STR in Hawaii

[Makani Donaldson]

Aloha everyone, I just started my interest in real estate this past summer and just have been listening to podcasts and what not while I can. I’ve been looking through the forums and haven’t found what I’m looking for. Maybe someone can help!🤙 as we all know buying here in Hawaii is very expensive at least for a property. I’ve been scanning the market and come to understand as my first investment I’ll probably have to find an apartment/condo something like that and I typically hear of STRs typically making more cash flow etc. Ik that here in Hawaii, there’s a few laws on STRs and I’ve been trying to understand but it’s difficult to decipher. My questions are

1. Is Hawaii able to have a profitable STR despite a few of these laws?

2. Is someone able to explain any of these laws so that I might be able to understand?

3. Is STRs the way to go in Hawaii or maybe just traditional LTRs instead? 

Mahalo to any feedback given🤙

[Bryan Vukelich]

Aloha @Makani Donaldson and mahalo @Andrew Steffens for the shout out. Makani, please see my answers to your questions below.  If you have any other questions, you are welcome to contact me any time. 

But to be clear, I am serve the O'ahu market but have had clients have me help them look for property on other islands. Also, please note, there are many nuances about the STR market on O'ahu so this is a brief overview. Oftentimes my initial consultation call with a potential client runs 1 hr and that still doesn't give me enough time to cover everything about the STR market on O'ahu.

1.  Yes, I have investors actively buying STRS on O'ahu at this time and they are planning to make money off of these investments.  

2. Unless a property has a non-conforming use permit (NUC), there are only 4 areas on O'ahu that you can legally do STRS. Waikiki area (however there are a couple STR buildings outside Waikiki), Turtle Bay (North Shore), Ko'olina (Westside) and Cottages at Mauna'olu Estates.

For the 30 day rental minimum. For non-STR properties, last year the Honolulu mayor and city council tried to change the 30 day minimum to 90 days. The regulation was ruled illegal and a permanent injunction was issued. However, the injunction only pertains to property owners who were doing 30 day rentals prior to the gov't trying to change the minimum to 90 days. This year, the State Legislature gave all counties the authority to change STR's laws however they see fit. Thus, there is now a possibility that Honolulu County will change the minimum rental period (for non STR properties) to 90 days. So at the moment, if you buy a property now and operate it as a 30 day rental, owners are not having any problems with the gov't. But if they gov't changes to a 90 day minimum, you would have to operate as a 90 day rental or longer.

And talking to local experts, if you want to own a STR on O'ahu, your safest bet is to buy a unit in a Condotel that is located in the "Resort" zone of Waikiki. These buildings are:

Bamboo

Ilikai 

Ka'lahi (Formerly Trump)

Pacific Monarch

Palms At Waikiki 

Regency At Beachwalk 

Ritz

Waikiki Grand

Please note, there are other condotels located outside the Waikiki Resort Area.  

3. I do not know of any of my STR clients who regret buying on O'ahu. They all seem very pleased and some have bought more units on O'ahu and I know others hope to buy more if the opportunity arises. However, I am seeing more interest in MTR's and have a colleague that does well buying condos and renting out to traveling medical workers and foreign exchange students. My company also offers premier vacation rental management services as we recently expanded our services to MTRs because of the apparent need for management services in the sector.

Happy New Year and if you need any assistance acquiring property on O'ahu, contact me at any time - I am here to serve you.