All Forum Posts by: Cole Schlack

I read a lot of misconceptions about  buying in Hawaii, so I figured I'd clear up some of the basic Stuff:

1. I Can't buy land there its only for Hawaiians. False- anyone can buy land in Hawaii just like any other US state.  There are a small handful of developments that are part of Hawaiian Homelands which require you be 50% Hawaiian to purchase.  These are very rare so its unlikely you will ever see them. 

2.All Property is on leases(leasehold)- False- Most property in Hawaii is Fee Simple title just like everywhere else in the US.  There are Leasehold properties for sale but any listing has to state "leasehold" in the first sentence of the description. 

3.Everything in Hawaii is to expensive-False- Owning and Living in Hawaii does have its expenses, you are on an island and most things have to be shipped here. However we do have Costco, Home depot, Target, Walmart and I find that most items are similar to So California.  Gas has been lower here than CA in general. Taxes are higher in some and lower in others.  Property Tax in general is in-line with many other desirable areas in the US with an amazing exception for Agriculture land which is often only $100 per year on a $1m property.   

4.I cant buy a 3/2 home in hawaii under $500k- False- Hawaii has a vast array of price options, of course you have the $20m resort homes. However many people don't know that you have many rural communities with homes in the 300-700k range with nice neighborhoods, great weather and natural beauty. 

5.Lava is a risk-True- Its true but only on 1 island , the Big Island is home to 2 active volcanos, however the risk is actually very low for most areas(google Lava Zone Map) Zones range from 1(most Risk to 9 no Risk) Zones 1 and 2 have some risk and are best avoided, insurance is hard to get and mortgage companies won't loan with insurance. Properties in 3,4 zones include Kona and Hilo and dont require any additional insurance requirements. North of Hilo (Hamakua Coast) and The Kohala Coast Area on the north end of the island fall in the 8-9 Zones and are good areas to look for investments.   

6. Hawaii Is not STVR Friendly-It Varies- The State of Hawaii has 4 Main Island- Oahu, Maui, Kauai and The Big Island. Each island is its own county and have different rules for different areas.  In general they all have areas that are Zones for Short Term Rentals(Vacation/Resort Zoning)  which it is allowed and there is not an attack on these areas.  The counties are however on a witch hunt in the Residential and Ag Zones they feel it is taking away local housing and they are working to make it tough to rent even for 30 Night Min.  I recommend if you want a STVR to stick to the Resort zones, there are plenty for sale. 

7. The Big Island is the Best Island- True- Ok Im biased, but it does have some of the best beaches, 2 international airports, 8 Different Climates (tired of the whatever weather you have, drive 30 mins to something else) , Average Temp is 75, much of the residential housing is over 1,000 ft elevation which means no AC needed.  2 Volcanos, Thousands and Thousands of acres of farm and ranch land.  Land starting at only $15,000. Best Private schools in the state.   No Skyscrapers (30 Min flt to Honolulu if you want big city)

I hope this helps, fell free to ask any additional questions on Hawaii.

Quote from @Ryan Moyer:

Quote from @Cole Schlack:

Quote from @Matthew Erickson:

Hello!  Does anyone have a recommendation for a great real estate agent with expertise in cabin / mountain property short-term rental transactions?  I am most interested in the Wasatch-back area, but am also open to Bear Lake, Flaming Gorge, or National Parks in central and southern Utah.  Thanks in advance!

Happy to give you input, having owned a number of them over the years in Utah and Idaho.  The key is you need to make a great buy, paying inflated rates based on Covid rental numbers on the last 2 years is a big mistake. Im not an agent, my wife is in the Eden area(Powder Mtn, Snowbasin) 

 Is there such a thing as cash flowing properties in the Eden area at current rates?  I've got some great properties down in Southern Utah but I live in Ogden and would love something over on the Ogden Valley side, but seems like inflated prices and meh rental revenue there would make it pretty impossible to cash flow.

 Ryan

Not right now but I think we will see a few deals. Im working on a Tiny home campground in Eden you might want to check it out.

Quote from @Matthew Erickson:

Hello!  Does anyone have a recommendation for a great real estate agent with expertise in cabin / mountain property short-term rental transactions?  I am most interested in the Wasatch-back area, but am also open to Bear Lake, Flaming Gorge, or National Parks in central and southern Utah.  Thanks in advance!

Happy to give you input, having owned a number of them over the years in Utah and Idaho.  The key is you need to make a great buy, paying inflated rates based on Covid rental numbers on the last 2 years is a big mistake. Im not an agent, my wife is in the Eden area(Powder Mtn, Snowbasin) 

Quote from @Michael Borger:

Aloha, @Darrell Degrazia - welcome to the Hawaii scene. I've been doing deals for 10+ years now - just wrapped up a 6-figure flip in Waianae yesterday.

Lots of great info here - reach out for help.

 Michael

Have some interesting flip opportunities on the Big Island if you are looking. 

Quote from @Kuuipolani Sherlock:

Aloha! My partner and I have been living in Hawaii all of our life’s and we have been interested in house flipping for some years now. I’ve done quite a bit of research. One of the things I’ve seem to have learned that has been repetitive is that it is recommended to have a mentor. Right now me and my partner are currently running Turo business but we are looking to do much more. I spend my time running the business and I Uber drive when I can. So, you can say that I have a somewhat flexible schedule. I am very eager to learn more, and I can even run errands for you. What I am wondering is if anyone is willing to mentor me. We can meet up in person to see if it’s a good fit. I am very motivated as I want to change my future. Mahalo and thanks for reading!

Kuuipolani 

Which island?  

Quote from @Richard Loniewski:

I'd be happy to help, I actually working with a friend that lives in Hawaii, helping her find an air B & B

 Let me know if you friend is still looking for an Airbnb, I have a few listed in Waikoloa Beach Resort with permits and bookings 

Quote from @Brian Plajer:

Hello,

Does anyone purchase far land as an investment? I keep hearing about China buying US farms and  Bill Gates and other billion/millionaires  purchase farm land. I'm wondering if anyone on here does and what's that play in farmland? 

thanks

I love buying farm land, but not in the east or Midwest.  It is a long term play and you need cash but appreciation returns are way higher when you make the right buy. Example-23 acre Avocado farm in San Diego county.  Purchase in 2020 for $1.3m with house.  House rents for $4,000 per month Avocados range from $100,000 to $200,000 per year.  In 5-10 years I will subdivide into 6 lots, Sell off the house for $1m and remaining lots for around $500,000+ each.   Sounds easy, its not ,It was a special property and in the right location.   I am focused on Hawaii now, massive amounts of under-utilized farm land that can grow anything with crazy low property taxes.  

Quote from @Dave Foster:

@Stephen E Drew, it's unfortunate that your accountant is so cut and dried about it.  There are really all kinds of options for you.

1. Your only reinvestment requirement is to purchase at least as much as you sell.  You can live legally in any part of the property more than amount.  If you sold for $450K (150K a unit) and bought for $750K ($250K a unit) you would only need to use two of the units for investment.  You could live in the other one no problem.

2. If your intent was to do a 1031 into a different property and use the new property for investment but then after that something changed in your situation you could explore that since there is no statutory holding period.  It must be your intent and how you could document it This may be where your accountant got hung up.  But that doesn't negate these other options.

3. It also would be possible to do a partial exchange depending on how the per unit valuations work.  Pay a little tax and still shelter some tax.  

4. Or you could simply choose to not report the 1031.  You'll pay the same tax you would have at the same time.  

No reason for your accountant to be has hard nosed as they were.  Because you have not violated any 1031 rules at all - yet.  And there's plenty of ways to avoid that.

 Great insight here, I would find a new CPA. The tax code is gray and not cut and dried . There are no 1031 police, its how you treat the property in the future on your tax return to watch and a good CPA can keep in the clear.  

I keep looking for one but not much on the Big Island.  Rates are so high here. Hopefully someone has a recommend. 

"Varies by policy and interpretation" is the only real answer.  Many carriers exclude coverage but it depends on how your home is destroyed and policy wording.  Hilo is in a lava zone 3 which is lower risk and does not require any additional review by mortgage or insurance companies.  The current flow is in the zone 2 which is much more likely, so if it stops there it wont change anything. If the lava flow makes it to lava zone 3 and causes a bunch of damage we could see rates for properties in the Zone 3 go way up.  It should not change rates for the other zones  on the island either way.