Find a partner or fund my own deal?

[Brian Nakagawa]

So I just tried to begin analyzing my first properties yesterday and I hit a snag. I live on the island of Oʻahu in Hawaiʻi and I am interested in buying rental properties. We recently sold our townhouse to make a small profit and went back to renting to save money in order to finally start investing. I feel like we can afford to purchase something in the range of $100-150K, which basically means apartments or townhouses in various locations of the island. However, they all seem to be leasehold properties, which makes sense because most are located in high rise buildings in Honolulu. My question is, is there ever a reason to buy leasehold properties for the purpose of making them into rentals? And furthermore, would I be better off investing with a partner to find fee simple properties instead? I apologize for my ignorance in advance, please correct my thinking where I have fallen short :)

[Royce Talbo]

@Brian Nakagawa The only time to invest in a lease hold is if you are planning on making it a vacation rental and the numbers work or if the lease is at lease 40+ years and the lease rent is low.  This is so you can sell later on.  LH with short leases will not sell because noone wants to take that chance that the Fee holder will not renew and just take the property back.  If you have a long lease the value will slowly go down but because of the high appreciation in hawaii you might be able to make a profit or break even. Also banks wont loan on LH with short leases because they know they cant get their money back, so the range you are looking at will probably not work.  

Right now I think you should hold on to your money because the market is crazy right now.  The prices I feel are overpriced (just my opinion) and the rental market is down across the island.  Many landlords are dropping prices from what they used to ask and occupancy is taking longer to fill.  So with buying prices going up and rental prices going down, the ratio is not good at all.

I suggest you just continue your education and watch the market.  You could also look into house hacking, if the numbers work, do Lien sales, find off market deals to flip, or wholesale.  Dont get suckered into investing out of state until you know what your are doing, thats how many people lose money.  They think they are good investors just because they are making money in an upmarket, acquiring property after property, then when a storm hits or there is a down market they get screwed.  Good luck.