Good deal? Buying a condo for vacation rentals

[Garrett Steinke]

I'm thinking of buying a Condo in a fairly popular tourist destination a couple blocks off the beach in Hawaii. Ide be Investing about 40k for down payment, closing and rehab. It could cash flow roughly $1350mo, thats a cash on cash return of 40% for about 2/3 of the year. The other 1/3 ROI would be around 20%. . If I long term rented it, the numbers would not work out and I would be lucky to break even. There are a couple risks that make me weary and would love to hear if anyone had some stances on the subject that could help me validate/eliminate my concerns. Mahalo!

1.) I'll be buying at historical high prices for the condos history and I feel the markets in a bubble and I won't be counting on appreciation, more likely to depreciate in the near future if the bubble bursts.

2.) What if one day the home owners association decided to not allow short term renting or possibly the state of HI passes laws banning short term renting (it's very controversial over here) and over night I go from a great cash flow rental to a rental thats in the red and possibly underwater if the bubble did pop.