Buying a rental vacation house

Jason,

I have a client that bought a beautiful property near the beach (across the street) in the Ahuimano area (between Mauna Kea Beach and Waikoloa) listed for $950K, bought at $650K. It was a deal and a half. With today's rates, their monthly payment is easily half of what they could rent it for. Keep in mind that the conforming loan amount in HI is much higher than in the rest of the US. Of course, for Canadians, you don't get the same deal unless you are a legal alien.

Saw another property in the Kona Highlands area that had a tennis court (!) in the $500's. Kona-side has some real deals out there, IMO. The rent for upland proeprties is not nearly what you can get down by the water however, but still worth looking at. Whatever is being asked, I would suggest you are not shy about bringing in an offer that is aggressive. Many of these owners are mainland buyers who just want out.

Good luck.

 

When we bought our vacation house we first thought we would rent it. Then we started filling it up with all our good stuff. We couldn't bare the idea of people trashing our house so we never made it a rental.

 

I was just going through the process myself. Currently renting a 2.4m house in kona right now (its for sale btw) , on a golf course with private beach access for 650/night. After all the math, I can see why its for sale.

 

the purchase makes sense if 2005 like appreciation occurs. in a flat appreciation market its a major loss.
ed

 

I just built a house on the Big Island in 2012, and I rent it out as a vacation rental (fully furnished, suitcase-ready). Plan on grossing $1/SF at 100% occupancy for a full ocean view property. If you charge more, expect lower occupancy and more turnover/overhead. HI charges 4% sales tax on long-term rentals, and 13.4% on rentals shorter than 6 months. On top of that, you have all the usual expenses: property tax, insurance, lawn maintenance, property repairs, management fees, etc. If we had a mortgage on the house, we would never break even.