All Forum Posts by: Royce Talbo

Im pretty sure he is not supposed to do this as it is unethical if he is representing you.  If he does the appraisal and doesnt represent you then this is fine.  He can be called to answer any questions on how he came up with his value, but thats about it.  Once he starts to represent you he is no longer a neutral third party.  Appraisers are supposed to be neutral unlike realtors or lawyers who are looking out for your best interests.  Personally I wouldnt go with him, sounds like he is just trying to make extra money.  

I would talked with the county to see who was your appraiser and what comps did he used.  Its pretty easy to win a case if you are right, but if you are trying to win because you want to save money then thats another story.  County tax does mass appraisal so they just get the average of a neighborhood. there are some outliers that will get lucky and pay lower taxes than their properties are worth like the nice house in the ugly neighborhood or higher taxes than their properties are worth like the ugly house in the nice neighborhood.   

@Gabe C. 

 welcome!!!

Are you looking for a apt/townhouse or a SFH? every area is different and you can make money depending on what you are looking for and what you want to do. I would suggest renting here for 6 months to a year first to get to know the areas. Like @Michael Borger 

 said stay away from Hauula and Kaaawa pretty much anywhere that is really country looking.  Also lower Kalihi and parts of Waipahu.  Everywhere else is fine besides the terrible traffic.  Remember we have the worst traffic in america hahaha, so pick where you want to live close to your work.

@Dan D. 

"Would it make more sense to rent instead of own your primary due to the high expenses of home ownership? (Repairs, Property taxes, mortgage payments, etc)."

You should not even think of this because it doesnt matter if you have it as an investment or as primary residence you will be paying the same things.  

Now back to the main question, yes I know several people who have investments but rent. There are a bunch of reasons like they moved and kept their old house, while getting a feel for the new area. Some of my friends chose to buy an investment first and live at home to build equity while paying cheap rent to their parents. The same goes for if you bought a SFH and rented that for $1800/month, but you are a single guy and just need a studio. You could move out and rent a studio in town that is closer to work for maybe $900/month. For example if you bought a SFH for cheap because it needed a lot of work. You didnt have the funds to reno it all one time, so you live in it and work at it after work and weekends one room at a time. After several months you finish, but you still dont have funds to buy your next place, so you rent a smaller place and rent out your place to build up enough to repeat the process.

@Matt McGinn Welcome, its always good to see more hawaii investors on here.  How long have you been stationed at Schofield? 

@Bryan C. why don't you just refinance to get your numbers to work or lower your monthly payments? Im guessing you have a 15 yr loan? You have about 30% equity, just refinance a 30 year conventional loan then you will cash flow.  If you sell to get lower properties they won't appreciate as much. 5% appreciation on on $100k you get $105k. If you got 5% on 550k you made $577.5k. So you make $27.5k instead of $5k. Lwhat about just selling one if you can refi and put that into paying down one of the properties. Your assets with 2 will still be worth more than the 3 or 4 you plan to aquire.

@Matt A.  yes they usually are, but again it comes with more work and risk. VR are usually full 90%+ of the time and it does depend on who is coming to hawaii. The Japanese are a big percentage of our tourist and have been coming here for years. when the Yen is strong they come in the loads, but when the Yen is weak like the trend that it is in now, they start slowing down a lot and this will lead to more vacancies or price adjustments. Vacancies for B&H on the other hand on Oahu(in majority of locations) is practically 0. Like I said VR is more of a business as you need to do more work and pay more taxes and B&H are passive, where you do almost no work and dont pay the same taxes.

@Matt A. 

 personally I would shy away from vacation rentals as @Johnny Aloha said its a lot of work when looking at vacation rentals.  It is more of a business, than passive income like buy and holds.  Besides keeping them filled there are a lot of other things to consider as well.  If you feel the risk is worth the reward, here is an article to get you started, http://www.hawaiilife.com/articles/2013/09/hawaii-...

I would PM @Dana R.  as she has experience in this area and offered to help.  Though Kauai does differ from Oahu, but basics should be the same.  Here is another article that might be of interest to potential VR investors that follow what other people are doing and not the law.  http://www.hawaiinewsnow.com/story/27646141/new-calls-for-regulation-as-vacation-rental-popularity-grows.  

@David Krulac  I would have to disagree with you the article is just stating the riches people in each state not the top 10%.  Not sure if you saw the video about "wealth inequality in America," look it up on youtube it talks about how the 1% hold most of the money in the country.  Those riches people in each state are those 1%.  Also being a millionaire now days doesnt mean much if its just on paper I can be a millionaire after buying couple houses in hawaii, but in actuality I'm broke and pinching pennies lol.  House rich, money poor.

Oh yah as most apt condos here dont have HVAC that will also cut down on any calls that you would get.  if your apt does come with a window ac you can state that it is not part of the rental and is free of use so that if it does break you do not need to replace it or fix it.  if they want to replace it they will have to get your consent first and you can work out a deal with them to buy it over time or they can take it when they leave.

@Andrey Y.  I wish I found this post earlier hahaha. first and foremost you have to consider that hawaii is very different from most of the country and people who dont know hawaii will not understand where you are coming from.  Secondly like @David Krulac stated condo is a type of title you can make a SFH into a condo if you wanted to with enough land, like having one house with r-5 zoning with 7500 sf of land you can cpr the property and make it into 2 properties sharing the same parcel and common ground.

I know where you are coming from as the prices in hawaii are so high it is easier to go after condos, apt type not TH. In hawaii they will appreciate nicely and like you said sells just as fast as SFH. They hold true to the rule that in a down trend they are the first to get hit and in an up trend they are last, but the swings in hawaii are so little compared to the mainland it shouldnt matter.

As far as who covers what in HOA/maint fees, they usually only cover exterior and structure all interior is yours to deal with so you will still get calls. if you are using the standard hawaii association of realtors rental agreement then if you look at R5 maintenance it states that they are responsible for maintaining the property and repairing any stoppages in plumbing fixtures or lines and any damage cause by them. so if you are talking about apt condos with concrete walls you will pretty much get no calls, as piping in the walls and structure should be covered by the HOA and the fixtures are covered by the tenant.

When you have a TH condo you will have to deal with parking issues, garbage issues, lawn issues,  termites, and all sorts of other head aches that I can see why people stray away from those types of condos. 

As for SFH not cashflowing you just have to find the right ones and know what to do to them to make them cashflow. yes it is hard to find a good deal but it is possible if you know what to look for. for condos only cashflowing about 100-150 again you need to know what to look for. If you are looking for appreciation then those will generally not cashflow or have about 100-150. I found several that cashflow 300-400 or at least they did earlier this year, but they appreciate very little but if you dont intend on selling then thats the way to go. We bought a property for 150k six years later we sold it for 280k, it appreciated nicely, but didnt cashflow, so it all depends on what you are looking for.