1st Time Maui Rental Purchase During COVID

[Kevin Longeuay]

Hi everyone!

Haven't posted in quite some time but my father in law is looking to use some inheritance money to purchase a property in Maui or Tahoe. He's looking at it for tax relief as well as being able to use it for personal use (he LOVES Maui) and it would be a short term rental property to cover costs but I want to make sure the numbers work out so that this doesn't end up sinking his retirement ship. I know zero about renting in Maui but we have a property in Chicago so we have some experience in rental properties although that is a long term rental. Some things we've recently discovered about Maui are 30% down lending requirements for rental properties, most SFH/condos can't be used as rental properties due to local laws, and hotel-type rentals usually require ~30% for PM fees (pretty high but it includes onsite front desks/house keeping, onsite maintenance, etc.). A lot of costs involved and I plan on factoring those in but where I'm struggling is how to realistically determine annual income for a property. Is there a good formula for annual income? Perhaps a simple nightly rental cost multiplied by a conservative number of nights rented/month? Some other questions to throw out there:

1. What are some common mistakes investors in Maui make and how can we avoid them?

2. Does anyone have experience purchasing rentals from large hotel chains on Maui? Specifially we're looking at Aina Nalu and Aston Kaanapauli Shores since we've stayed there before and enjoy the properties.

3. What are uncommon rental costs associated with Maui properties? I know HOAs can be very high but other than that and repairs/capex, anything else we need to account for? 

4. COVID-aside, how much variation have you had in terms of annual occupancy rates? I know this may be a large function of proximity to the beach but any data I can gather the better.

5. Along the same line, do you have a large variation in nightly rental prices based on the season?

6. Any weird tax laws to be a aware of?

I know this is a lot and I thank you if you've read this far! Any information/insights are greatly appreciated!

Cheers

Kevin