How difficult is it to convert property to "legal duplex" on Oahu

Question

Out-of-state investor that has been following the market in Oahu for a few months now. Been looking into possibly purchasing a small multi-family (duplex/triplex/fourplex) as a long-term rental. I'm seeing quite a few of these types of properties for sale, but mostly they seem to be the type of property where the units are not separately metered and I'm not even sure if they're technically legal. The issue that I see here is that could mean that I end up having to cover many of the utilities myself. So my question is this - does anyone know how difficult it is to get the city/county to approve converting these types of properties into "legal" duplexes, triplexes, etc. with separate meters, etc. If this is a routine process, it could be a game changer with some of the projections I'm running. Would love to hear from any of you who have experience on this front.

Thanks!

Ken

Thanks!

Ken

Kenneth Burdick · Answer

@Michael Borger That's kind of what I've been sensing, but helpful to hear someone say it out loud who is closer to the market than I am. Thank you!

Michael Borger · Answer

@Kenneth Burdick Happy to help. You might want to look into CPRs (island-style form of subdivision with easements). I just finished one last month in Makaha and am doing another with a friend, but we're doing those for the purpose of selling off the newly-created individual units, not for long-term cash flow like you are. It's possible this would be another way of turning an illegal duplex into a legal one - whether it's worth it or not is up to you. Ballpark 15k for 2 units.

Michael Borger · Answer

Red tape in Hawaii is never an easy process. There are a lot of illegal rentals. Most people just factor the expected utility costs into the rents.

Kenneth Burdick · Answer

@Julio Garcia Very helpful. So it's not so much that you can't get approval to do it as much as it's just costly? Do you recall a ballpark cost figure?

Julio Garcia · Answer

I looked into this and its expensive.