Investment Info:
Other buy & hold investment in Honolulu.
Purchase price: $335,000
Cash invested: $345,000
Airbnb studio suite. Switching to extended stay or longer term tenants after Vacation rental law went into effect 8/19.
What made you interested in investing in this type of deal?
The building started selling their leases. This fee simple unit was available and making $3-4k per month in gross rents. The building was mixed-use with parking which was a rare find. Maintenance fees are usually really high in HI and this one was reasonable at $650/mo with a pool, prime location, and 24hr security.
How did you find this deal and how did you negotiate it?
MLS through my realtor. I offered $10K less and he accepted.
How did you finance this deal?
I had liquidity and bought it all cash. It was very difficult to get traditional financing because it does not have a full kitchen. Lenders like properties that you can rent long term due to their lower risk.
How did you add value to the deal?
By renting it nightly on day 1.
What was the outcome?
It did well until the law changed. The building is still working getting a non-conforming use certificate (still in the works since 8/19). Not sure why it is taking so long. The building houses it's own hotel which still operated, which made me wonder....
Lessons learned? Challenges?
The maintenance fee cut hard into my bottom line. Appreciation isn't great either. I hope to avoid these types of condos in the future unless I can get top dollar in nightly rent. Laws change and so shall my portfolio.
