All Forum Posts by: Greg Gaudet

@Debbie W.

Regarding the neighboring unit having a fire and no insurance to cover your damage, that is typically covered under your H06 policy. So make sure you have an H06, it's like $17/month for each of my condos and covers me if another unit damages mine and also pays for the improvements to my unit. Because the master HOA policy only covers my unit as it was originally built, so if I have a fire, but no H06, the master policy restores my unit with the same quality materials it was originally built with. Not my upgraded flooring or cabinets. I would also have to pay out of pocket for the master pocket deductible, which can be anywhere from 5k-25k or more, depending how many claims the HOA has had.

Bottom line: if you own a condo you NEED and H06 policy!!!

I'll second Paige. I own 5 LTR condos. The first one doubled in value in the first year. That's about as good as appreciation gets (that was also due to me buying it 30% below market value, but still lots of appreciation). The building has appreciated 20% yearly on average over the last few years. 

Personally I love condos. I pay the HOAs and they handle the roof, plumbing, lawn care, etc. But you need to understand the HOA, condo docs, reserve study, financials, etc. Review the meeting minutes for discussions of HOA increases or assessments, and have a cushion for those things down the road.

All of my condos produce 25% COC returns plus appreciation, so I'm happy. But that is also my insurance against the HOAs going up. My other protection is that I serve on the board since I own 5 units in a single HOA. That way my fate isn't decided by others.

HOAs will generally always go up over time. Theoretically, they should go up about 3-5%/year on average. But if the board is smart they can cut costs and increase revenue then they may be able to avoid increases for a long time. Hopefully rents increase on pace with HOA increases. But again, I need to have a cash flow cushion built in for this anyway.

@Nick B.

Thanks Nick, and thanks everyone for coming! Unbelievable turnout!! I was expecting 5-10 people lol so I hope my agenda was ok for everyone with the huge group.

Everyone please message me with suggestions or requests for the next event. I’m thinking of making the topic “how can I create cash flow in Mauis expensive market”

@Isi Nau

Dude. Great post. LOVE that scene too! I have always thought the exact same thing in my head every time I see an exotic car lol so I really love that scene!

Isi hinted at this; but the first deal isn’t about getting rich, the purpose of the first deal is to get you to the second. Before I started I thought I’d buy 1 unit a year, then I bought my second unit 2 months after my first lol and then 5 within the first 12 months. All bc I did the first one. And maybe also because I spent 15 years learning RE and 2 years seriously studying how to invest and analyzing deals so I think I was ready.

@Yossi Goldstein

Actually one of my D class units is direct oceanfront with unobstructed ocean views lol but the buidling is considered rough and very low end for Maui. It’s mostly occupied by people from Micronesia that make minimum wage and have multiple families, put to 10-12 people living in a 2/1.5 condo. Not a bad building, just not very clean or nice looking. There’s pics of it on my profile from my 5 buy and holds in that buidling.

Welcome to BP. Jasmine C. is having this meetup is next week in Kapolei:

https://www.biggerpockets.com/forums/521/topics/71...

I think the speaker is someone that helps people on Oahu acquire investment properties out of state. I'd definately go check it out, you're sure to learn a lot and meet some very good people to network with. Maybe even find your first deal there... 

Condos are not for everyone. Some people hate them. But they are arguably the most popular investments in Hawaii, particularly vacation rentals. The challenge is that the prices are so high now because they produce such great revenue. You should make sure you fully understand how to analyze a deal and every expense you need to account for before buying anything. 

Brandon Turner has a lot of videos on youtube, webinars on here, and other resources that are basically like a free college class on how to find and analyze a deal. I still have the sheet of paper I did my first analysis on following Brandon's 4 square rental property analysis method video from youtube.. I had searched for how to analyze a deal to make sure I was doing it right before I went to bid at the auction. I still own that condo, I projected that it would make $320/month... but it actually makes almost $700/month! Love that little condo... 

Anyway the argument with condos is the HOA fees. Personally they don't bother me as long as it meets my cash flow criteria. I like that I don't have to get the grass cut, set aside for a new roof and other capex, etc., I just pay my HOAs every month. And since I have a lot of units in one building and don't want to worry about the HOA mismanaging it and HOAs going up, assessments, etc. I serve on the board there, which has also led to me networking with a lot of other investors and even led me to some deals. If you consider a condo just learn how to understand the HOAs first, review the condo docs, financials, RR105c, reserves, etc. and make sure the HOA is in good standing and there are no big assessments coming soon. Also make sure that the maintenance fee delinquencies are not more than 10-15% because banks typically won't give an investor loan if they're over 10% or an owner occupant loan if they're over 15-20%, which can prevent you from getting financed and prevent values from going up.

@Joel Gierbolini

I have 3 mortgages under 75k. My first purchase was 70k with a 56k mortgage. An that’s in a market with a median price of 820k. If they do it here, they’ll do it where the median price is 200k. Just gotta call all of them, particularly the small local banks and CUs

@Geordy Rostad

Thanks for the support Geordy! The seller was such a nice guy, I feel like it was really a win win for everyone involved.

The only thing I’m not quite sure about is that the buyer is a new investor and I could tell he is very green. Hopefully he doesn’t make too many mistakes. I tried to share as much as I could with him. This is a D class building (by Maui/Hawaii standards, at least; it’d be a C+ in most cities) so you gotta be really hands on w your management and make sure you’re not getting played by your tenants.

@Cassie Chun

Thanks Casey! Same goes for you, I love that Kauai deal of yours! Great example of how anyone can invest anywhere, even inter island.

And yeah Cory Nemoto is a beast, and a super nice guy too. That’s who I’d try to replicate if I were going for flips in the islands. Actually we are doing flips on Maui now lol so we are kind of trying to replicate Cory’s model over here.

There’s plenty people investing in the islands. But there are plenty of excuses of why not to do it. I’ll say that from my experience, you have to be willing to work 80 hour weeks now; or be willing to “live like no one else now so you can live like no one else later”

-Brandon Turner

--Michael Scott

(Lol For those of you that heard the podcast episode two weeks ago of the waitress that bought 10 homes making 20k/year as a waitress)