Buying property in Honolulu

[Preston Steele]

We are visiting Army friends and I've seen several run down apparent buildings outside of post, pretty typical, does anyone know the RE markets? Worth getting into?

[Joe Sillaman]

@Preston Steele Yes, the market is worth getting into. By literally sitting on Oahu real estate over time you'll make money. Based off historical stats values double every 10-15 years. Not saying it will happen in the future but if population continues as it has been demand will continue to be strong while inventory low causing values to increase. Cash flow is nearly non existent but if you can hold onto property over time you should be able to make a to considerable value gains. I don't recommend buying only to sell in a few year though, that's taking a gamble. If you're only focused on cash flow it's better to invest off island. But you'll still probably make more in the end (with less tenant headache) just by simply owning on Oahu. 

For $600,000 you could buy a huge multifamily in Kansas and would have to deal with many tenants, their problems, and property upkeep, hardly any appreciation gain. You'll make positive cash flow but it could be eaten up by repairs and vacancies. Rents cannot be increased dramatically in less populated areas so cash flow wouldn't grow as much. 

On a Oahu $600,000 gets you a single family house or condo with 1 tenant, minimal property upkeep, aggressive appreciation gain, consistent renter pool (military/DoD contractors). You won't hardly make any cashflow and would be lucky to break even every month but your property value would grow 4% in general every year. In a high demand low housing inventory environment like Oahu rents could have the potential to increase faster than less populated areas. 

Anyhow, this is all speculation and my opinion. One thing is for sure, there a lot of granny running around Oahu sitting on paid off million dollar properties they purchased for nothing half a century ago.