All Forum Posts by: Hope Hatton

I am a realtor who lives and sells in Makaha. Everything the other posters have said is true. However, their suggestions depend on the amount you have to invest and why. Ewa beach and Waikiki you will spend hundreds of thousands of dollars more for a studio or 1 bedroom than in Makaha. If you can afford it, then definitely follow their advice. If you are realistically looking in the under $200k market (and you don't want to retire to the Big Island), then you may have few choices besides Makaha. Investment-wise you may not see much appreciation in the value of the property if you are already close to retirement age. Here are my impressions of Makaha Valley Towers: the maintenance fees are high, but they cover all the utilities, and are much lower than compared to Waikiki condos that also include all utilities. Retirees like this option because they can predict their expenses. But its true, rentals here will only just cover your expenses, you won't make much profit if any . The building adheres strictly to Oahu vacation rental rules...you can only rent per 30 day rentals. If you are a long way off from retirement, you may do better with Makaha Valley Plantation, which has 2 bedroom units for a similar price. There are lower maintenance fees for you, with the tenant paying some of their own utilities, and the size of the units opens you up to a larger rental pool. When you are closer to retirement, you can always sell the plantations unit and buy in the Towers using a 1031 exchange a few years before you move. Or...If you can wait for the next market downturn, Makaha Beach Cabanas is a great value for a direct beachfront 1 BR condo on Oahu.

I agree with the other answers. I live on Oahu, Looked up the building and got some info. There are HOA fees, but in Hawaii they are called monthly maintenance fees. And the studio is leasehold, which means you own the condo but not the land it sits on, and you pay an additional monthly "lease rent", which could be pricey. Also, many of these studios are former hotel rooms, or " condotel", around 3-400 sq ft, with no kitchen. This makes them difficult to finance because mortgage companies don't consider them a permanent residence (although many people in Hawaii do live in them).

IN your particular example that you listed, the maintenance fees, lease rent, and taxes come out to just over $1000/mo, and the monthly maintenance fee does not include electricity ( Hawaii has the highest electric rates in the US). Yur example listed is also a cash-only deal, which means banks probably won't lend on units in that building.

If you are looking for a cheap place to crash in Hawaii for vacations, and you have the cash, it may be a great idea for you. If you are thinking you might be able to cash in on Airbnb/ vacation rental income, be very careful to check for the zoning, only certain areas are zoned for legal short term vacation rentals. This particular building only allows rentals of 30 days or longer.

I have 2 questions: 

1. Can repairs that the buyer of the 1031 exchange property asks for be subtracted from the gross sales price?

2. Can the target property be purchased by the 1031 exchange participant plus a new partner, or must the partner be added later?