Investment Properties in Hawaii
It’s not just a new year, but a new decade. If one of your New Year’s resolutions involves becoming more financially successful, real estate investment is the way to go. For the past 35 years, Oahu real estate has proven one of the best such investments in the nation. It is not that the real estate market never declines, as there are always hot and cold markets, but historically such dips are not extreme and the market revitalizes within a reasonable amount of time. That’s not necessarily the case with Mainland real estate investing.
Just as with a home you intend to live in, obtaining prequalification prior to searching for a Hawaiian investment property is critical. The lender will go through your financials and you’ll know just how much money you’ll have to invest in a property. You will also know the interest rate for which you qualify. One caveat: When buying a condo, expect to pay a higher interest rate if more than 49 percent of the residents are renters.
If you are new to real estate investing, consider starting out by purchasing a small condo. Your real estate agent can advise you on the most promising locations. Keep in mind that the goal is creating a positive cash flow for the property, so your investment readily pays for itself and puts you on track to selling it at a profit down the line.
Along with the real estate mantra of “location, location, location,” consider the condition of the condo and the building overall, the current rent, local vacancy rates, and the monthly maintenance fees. Perform your due diligence regarding the condo association to ensure it is well-run and that applicable fees are not too high. Once you calculate all of the costs, including necessary repairs and upgrades, you can determine whether to move forward with this particular unit.
You may find a bargain investment property by going the short sale route. Short sales occur when the homeowner owes more on the mortgage than the property is worth. The lender must approve the sale.
While not as plentiful as they were during the financial crisis, short sales are still available and, if you find the right one, can make excellent investment properties. Many of these homes are not in great condition and require considerable repairs, but if in the right neighborhood you should make a profit after refurbishment and sale.
Most visitors prefer staying in a home rather than a hotel during their Hawaiian stay, but purchasing a vacation rental as an investment property is trickier than it once was due to recent legislation. While homes in resort areas are not affected by the new vacation rental laws, that is not the case with properties in other locales. The number of legal vacation rentals has been capped in these places. A real estate agent can help you find a vacation rental investment opportunity conforming to the new regulations.
If you’re looking to buy an investment property, you need a knowledgeable, experienced realtor familiar with all aspects of the Hawaiian real estate market. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com.