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All About Purchasing an Investment Property Condo in Maui

Posted by on June 4, 2021

If you are interested in investing in Hawaii vacation rental properties for sale, here are some specific steps I encourage you to consider to be efficient and effective. I represent buyers and sellers on the island of Maui for vacation rentals. If you are looking for a rental property a Hawaiian island other than Maui, I work with colleagues around the state for buyers looking on Hawaii Island, Kauai, and Oahu — there are specialists just like myself and I am happy to help connect you based on your specific needs.

Do Your Investment Research about Owning Hawaii Vacation Rental Properties Before You Book Your Trip

Most buyers of Hawaii real estate visit Hawaii on average of 3 times before they decide to commit to purchasing a Hawaii vacation rental property. That being said, there are many buyers that simply fall in love the first time they come;  I have witnessed this time and time again. If you are one to make spontaneous decisions — open houses can be great. If you are a bit more caclulating — jump onto our website and start compiling notes.

Make Sure Your Finances are in Order for Your Hawaii Vacation Rental Property Purchase

It is very important that you speak with your financial advisor as well as your tax attorney about the many advantages congruent with owning investment property. There are overlaying federal laws that apply across the country, but Hawaii does have its own specific laws so if you would like an introduction to a local real estate attorney, please don’t hesitate to ask, we are happy to recommend several.

By whatever means you intend to purchase your property, it is prudent to be prepared in advance so that you know all of the requirements, and when the right opportunity arises, you are ready to act immediately as most properties now sell very quickly. 

Have Realistic Goals regarding Financial Performance

Many people believe that they can enjoy a positive cash flow from their rental property with a downpayment of 20%. In today’s real estate market, this is not a realistic expectation. Hawaii is more of an equity based market, and most of the quality properties will break even with about 25-30% down or more. Investors can earn a decent rate of return (4-6% cash usually on quality properties) but the real value is that you own a piece of property in Hawaii that you can come and visit with your family and friends and has a high certainty for appreciation over time. If financial performance is of utmost importance for you, then you should discuss this with your agent at the very outset of the conversation before getting too involved in anything else. 

Understand the Seasonal Nature of Hawaii Vacation Rental Properties

Hawaii vacation rental properties do experience seasonal variation. However, you can be sure that even the slowest months of the year should still have at least 50% average occupancy if being run properly. The vast majority of the properties that we manage in our portfolio are running in the 85% average occupancy range throughout the course of the year. Generally speaking, the larger the unit, the lower the occupancy percentage. However, there are exceptions that apply when inventory for a specific offering is very low relative to the demand. For example, we have very few three bedroom units for rent in upper West Maui — Honokowai up North to Kapalua, the same applies in Kihei — so these do run higher percentages of occupancy.

If you plan to visit during our busier seasons — holidays, winter, and summer do know that getting into the properties that you are interested in purchasing can be difficult as they are heavily booked during these times. Most management companies and property owners are not going to be willing to interrupt their guests stay unless there are compelling extenuating circumstances.

Now Start Your Search

With properties flying off the shelf, sometimes in a matter of hours – and for cash – call us today to see what’s available that satisfies your needs. We are here 24/7 to attend to every detail of your Hawaii Real Estate needs. From showing to closing. Call us today and begin your Maui real estate adventure.

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