owners. That's where most of the deals are. Use the market to your advantage. Ours is a good market for wealth creation, but if you're trying to do passive income here, you're paddling upstream, bruddah. 

Don't worry, Be happy. This **** works! 

If you want more advice, you can buy me a coffee. ;-)
~Michael