How to analyze a deal in Hawaii zoned Ag with 2 rental units on it?

[Kahanu Noa]

Hey BP,

Thanks for reading my post!  I am looking at a few properties on Maui, Hawaii but am not sure how to analyze based on comps.  One particular property is zoned Agriculture with almost 4 acres of land and has two income producing 2 bd, 1 bath cottages in need of some repairs but habitable.  When I try to run comps in the area, the two things that never seem to match evenly are:

1) the land size (too small/ big) 

2) Age of the home (too old or recently built in the past 10 years)

How do you estimate or analyze a similar property?  

Are there any blogs, posts or other resources on bigger pockets that other investors can recommend?

[Royce Talbo]

@Kahanu Noa

If the codes are same as Oahu then I'm guessing you are in a ag-2 zoning with only 4 acres and 2 dwellings unless it was grandfathered in.  Anyway age of the house does not matter too much, its the condition and type of materials that are used that matter.  You see a lot of single wall homes that go for same price as double walls because they update the kitchen, bathroom, etc.  If you use cost approach for the building it will cost more to rebuild a single wall than a double because of the redwood T&G vs cheap 2x4, drywall and masonite siding. 

As for lot size a few thousand feet shouldnt matter in AG.  For ag-2  2 acres would be the base and anything more would be rated at a lower rate once they hit another 2 acres they might be rated higher, but not at the same as the base rate unless it is allowed to subdivide.  Think of it like a house if you have 2 bathrooms as your base in a 3 bedroom house is the norm.  If each bathroom is worth say $15k then you add another bathroom would the market pay another $15k for a 3rd bathroom and another $15k for a 4th bathroom? probably not, so it is not worth as much because it is not as useful.  

So unless you are actually using it for ag and going down to price/sqft to utilize crops then it shouldnt matter too much. It all depends on condition of the house and usefulness of the land, not so much on how big the land is or how old the house is, unless it is way different.