High rise condos as a long term investment

[Fernando E.]

Hi all,

My sister recently sold a property in Sacramento and planning to invest a very small portion of her profits in Hawaii. I plan to help her by joining in the venture.  I'm doing some research, I see some 1Bed 1Bath for about $125K+ and I ran some numbers  using BP Calculator, your comments & feed back is much appreciated

Purchase price: $125K

Down payment: 20%

Closing cost: $5K * 

Interest: 5.5% for 30 years

Rent: $2K / month * 

Property tax & insurance: $100

Repairs: 5% | CapEx: 5%. | Vacancy: 5% | Property Mgt: 8%

Net Cash flow: about $160   Cash On Cash: 6%

Total cash out is about $30K

*Not sure about closing cost and rent may vary

Purpose of the deal is to buy a property in a fairly good location walking distance from Waikiki beach, potentially grow some value for the next few years, having a property outside the US in Hawaii as a potential vacation home, if we don't rent out the mortage can be absorb w/o breaking the bank. 

Thanks all!

[Royce Talbo]

@Fernando E. $125k in waikiki for a 1bed is most likely a leasehold with with less than 30 years left. lenders wont lend to properties with leaseholds less than 25 years if i remember correctly. if it is leasehold then you need to add in lease rent. also dont assume capex is 5%, the association takes care of capex(everything from inside the walls to exterior), so find out what the maint and association costs are.  8% pm is too low.  if its not leasehold you found a diamond in the rough. its almost impossible to find something like this on oahu. nothing cashflows off the bat unless you put a large down.  for hawaii in the long run everything appreciates and with true appreciation comes rent growth.