All Forum Posts by: Rob King

To everyone who responded thank you very much, I appreciate your time as well as your insight.  In 24 hours I learned several key points thanks to this community!

Good evening,
  I have three properties in Honolulu, HI and am looking to sell two in the next 12 months.  My understanding is that if you live in a property for two of the last five years you are protected against capital gains to a certain extent.  I have lived in my current property for 16 months and would like to sell in January.  The property I would move into was my home for two years prior to occupying my current residence which I would then also turn around and sell.  I believe this would allow me to sell these two properties in a short time window without suffering tax penalties to then move into my third property while using the capital gained to move into an out-of-state market. 

  Has anyone used a similar strategy and, if so, were there any lessons learned you would care to share?  

  Thanks in advance for any assistance, prior to fully committing I will speak with a RE tax professional but also wanted to see what the large BP communities insights may be.  Have a great one and aloha.

Investment Info:

Condo buy & hold investment.

Purchase price: $380,000
Cash invested: $19,000

This is a live-in renovation of a 3/1 condo. This was property was an estate sale which sat on the MLS because of a disorganized seller and a lazy agent.
The condo was originally listed for $445,000
The unit sat and sat while they systematically dropped their price every 2 weeks and when I was in the position to buy I offered $380,000 with a 3 day decision period. The seller's agent was beside herself and claimed that the offer was offensively low.... and then they took it.

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

I knew the building well and had desired a 3 bedroom floor plan for the increased square footage and large private outdoor area which is rare in Honolulu. This property is also located in the residential area the services Waikiki and is within walking distance to 2 major hospitals, the state's major public university, and is serviced by the best public high school in the state. My other properties are in this area and I know that when I rent in the future I will have low vacancy.

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

This property was withering on the MLS, I worked with a different Relator, Ava Pyszczymuka (pronounced "Pez-muka"), who is also a real estate investor and she aggressively negotiated the deal. From the start I told Ava that if the deal went through great but I would rather push too hard and loose the deal then buckle and buy against my strategy, Ava totally understood and crushed the negotiation by not only reading the seller but also the seller's agent who was retired-in-place.

How did you finance this deal?

This was the first property I purchased that qualified for the GI-Bill and I was thrilled.

How did you add value to the deal?

Complete renovation with only the upper cabinets remaining from the previous owner. The unit was out of date and in bad condition but because it was a condo I knew most of the work would be cosmetic and within my wheelhouse. When I did hire contractors I made sure to stress it is a future rental to keep the material cost in check and then rewarded excellent work with references to other investors in my area.

Lessons learned? Challenges?

Lesson learned from this property:
Be aggressive with both price and timeline - this is a seller who had set themselves up for failure and while the offer may have hurt their feelings at first I was the only show in town and had the leverage. By keeping the timeline concise I keep the momentum and did not loose the deal by allowing the seller to reorganize, fire their agent, and relist the property.

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

Ava Pyszczymuka (pronounced "Pez-muka"), she was such a difference maker in this process and I have recommended her to numerous friends and coworkers since. She is also an investor and understood my mindset, how I wanted to approach the situation, and what a successful outcome looked like for me. After gathering this information she went to work building a strong approach to gain the seller's approval to our terms. I can't speak highly enough of Ava, an absolute rock-star through and through.

@Lisa Kay the best time to invest is always yesterday so you're right on focusing on location. I will politely disagree with the earlier lack of confidence in Kapolei as a true second city. I live in town but work in Kapolei and it is the best market on Oahu right now in my opinion for long term steady growth. I see enough potential in the west side that my better half and I just purchased a SFH approx 3 months ago for the BRRRR method.

I don't advise buying new properties because there are limited ways for you to build equity vs buying/accruing equity but having a second income stream changes everything, if the numbers work than bet on yourself and trust the math.

You're on a great path, let me know if you need anything further, I hope you keep the community updated!

Rob

numbers are right than I would move forwarf

@Nick Ung welcome in advance to the islands! I am a long term rental guy in Makiki but I have a coworker who was successful with an STR on Seaside Ave for a number of years, I will reach out to him and see what his experience has been but the long term market has been consistent for me so if you find a property that can work both ways you'll be ahead of the game.

@Peter Johnson good morning, you are correct that our weather is perfect but that does come with some implications for vehicle storage, namely that the sun can bake a car's roof, hood, or front dash. I personally don't put a value on it but when I was helping a new coworker find a property he stressed that covered parking was a must for him because of his car (a Nissan Z).

Specifically for Hawaii I have had more renters ask if the parking is secured because of the high rate of theft from vehicles.

Good luck and let me know if you have any other questions about Hawaii

@Kapena Otare I bought a property in Makiki through Hubzu and was less than thrilled with the experience but learned a lot.

@Derek Okahashi well the title is accurate haha, makes my upcoming Makakilo reno look like a Sunday morning! Good luck with the rehabilitation, I look forward to the after pics!

@Jared M Pilarski good morning, you are covering a few topics in one post but you can make Honolulu work for you. By setting goals early you'll be ahead of the curve just do the research to educate yourself on the market so that you can accurately determine what is most important to you. Learn about the different areas of Oahu, where the city of Honolulu is located, but there are other cities that may better suit your needs depending on what base the Army sends you to. I'll send you a PM with more details but again good on you for planning ahead.

@John Rankin well done, especially pushing through the current uncertainty.