Condos as vacation rentals in Hawaii

[Vincent Ballew]

I have some questions on purchasing condos in Hawaii as a vacation rental and was wondering if anyone could help me out.I know location would greatly effect this but overall how do they perform with all the expenses? The fees seems like they can be pricey HOA, management,cleaning fees. Do you have to buy a million dollar ocean front condo to be successful? Or can you get something cheaper away from the beach and still keep it rented? The idea of having a condo in Hawaii renting it out when I'm not using it is a dream of mine and thought I should at least ask the question to see what people had to say. I don't have my heart set on a particular island so I understand the question is pretty vague but if anyone is welling share their experiences I would greatly appreciate it. The other side of me thinks I should continue investing in what has been working for me and use the extra money to vacation and not worry about the extra headache of a vacation rental. Again any advice or experiences would be greatly appreciated!

[Isi Nau]

Hi @Vincent Ballew

Your best bet will be in Waikiki.  Ko Olina and the North Shore are other popular spots, but Ko Olina property values have barely recovered from the recession, and the North Shore is a little far and may not get as high of an occupancy rate.  Also, properties far from the beach will see a much lower occupancy rate.  Waikiki is the best overall area.

The HOA fees are high, but also cover virtually everything, including utilities. But this will definitely be something to watch for as you shop around because they don't all cover utilities or other areas which could be a large difference in monthly expenses.

A million dollar purchase is definitely not necessary.  You mentioned using it for personal use, you'll need to find something that fits your family's needs.  So a studio may or may not work.  Most of the units are studios, quite a few 1 bedrooms, some 2 bedrooms, and hardly any 3+ bedrooms.  You can find studios for under $200k that rent out well.

If it will be for personal use too, one thing to consider is buying a unit where you'd want to vacation.  You may like the slow paced areas like the North Shore, but your best overall investment will be in Waikiki.

Some other things to consider are GET, TAT, and Nonconforming Use Certificates.  Although not major issues, definitely something to know about.

We have had clients buy in various locations on the island.  The best bang for the buck has been at the Waikiki.  One specific example; Waikiki Banyan.  It is occupied about 26 days a month.  Our clients visit twice a year.  They have also enjoyed allowing their friends, family, and business associates use it.  They even offered a five night stay at the annual fundraising auction at their children's school.