Condo without ocean view- good for STR?

Question

Hi experts,

I am relatively new at this although we do own a STR in Kihei region with some view. I see an opportunity in Lahaina with no ocean view, some mountain view and that is priced lower but has great interiors and is STR able.  Are STRs with ocean views the only ones successful?  Worth investing?

S

Mike Neubauer · Answer

@John Underwood with all due respect, please stop posting about markets you have no knowledge of.  If an investor wants an STR on Maui they are limited to investing in condos.  You can't buy a SFH and get an STR permit without holding the property for at least 5 years before applying. Even then, the county has all but said they're not giving out any more TVR permits on single family homes.  I've seen too many of your posts about Maui that are not accurate. You're giving investors bad advice.  I know nothing about investing in Myrtle beach so I'll leave that forum to you.  Please leave Maui related advice to people with Maui related experience.

@Suvarna G. Like @Mark Waite said, your costs to acquire are going to be less without the ocean view.  We've seen the numbers actually working out better in many cases with investing in places without an ocean view as opposed to those with one.  When you take into account the premium you would pay for ocean front vs. across the street for example the price can be almost double.  However, the nightly rates can still be 75% of what you might get for ocean front depending on the area.

Carson McGee · Answer

Thanks for the connection, Sarah!Suvarna, My team owns and manages condos in both Kihei and Lahaina. We have bought direct oceanview and units across the street. Both of the deal types can work out if properly researched. That being said, you need to find the complexes where it is actually worth it to pay the oceanview premium and capture higher revenue. The HOA's are unavoidable in Maui but typically pricier and higher risk (erosion) with oceanfront. There isn't a clear cut answer to a specific type of condo being the only successful investment. I would say run your numbers on both deals and see which makes more sense in your situation.

John Underwood · Answer

Generic advice. You can chose to ignore what doesn't apply to you.

Brooklyn McCarty · Answer

See what other non ocean views are renting for in that area. It will likely impact your ADR, but might not be a deal breaker.

John Underwood · Answer

I'd stay away from a condo.

HOAs can make your life miserable with fees, rules and fines.

You can make more money with a private house.

I can rent a condo in Myrtle Beach cheap because there are so many of them competing for my dollar.

Rich Chavez · Answer

Hawaii is a tricky market, it all depends on the area and where people are vacationing.  I've done loans in the middle of no where on Big island for B&B that was generating 15k a month.  I just had a client that closed on a 3/2 condo in Waikoloa that has the potential to generate 150K a year.  Unless you know the market and the area I suggest partnering up an agents that knows the specific markets.  To answer your question, you don't need an ocean view.  You just need to acquire it for the right price.

Jon Martin · Answer

You probably won't be able to charge as much as an ocean view, although there will always be people willing to pay less if they can be in close proximity to what the area has to offer. Ask around to get a feel for what you can charge and if the numbers make sense then yes, it's worth investing.

Andrew Steffens · Answer

I cannot comment on this for Hawaii specifically but in FL water front or water view only gives a small bump.  Beachfront is there the rates jump by a lot.  I think if you are in a good location (i.e. walk or very short drive) to beach and other attraction the view will not be so important.  IMO the view is nice for a few mins in the morning while you are having a coffee and maybe a few mins before bed but the majority of the day people would be out and about.  It is only worth so much..

Mark Waite · Answer

You won’t be able to charge as much as if you had an ocean view, but your acquisition price is going to be far less as well. I always tell my clients to look at the difference in the nightly rate of comparable ocean view versus a non-ocean view properties. You’ll find the ADR difference is not that great, so you’re going to have to rent a lot of nights to make up for the additional price you’re paying for an ocean view.

As for comments about an HOA, that’s part of doing business here. But if you run your numbers, you should have already factored that in to your monthly expenses. It’s no different than someone who owns a house and Hass to pay for a lawn service or a pool service. It is just part of doing business.

Sarah Kensinger · Answer

@Carson McGee would have some more info for you as well!

Condo without ocean view- good for STR?

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