Looking for information about STR near Kona on the Big Island

[Lauren Ruppert]

I need the real story on vacation rentals on The Big Island, HI...specifically the Kona area. What are the cleaning and management costs? What are the pitfalls that I may not be aware of?

Does a 1 bedroom get as much traction as a two bedroom?

What's the deal with 'land lease'...should we steer clear? It seems common.

Any and all advice would be appreciated!!!!!

[Joseph Lambert]

Aloha Lauren!  Excited to see someone looking on Big Island here on the BP forum.
I live up in Waikoloa, but do work in all of the Kona and Kohala coast, and have done numerous transactions for clients wanting to do STVRs in Kona- I have one active listing in Kona Bali Kai right now for example, which has the STVR permit.

I think the biggest issue I am seeing today, that can get overlooked, is the increase in Association fees as we head into the new year.  The STVR condo complexes have had some big increases the past couple years.  I had some clients in escrow last month on an STVR where the 2024 dues were $497, and then just at a November meeting they decided they were raising to $698 in 2025- which changed the calculus on the property for my Buyers.  Since we had the Association document review contingency included in the contract, they could escape the contract and get their deposit back.  So definitely include a review of the Association documents so you can see those fees and any potential increases.

Most PMs are going to be in that ~25% range.  I have a few POCs I can put you in touch with, as it does vary between PM company.  Just shoot me a text or something.  I know the Big Island Vacasa Owner rep, if you'd like to chat with her she is super helpful- they have a program that brings it down to 22% I believe (you can ask her about that).  And don't forget about the GET/TAT as well.  Often that is a pass through to the Renter, but just make sure you discuss that with the PM.  The PM will typically set up your GET/TAT license as well.  Cleaning is typically a passthrough cost as well. 

Yes, 1 BR get plenty of traction, as well as studios, compared to 2/2's.  That said, don't forget about Waikoloa, you can get some 2/2's up here in Waikoloa Village for near the price of most inexpensive 1/1's in Kona (i.e. at the $400k price point).  So it really depends on your price point, are you looking at the $400k level or the $1M level?

Yes, on the leasehold properties, remember that you won't actually have the full ownership of the real property.  Your land lease on that condo will end- often it is renewed, but there is no guarantee.  That is why those are radically less expensive, because you have a lease term that you have to adhere to, and that has an expiration. I don't typically recommend those to Buyers.  There are plenty of fee simple condo complexes for STVRs.

You also want to look at the overall reserves and condo financials, to see how well it is being managed, and if there are any big projects coming up that may lead to a special assessment on top of regular association dues.  This would be part of the Association document package that you would receive during the contract, as well as the required Seller Disclosures.

I'd probably ask- what are your overall goals?  Are you looking purely as investment?  Or do you want to occupy the condo yourself a few weeks each year?  It's tough to cash flow any with a low down payment, so often it is necessary to buy a cheaper condo and put much more down in order to make the numbers work for you.  There is also the intangible benefit of just having a condo in Hawaii that you can use and stay at when you want- for some that is priceless!  And that can be a motivation to have negative monthly cash flow overall, but then you have the condo and can get the appreciation over time.

Oh- lastly, I actually asked the BP tech guys to add "Kailua-Kona, HI" as a location, to differentiate from "Kailua, HI" (which is on Oahu).  :-)   I also had them add "Waikoloa, HI" here on Big Isle too.  So just an FYI there on future posts, so we can differentiate Big Island Kailua-Kona from Oahu Kailua now: