Reasonable HOA expense in Hawaii

[Ryan O'Leary]

Good morning everyone,

Currently I house hack in Hawaii while stationed there. I’m on my second round tenants on a 12-month lease, and I leave there in May 2021.

Recently, I saw my HOA went up again another $10/mo, totaling $617/month. This includes exterior landscape, management, community pool services, and trash/water. With the second HOA that's quarterly, the monthly totals for HOAs is about $650.

I’m in the process of refinancing the house in order to make renting the condo out easier for when I leave. I also paid my car off over 15 months in order to break even on any money leftover that the rent can’t cover.

With houses appreciation continuously over the last 30 years, and the increased construction while simultaneously running out of land to build on, does it make sense to hold onto the property every year (while losing potentially 5k/year to break even and for rental income GET tax) and bank on appreciation? The HOA seems like it will keep going up, and surrounding communities are nowhere near the $650/month. I think the amount is insane... but if I sell when I leave in May 2021, I wouldn't be making any money in the deal and could potentially lose money.

My vision on it... hold onto it for about 7-10 years, see where the market is and how much the house would be worth, how much equity I have in the house, and either 1035 exchange it into multifamily properties or keep renting it out.

However, over the span of those 7-10 years, that's potentially $35-50k that could be used to build my portfolio or pay down other properties. I could sell it after maybe 5-6 years, 1035 into a multifamily, and then purchase another with the renewed VA loan availability.

I understand not to bank on appreciation, with this property being the only property I’d be doing that with. All other future properties, one of which I’m working on purchasing in May 2020, would be based heavily on cash flow and less focused on appreciation.

Any information is greatly appreciated!

- Ryan

[Ryan O'Leary]

@Lane Kawaoka I definitely want to buy more properties, and they will definitely be on the mainland. I’m tracking on the 1% rule and will aim to make that the minimum standard with these properties. Thanks for reaching out man!

@Duc Ong

I want to build the long-term wealth but am still juggling the pros and cons of keeping this property. I’ll head to a Honolulu meetup once I get back from deployment and meet you all! Thank you as well for reaching out.