All Forum Posts by: Isi Nau

Aloha Jason.  I'm interested in what KIN can do in Hawaii.  We recently purchased an apartment building on Oahu.  The previous owner was paying $3k a year with DB.  DB wouldn't write us a policy (for similar reasons mentioned in this thread).  I had three insurances agents hunting for: 1. a provider who would even consider writing a policy, and 2. a policy that wasn't sky high.  We only received a couple of quotes, and the cheapest one was $17k!!  I'm hoping to find a cheaper policy in the coming months.

Hi Su.  We've used Allstate and RLI for our flips and rentals.  Sue Savio (Insurance Associates) is a good one as well.  Not sure what their criteria are post-Lahaina.  And you are correct, in response to the Lahaina fires, most insurance companies here have changed their criteria, stopped insuring, become more stringent in property inspections, etc.  Good luck!  Isi

A 2/2 with a carport is a slam dunk.  $2000 a month rental rate is a solid estimate.  Even if the $150k is financed, you should still net close to $1000 a month.  Great opportunity.  Congratulations.  Yeah the permitting timelines are unacceptable.  There are some engineers who are certified (not sure that's the exact term) by the C&C to review plans on behalf of the DPP.  Then the DPP gives the final approval.  This cuts down on the processing time quite a bit.  Good luck!

Aloha Andrew.  Will it be a two bedroom, with at least one parking space?  If so, that's money.  You could rent it for close to $2000 a month.  More details are needed in order to determine how much the value of the property would increase, but from a cash flow stand point, this is a good one.  Before adding the ADU, you might want to research what's possible for the overall property.  For example how many units can you build, what size homes, etc.  Maybe a second home could have interior and exterior stairs, plus an ADU.   You'll also want to take into consideration permitting timelines. 

Hi Katrina,

Sorry it's been hard finding someone to list your condo.  As I read your post I had a few thoughts:

-Did you use a realtor when you purchased?  Are they willing to list it?

-Sounds like a great location.  You're right, that is a lot of sq ft for a Waikiki 2 bedroom.  What floor is it on?  Some of those beach front buildings could have some minor obstructions in the lower floors (trees, parking garage roof, etc.).

-A $5k a month maintenance fee is a lot, even for Waikiki!  There are very few units that have that high of a maintenance fee, and most of them are in luxury buildings with price tags of $5M or higher.  Do you know why your maintenance fee is so high?

-A lease expiring in 2034 is a little short.  This could lead to your sale price being equal to, or less than, what you paid for it.

-How long was the unit on the market before you purchased it?  This will give you some idea on marketing the unit now.

-If the fee was available last year for $1.4M, I would assume similar sized fee simple units were selling for just under $2M.  Your LH unit sold for $200k.  Even with 13 years left on the lease, last year, that seems like a low sale price for the size and location.  

-Have you rented out the unit? It should be resort zoned. Were you able to do STR?

All this being said, I believe the sizeable maintenance fee is probably the biggest obstacle.  The short lease is something to be aware of, but it is a minor issue in light of the size and location (assuming it is a high floor unit). 

Hope this is helpful!

Isi

Hi @Krystl Matsunaga

A house hack will always have better tax implications and financing terms than a rental.  Hands down.

You mentioned a second home mortgage and investment property mortgage.  I believe you'll need an owner occupant loan in order to house hack.  That's a good thing.  The terms will be much better.

As far as which investment route is better, more details would be needed.  For example what will you do with your current home (rent it out or sell it)?  The financials of the house hack?  The financials of the rental?  What is the next step after this initial move?  A fair amount of due diligence should be given to find the best route.

Using a HELOC to purchase a rental often leads to little/no cash flow, and also increases risk because the property is technically 90-100% financed. There should be a plan for getting those HELOC funds out of the rental property as soon as possible, which most often happens through a refinance. If that is the plan, then it will be even more critical to select the right property.

Aloha!  Isi

Some good news on loan forbearance in Hawaii.  Last week two key earnings reports came out from Bank of Hawaii and First Hawaiian.  Both showed significant reductions in loan deferrals!  With only 1-2% of loans now in deferral (down from 6% a few months ago) at this point in the pandemic is very good news.  If all goes well, loan forbearance will have little impact on Hawaii housing!  This good news, coupled with tourism far outpacing previous predictions, there is some pretty good light at the end of the tunnel.

https://www.staradvertiser.com...

https://www.staradvertiser.com...

Hi @Mika Manzo

Hawaii can be a great place for STRs.  If you hire a private management company (not the hotel), you can make more than $300 a month.  If you manage yourself, you can definitely make more then $300 a month.  But the big factors are your price point, down payment, and personal preferences.

Plan on needing 35% down.

Personal use often hinders the returns.  For example, some families need 2 bedrooms.  Those (legal 2 bedroom STRs) are harder to come by and harder to cash flow without a larger down payment.

Personally, I believe the best STRs on Oahu are single family homes, but that's a higher price point than condos. Also, legal ones are rarer than legal condos, but if you have time to wait I would recommend a SFR.

If you'd like to talk about it some more, please feel free to reach out.

Aloha, Isi

Aloha @Clifton Monte

For most of our VA clients (active duty), we recommend a live in flip or house hack. Cash flowing long term rentals are almost impossible to do here with $0 down. So we typically recommend that our VA clients go into a purchase assuming they'll sell in three years. Hawaii is a great place to build long term wealth, but it is typically best for those who will be living here long term. Nonetheless, those stationed here can still achieve results that are better than renting.

To answer your questions:

1) I am not aware of any rules of thumb that would say "$X of cash flow is a good/bad balance when considering $X of appreciation."  This balance will vary from market to market, and your investment strategy and goals.

2) I apologize, I'm not sure what PV stands for in this context.  But as far as price projections, that is a long boring discussion about historical prices, unique economic factors in Hawaii, the government, builders, zoning, supply, demand, military, etc.  I believe Hawaii, specifically Oahu, has the most unique real estate environment in the country.  Appreciation may be seen as speculative in any other state/county, but Oahu has some significant parameters that make appreciation much less speculative.  Or at least not any more speculative than trying to project rental rates.

3) Over the next three years you can assume about 10% total equity gain (debt pay down and appreciation), with no forced appreciation (remodel).  A forced appreciation situation (fixer upper) will get you higher than 10%.  We always recommend a forced appreciation strategy to mitigate against unforeseen circumstances.

Aloha!  Isi

Hey @Ryan Beetham

Based on your criteria, I think the best you can case scenario is finding something where the numbers are better than renting.  Trying to cash flow with $0 down on a $1M-$2M property is going to be very tough here.  Also, trying to do it with a property that doesn't need a fair amount of work.

Assuming you're at Schofield or Shafter, the best options for neighborhoods are Waialua, Mililani, Moanalua, Kaneohe, and Kailua.  These are great neighborhoods, but if there are any multi units, it will likely be two units.  Meaning you can expect about $1500-$2000 a month in rent (assuming your family lives in the bigger of the two units).

Appreciation here is good, but if you're here for three years (maybe 2.5 now) you can expect the appreciation gains to cover closing costs, essentially breaking even.  If you're here longer than three years, then there's a good chance of coming out ahead.

There isn't a whole lot of variety in property types on Oahu, especially in good neighborhoods.  So you've probably seen every property type available.  There are off market opportunities, but not anything (property types) you haven't already seen.  Some could come at a discount, but a fair amount of remodel work will be needed.

If you're looking for a solid long term investment, some criteria may need to be adjusted.  For example property condition and neighborhood, but these can be tough when you have a busy job and family needs.

If you're okay with something that beats renting, then that is definitely doable.

Feel free to reach out with additional questions or for further discussion.

Aloha!  Isi