Luxury Investment Condo in Hawaii

[Micah Grafsgaard]

Investment Info:

Single-family residence buy & hold investment in Honolulu.

Purchase price: $635,000
Cash invested: $50,000

I purchased a seller-financed property with $50,000 down with a balloon payment after 5 years. My strategy with this property is to hold long-term and use as a vacation rental property for tourists. So far my monthly gross has averaged $4,500 and my monthly expenses have remained at $3,200.

What made you interested in investing in this type of deal?

I've always been interested in investing in short term vacation rental real estate here in Hawaii because of the increase in monthly cashflow.

How did you find this deal and how did you negotiate it?

I sell real estate here in Honolulu full time and one day I saw my friend post something on Facebook about our mutual friend selling his condo in Waikiki. It looked like a nice place so I reached out and asked if I could show it to my client who was looking for something similar. It ended up being a little above my client's price range and the seller told me that he would offer seller financing over 5 years with $50,000 down so I jumped at the opportunity.

How did you finance this deal?

The deal was seller financed and I used PLOCs to finance the $50,000 down payment.

How did you add value to the deal?

I have a lot of market knowledge here because of my sales history with other clients so we didn't have to use real estate agents in a traditional way and I handled all of the paperwork.

What was the outcome?

The outcome was that I acquired this great cash-flowing unit, the seller was able to leave island worry free with $50,000 cash in his pocket and we're both happy.

Lessons learned? Challenges?

I may have paid a little too much of a premium for the unit, but I justified it because of his seller financing terms with low downpayment and it came with 2 parking stalls (which in Waikiki is very rare - parking stall is worth ~$50,000)

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No for the most part it was just me, however I do know many great lenders on Oahu if you need a referral.