Buying a vacation rental in Hawaii

Vacation rentals are a popular topic for mainland investors buying in Hawaii.  Buyers often think about owning a property here, renting it out like a hotel room for a tidy sum and living in it when they vacation in the islands.  It's a great idea!  There are some considerations that buyers should be aware of.
 

The difference between a vacation rental and a normal rental

In Hawaii, a transient rental is defined as being for a  period up to 180 days.  Residential (non-transient) rentals can be for periods of 30 days and more (yes, it's a bit confusing).   In general we consider 30 days and longer as non-transient rentals for residential properties.

Applicable taxes for Hawaii rentals

Hawaii has two taxes that may…

Oahu housing market - June 2008

Statistics for June 2008 are published and Oahu home prices continue with their resilience.  While the number of units sold is down 31% from a year ago, median home prices have decreased just 8.8% compared with June 2007, a relatively small amount compared to markets in other places, such as California, Nevada and Florida.  Oahu's condo and townhome unit sales are down 35% with just a 1.9% decrease in sales prices versus a year earlier.

Why is our market so resilient?  For one thing, lots of people want to live in Hawaii.  We have a high demand for homes from current residents, plus a steady influx of people from Asia, Canada, California (yes, even at times like this) etc.  I can't blame them for wanting to live here, I've…

For Sale By Owner Scam in Hawaii real estate

A customer contacted me today and asked if I could represent him in a For Sale By Owner (FSBO) purchase.  I said that would be fine.  He forwarded an e-mail with a link to a website listing. See the photo below.  I did not intentionally blur it, apparently that's what happens when a webpage is copied and pasted into another webpage.

Message from a person claiming to be the owner

The customer also included correspondence between himself and the "owner."  Here's what the "owner" said:
 

Hello,

This is not a leasehold, we recently moved in Europe/ Spain and we have no use of the condo so if you are interested we will need to settle an appointment, also if you could arrange a sales contract that we will sign…

Honolulu open house draws a crowd

Ever have an open house and nobody visited?  Or just a handful of visitors in three hours?  What a drag.  We recently listed a preforeclosure house in Honolulu.  This house appealing because it's duplex (two separate residences for one price) and its location near downtown.

The owners bought the house in January 2007 for $810,000.   We listed the house for $750,000 and after 10 days there were a few inquiries but no big charge of buyers.  The owners had waited awhile to list the property, now we were near the deadline for a foreclosure auction.  They made the bold decision to drop the price $200,000 and get some activity.  It worked!  Suddenly we had one of the lowest priced homes for sale in metropolitan Honolulu,…

Hawaii foreclosures increase a bit

Haven't they gone up everywhere?  Honolulu statistics for the first quarter show 155 foreclosure filings this year (January through March) versus 102 during the same period last year.  That's an increase of 52% - the increase percentage sounds ominous, however the number of forclosures versus households is still very small.  Honolulu has the second lowest foreclosure rate in the U.S!

Why aren't we getting hit?

What's so special about this place?  We got smoked back in the mid-1990's after the Japanese bubble burst.  Some people actually walked away from their houses and let the banks take them back.  Note that the people doing so were in neighborhoods away from downtown Honolulu.  Homes in Honolulu are just too…

Hawaii Tourism Authority Steps Up

On March 31 2008, Aloha Airlines flew its last passenger flight and laid off 1,900 workers.  Customers with flights booked on Aloha Airlines were stuck if they were not completing their roundtrips by that day.  Then on Wednesday April 2nd 2008, ATA Airlines shut down operations, stranding more passengers.

Tens of thousands of people were affected by the shutdowns and there were not enough flights on other carriers to get people where they needed to go.   Aloha Airlines and ATA handled 15 percent of the air traffic between the West Coast and Hawaii prior to their shutdowns.

Pat the Hawaii Tourism Authority and Hawaiian Airlines on the back and say "Nice Job!" 

The Hawaii Tourism Authority (HTA) put up $5 million in…

Hawaii Foreclosures rising

This morning's newspaper has an article titled "Isle foreclosures slowly building."  The article intrigued me as a Palolo Valley resident and realtor in Hawaii.

House for sale in Palolo Valley

I live just around the corner from the house pictured in the newspaper article (and pictured above).  This house is located in Palolo Valley, a Honolulu neighborhood.   Several months ago the house had a garage sale and we stopped by to check it out.  The owner told us his story about moving and claimed that he had sold the house.

Later the house came on the market at a high price with a low commission.  That's a deadly combination for a home seller.   I imagine the realtor recommended a lower price with a higher commission but he or…

Assessed value and appraised value

Today I was corresponding with a customer about a condo he's planning to purchase.  We've looked at a few condos in this particular building and the unit in question has an assessed value that's lower than the others.  His thinking is that the property is worth less than the others because of the assessed value.

That's a common belief and sometimes it's true.  Other times it's definitely not true.  Assessed value and appraised value are determined by different parties for different purposes.

Assessed value is determined by the Real Property Tax assessor

County tax assessors determine a property's value based on its size, location, view, age and amenities, among other things.  In the case of this condo, the assessed…