If you are a regular reader of our blog, or frequent the real estate section of Hawaii News Now, or Pacific Business News, then you already know that the Hawaii real estate market is booming. In fact, you’re probably tired of hearing about how the median prices for Oahu homes continue to rise month after month, while sales also rise along with them. Why would this ongoing trend bother you? Because like many, you’ve been on the fence about making that first investment, and with each passing month, you find yourself saying “I should have…”. Well guess what? It’s not too late, not at all. This assertion is backed by current projections that see median home prices rocketing up towards $800,000 by the end of 2018.
So there you have it, you can still get in while the getting is good. But before you make that opening investment, here’s what you need to know so that you can turn the first into a pattern of many more smart investments to come.
6 Easy Steps to Getting Started on Your First Hawaii Real Estate Investment
1. Invest on Oahu
There are four islands you can make that first investment in – Big Island, Kauai, Maui, and Oahu. Your first should be on Oahu, otherwise known as the Gathering Place. Oahu is the most densely populated of all of the Hawaiian islands, with the most recent census tipping the scales towards 1 million residents (953,207 to be exact). Oahu is also the most visited Hawaiian island, nearly doubling the total for Maui, with an annual visitor count of almost 4.7 million. That means you have a far greater likelihood of renting out your investment property, be it for longterm residents, short term renters, or vacationers.
Then there is the trend in rising median prices to coincide with a continued increase in sales volume. That positive course (for investors) is most expected to last on Oahu, when compared to the other islands where expectations are more reserved.
2. Start with an Affordable Condo in Honolulu
For most first time investors, a condo makes more sense. This is a great strategy for those buying on Oahu, as Honolulu is home to some very affordable (now) and lucrative (near future) opportunities. The current median price for a condo in Honolulu is $410,000, making it a highly attainable investment for anyone with respectable credit and a small downpayment in their pocket. With median prices recently rising by a rate of 5% you will be looking at a profit down the short road. And these affordable condo prices are not for properties in the sticks (a relative term on Oahu), they can be found in the heart of Waikiki. For instance, there is a Seaside Avenue condo located in Waikiki Beach right off of Ala Wai canal, currently listed at just $415,000! Given that condo supply in Honolulu will continue to be limited in the near future, the time to get in is today, so that you can reap the rewards tomorrow.
3. Keep it Simple with In-Suite Amenities
OK, so you know which island your first investment will be on, and you’ve made the smart decision to start with a condo. What next?
Given that this is an investment (versus your living quarters) you will want to minimize your concerns. Look for a condo that has fewer in-suite amenities such as a washer and dryer, but offers them within the building or complex, will reduce the risk of damage and repair in addition to keeping utility expenditure in check.
4. Choose a Building With a Healthy Balance (for You) of Owners/Renters
As an investor, you probably have rental revenue on your mind. Fair enough. But you don’t want to buy into a building with too many of the same like-minded investors. That’s because you need a favorable owner-occupancy ratio (the percentage of owners who reside in the complex full time as their primary residence or part time as a second home). Warrantable condos must have a 50% or higher owner-occupancy ratio, and you can also expect to pay a higher interest rate if the condominium complex is occupied by more than 49% renters.
5. Go with a Great Condo Association
You will need to do some research (unless you also follow item #6 below) to make sure that you’re buying into a well-run condo association. The association will have low fees, adequate insurance and reserves to protect your investment, and will take pride in a well maintained property. Begin by referring to this Hawaii condo association resource, or simply continue below.
6. Work with a Trusted Local REALTOR
The decision to buy a condo on Oahu is a smart and easy one to make. That puts you almost halfway to your goal. But what about the rest of the criteria above? That’s where you will need some help to make the process a seamless one.
Avoid the “big box” real estate operations, because you’ll need a personal touch when it comes to your very first Hawaii real estate investment. The big real estate groups out here are focused on the big sale items and getting into the local and national news with their transactions and subsequent press releases. On the flip side, a boutique REALTOR team specializes in matching first time investors with a property in Hawaii that meets their explicit criteria. And it just so happens that in finding this article, you’ve come to the right place. The Richmond Realty Hawaii team will manage every aspect of your exciting first investment, ensuring that your interests are protected from the get-go. We will also be there to help you rent your property and/or sell it at a profit (when the time comes) and for when you’re ready to upgrade your overall island portfolio.
It all starts with a simple conversation. Call/text us at 808.284.1004 or by email to firstname.lastname@example.org.
~ Richmond Realty Hawaii ~