PLEASE HELP! SHORT-TERM RENTAL CONDO IN HAWAII???

Question

I've been looking for my first investment property(s): I'd like to keep my cash outlay to $50-75,000... I have a pre-approval for a Lo-Doc, non-owner occupied loan up to $500,000, 25% down, 6.25 interest, 30 years -- and my loan stipulates whatever property(s) I choose, the 30 day market rents have to cover the total payment (including any HOA).

I live in Los Angeles (and have a real estate license). I've been looking online all over.. but mainly close by in CA, NV, AZ (and Hawaii for short-term rentals). I work, so I can't spend a lot of time traveling to other states but am open to finding trusted partners. I've mainly been thinking cash flow... but am open there as well. Your thoughts on how to best maximize my $75,000 and get my Real Estate portfolio started?? Go for Multiplex? SFRs? Fix-n-flip? Turnkey? Notes? Combo of these? Thanks!

Julie McCoy · Answer

Hey @Lisa Gauff!  I started my investing career while I was working full-time in the film industry in Los Angeles - by the time I stepped back from the industry to pursue real estate full-time, I owned and self-managed four short-term rentals, one in CA and three in Tennessee by the Smoky Mountains.

You don't need to limit yourself geographically to what's near you - obviously, you aren't planning to be hands-on with a property in Hawaii or Arizona, it shouldn't be any different if you're investing in Tennessee, Florida, or anywhere else in the US.  You get a team of trusted people on the ground to be hands on, and you manage the rest from your smartphone.  Totally doable, even if you work 80 hours a week like I used to!

I've loved investing in the Smokies in particular because the regulations are friendly and unlikely to change, it's an extremely established vacation destination, and the number of visitors are only growing year over year.  From an owner/manager perspective, because the area is steeped in tourism and vacation rentals, there are lots of businesses and service people who specifically serve vacation rentals - they're used to absentee owners and work easily with us.  (yeah, some of them definitely operate on "mountain time" but overall my experience has been great!)

One of the things I do for my clients buying here is connect them with reputable service people in the area, so from the moment they close they're ready to rock with their vacation rental. :)  Don't be constrained by where you live - as has been said so many times, live where you want, invest where it makes sense.  :)

Ramsey Blankenship · Answer

@Lisa Gauff - I live in San Diego and invest in the SouthEast where properties have the ability to cash flow AND appreciate at  reasonable rates.  A $500k loan can buy a good amount of real estate.  Here are my suggestions step by step.

1.) Conduct Market research: population increase (+20% over 20 years), Median Household Income (+30% over 20 years), median household/condo value ( around 40% over 20 years), crime rates trending downward but not higher than 550, and lastly - Job growth in the past 12 months.

*This information can be found on city-data.com, or google.

2.) Establish relationships with brokers within the market. Log into Loopnet.com, click on a multifamily listing, open the OM, scroll to the bottom and find the Listing agents name. This broker will have access to other listings. Dont ask for pocket listings, simply tell him/her what you are interested in and follow up.  When they have listings, they will likely send them your way.3.) Learn to under-right deals.  Go through rent rolls and OMs to find acronyms you do not understand. Figure out what they mean and understand how they returns are calculated.  When deals come to you, you will eventually build a process to quickly vet deals while focusing your time on the good ones.

4.) visit the market you are interested in. Meet with brokers, property managers, lenders ect.  Get a feel for the neighborhoods, city projects, attractions, and amenities.  Understand where the line between blue-collar and delinquency is.

5.) find the property which meets your demographics, income requirements, and budget.  Make an offer and eventually get it under contract. Work through your due diligence period to confirm you are buying the property as it was advertised.

6.) Close on the property and set up your management team.

If none of this sounds like what you want to do - consider being a limited partner in a syndication. PM me if you want to know more.

Ramsey

Lisa Gauff · Answer

Hi everyone! @Ryan Webster @Duc Ong @Lewis Anderson @Corey Hawkinson

Thanks for your responses. Unfortunately, the headline of my prior post regarding vacation rentals was misleading. I was going to ask about a specific deal in Hawaii then decided to ask what everyone would do with $50-75K if I'm buying my first investment.. and forgot to change the Headline! (and I'd still like to get opinions on what you'd do with $50-75k! I've posted my questions in First Investments forum)

Yes, I'm well aware that STR rules are changing across the country... and before I would invest in a STR.. I would definitely research the specific rules/zones for that area.

Duc Ong · Answer

@Ryan Webster They are legal in resort mixed use zone areas. For example, see map below.

Lewis Anderson · Answer

There are a lot of places where short-term rental are frowned upon. Las Vegas and Hawaii are just a few examples. If you want short term rental in a beach spot than Panama city  FL is a great place.

Ryan Webster · Answer

@Lisa Gauff

Short term rentals are illegal In hawaii without transient licences.

Corey Hawkinson · Answer

@Lisa Gauff If you’re considering Hawaii for short term rentals I would encourage you to follow along with what is happening between the state and AirBnB. The State of Hawaii seems to be very against short term rentals. That’s just my 2 cents.

Pamela Sandberg · Answer

Totally depends on where you are investing. For example: here in the Phoenix market, small MF (2-4 doors) is hard to come by. It's possible, but there's a lot of competition, and this drives the price (making it harder to cash flow). SFR have been appreciating VERY nicely here, but unfortunately, this is a higher entry barrier that can also make it harder to cash flow. You can, of course, but you have to make sure the numbers work. If you're investing for appreciation over cash flow, it's a great market to be in.

Happy to discuss the Phoenix market or any questions you have!

PLEASE HELP! SHORT-TERM RENTAL CONDO IN HAWAII???

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