All Forum Posts by: Jeff Graves

My client is doing a 1031 exchange out of their long term rental in Seattle to properties to 2 or 3 STR here on Maui. Eventually this is where they will spend half their year, the other half in Seattle area. They've identified the turn-key VR's and are excited to begin ownership on one of the highest rated islands in the world, and #1 in Hawaii.

Aloha,

Jeff

@Albert D.  I do live on Maui...however I work remotely.

• Bookings are done via vrbo.
• Cleaning...as soon as I get a booking I would email my cleaner asap so they can get it booked into their schedule
• Repairs:  I have a couple of people I can text, call or email and they are very responsive and reasonable
• 80% occupancy?  For most of my clients putting their property on vrbo will get them to 60% to 70% occupancy - Maui's a pretty darn desirable vacation destination year round.  To get that additional 10%+ occupancy requires "spreading the word" I do this via Facebook posts to a dedicated VR page, I have also runs some FB ads, posted on LinkedIn (occasionally) and I use twitter.
• During our low season we do adjust our rates...I kind of play around with them, do a new header in vrbo too every couple of weeks.
• There are a couple of things you can do to increase your ranking on vrbo - we just have the very basic subscription level.

I hope that gives you a few ideas.

Aloha,

Jeff

I know for me personally, with just one vacation rental, and about 80%+ booked, I spend maybe 2 to 3 hours a week - it's pretty streamlined with vrbo's system...both from my laptop and phone with their app.

Aloha

I agree with Manly...properties in Hawaii have a good solid appreciation, not hyper inflated as some markets are.  We have have vacation rentals that will cash flow and generate good returns on cash as well.

Aloha,

Jeff

@Beth L. Yes...Airbnb allows late cancellations which I don't like either.  Yes they hold the funds till the day after check-in.

As far as funds being received AFTER the guest arrives...on VRBO you have two options...receive it at the time of booking, or the day after they check in. 

My personal preference...
I prefer to receive the money the day after they have arrived...I figured I would have fewer refunds to deal with, less fees, and I don't want to be spending money that isn't actually mine until the conditions of the host-guest agreement have been met.  If I'm needing the money to cash-flow my rental then I would be robbing Peter to pay Paul (so to speak).  I don't want to handle money in that way...I have a reserve built up so I don't need that "float".

BTW - we have cancellations less than 60 days...are non-refundable.  My wife and I were just talking about this...we would probably refund as much as we could re-book.  Why not.

Aloha,

Jeff

@Dan Stewart I believe most investors are looking for some income.  Here are a few things you'll want to consider before jumping into the vacation rental business.

• Location
• price point
• rental rates
• competition
• length of rental season
• licensing-permit requirements (if any)

  It can be very rewarding financially.

Aloha,

Jeff

@Megan Helm It sounds like you are doing the leg work you need...going and looking at properties, get a good feel for values, potential income (worse case scenario and crunch the numbers yourself).

I can only address your last question..."Is this a problem during the slower months?"

30+ day rentals here in Hawaii can do alright we have many Canadians who come down for just under 6 months...so that could be a potential market for you there in Florida as well.  

1. Determine who your primary market is and how you will be able to reach them is critical to your success.

2. Is your rental window long enough to yield you the needed return on your investment?

3. If there is a seasonal rental period of say 6 months...how will the other 6 months impact you?  Will you use it personally during the "low season"?  What if it is only occupied 2 or 3 months of that 6 month low season (if there is a low season) year after year, would you be ok with that or need to sell it?

4. Determine what your break-even occupancy rate is.

5. Make sure you have money in reserves to cover all expenses (even unexpected ones) for several months.

I hope that gives you a few things to help you analyze your investment strategy and minimize your risk.

Aloha,

Jeff

@Kelly Moffat  I would agree with @Alex Chin - excellent ideas to get the foundation of your REI on a solid footing. You've got to know what is a good deal and what isn't, don't rely on anyone else to make that decision for you. I'm a full-time Realtor here on Maui, from Seattle, and I tell all my clients that my goal is to educate them on our values and provide as much information as I can about the property, neighborhood, historical sales data, current market conditions, etc. You can use trulia and Zillow...but this is where an agent is really going to be able to help you find more accurate sales information.

I would add to Alex's comments you've go to do your own math.  You need to run all the numbers yourself, verify what you can, and make sure the deal pencils out. 

Aloha,

Jeff

@Raj Vachani Good recommendations for sure.  I agree for many buyers it's all in the numbers, some just want to cover their costs and use the property for themselves, and offer it to family and friends to use too.

Most of my clients have the same question you do..."do the numbers work"?  A couple of other things I would recommend are:

• Check the rental history of the property you are buying, if it is currently being used as a STR. You can't totally rely on those numbers to repeat...but in can help give you an idea of what the income could be. You should find out their high and low season rates, occupancy percentage as well. This way you can see if the rental income is accurately being provided.
• Check the reviews of the property as well (vrbo, airbnb, tripadvisor, etc) this can tell you what people liked, disliked, and whether you have some PR work to do to change any negative perception that is out there about the property, complex or area.
• I deal with a lot of condominiums so I also go back and check the sales history to see what the properties were selling at the peak in 2005-06, and compare with today's value. Is there room for prices to move up to previous high's or has it already surpassed them. I'd do the same thing with SFH homes, checking the neighborhood historical sales.

STR are a great investment vehicle.

Aloha

@John D. Prices impacted? If you are referring to SFH - no. Partially because if someone buys a home with the intent of doing STR they have to apply for the permit and there are no guarantees they'll get it. Years ago there were many more homes being used as STR but the State and County cracked down on it because owners were paying the TAT and GE taxes they are required to do, they essentially were operating illegally. The County has been cracking down on that for the last few years.

In order for housing prices to move up considerably because of owners buying with the intent to do STR, it would have to be a significant percentage of the SFH available to impact the values.

Besides, most of our buyers live off-island and prefer to purchase condos where the majority of the maintenance is taken care of for them.