Whether you are looking for someone to take the burden of the daily demands of managing the property and the tenants, or looking for someone to make sure you are in compliance with Landlord Tenant Code, Hawaii Dream Realty LLC has a TEAM of ethical, licensed, professionals to get the job done while making your investment as profitable as possible.
What we do and where we are going
We are pleased to reveal our newly designed vacation rental marketplace website for Hawaii Dream Realty LLC, feel free to Take a Peek! We have worked hard to grow Hawaii Dream Realty LLC from a single dimension real estate brokerage operation to a franchised company more robustly able to provide for our Client’s real estate needs. The company utilizes enterprise systems for each of its business lines with the goal to maximize returns, increase property value, reduce risk and stress, save time and money, and ultimately to provide piece of mind to our Clients.
The company already employed proprietary systems for marketing and managing real estate transactions through our affiliation with EXIT Realty Corp International. Hawaii Dream Realty LLC, doing business as EXIT Real Estate Services, specializes in the procurement and exchange of investment properties.
Today, Hawaii Dream Realty LLC is comprised of a number of business lines that have been developed in direct response to the needs of our Clients. Together they provide our Clients with a total real estate investment solution. For the first time we have dedicated websites and back office support systems that reflects each service line.
The vacation rental marketplace is the consumer end of an enterprise system that expands the ability for Hawaii Dream Realty LLC to manage and market our Client’s investment properties zoned for short term accommodations. Our new website, aside from being aesthetically pleasing, provides an agile and easy to scan, read, and navigate interface for its users enabling visitors to find their accommodation wants quickly.
One of our primary objectives we wanted to achieve when designing the new site was to help visitors get to know us better and get a feel for who we are as a company and vacation services host. We employed a responsive, security-conscience design, which means that you’ll see essentially the same design and secure interface optimized for your smart phone, tablet or desktop.
We hope you will visit the new website at our new address, www.waikikistay.com and acquaint yourself with the many options we offer when it comes to vacation rental properties for Waikiki. The company has its office located in the heart of Waikiki on the beautiful Hawaiian Island of Oahu. The vacation rental accommodations are within a three block radius of the office and have immediate access to everything that is Waikiki from its dining, street entertainment, to its beautiful beaches and parks, and even a zoo and an aquarium.
We are quite proud of the site, but we know there is still work to do. In the coming months, we plan to continue to expand our online marketing to additional third party vendor sites increasing the online exposure of our Client’s properties.
Craig Venezia is writer for the San Francisco Chronicle and author of Buying a Second Home: Income, Getaway or Retirement. On March 6, 2015, Craig published “The Dollars and Sense of Buying a Vacation Home” and provides some insight into what it means to own a vacation home. As with any investment be sure to do your due diligence and understand the implications of the investment as they apply to the state in which the property exists.
According to the National Association of Realtors, Americans bought 717,000 vacation homes in 2013. If you’re considering taking the plunge, take time to figure out what a vacation home purchase would really cost you. Otherwise, you may find that owning one is no holiday.
Expect Stricter Mortgage Requirements
More than 60 percent of vacation-home buyers carry a mortgage (current national average rate: 3.5 percent on a 30-year fixed-rate loan). If you plan to get one, be prepared for more scrutiny from lenders than on primary residences.
“These loans tend to have higher credit requirements because people are taking on large amounts of additional debt,” says David Gorman, Regional Sales Executive for Bank of America. “Traditionally, they are more likely to pay the mortgage on their primary homes if they run into financial issues.”
Those higher credit requirements come primarily in the form of higher down payments. Expect to put down at least 10 percent on a vacation home (compared to a 5 percent minimum, or even no down payment, for a primary residence). You may want to put down 20 percent or more, if you can, to avoid paying private mortgage insurance (PMI), which usually runs between 1/2 and 1 percent of the loan amount on an annual basis.
You’ll qualify for the best mortgage rate if your credit score is over 700. Otherwise, you could pay a rate that’s about one percent or more higher.
Know the Cost of Insurance
You’ll, of course, need homeowner’s insurance and you may have to buy flood or earthquake insurance.
According to the Insurance Information Institute, if you plan to use your vacation home exclusively for yourself, insuring it may be as simple as extending the policy you already have on your primary residence.
If you’ll be renting it out, though, you’ll need to buy a separate rental dwelling policy; that costs about 25 percent more than your primary home’s policy. Most rental dwelling policies reimburse for the loss of rental income if you can’t rent your place out while it’s being repaired due to damage from a covered loss.
Since owning a vacation home means you won’t be there all the time, you may need to hire someone to take care of it during your absences — or when you’re in between guests, if you rent it out.
For townhouses or condominiums, you homeowner’s association dues will handle outside maintenance. No such luck for single-family homes. Regardless, the inside is your responsibility.
A property management company fee can vary depending on the level of services. The management firm can also help you find short term guests or long term renters if you want; expect to pay upwards of 20 percent or more on the daily rent you take in.
Understand Tax Implications
Be sure you’re familiar with the vacation home tax rules, too, before making a purchase. The property will still qualify for the mortgage interest deduction, assuming the combined mortgages on both your homes don’t exceed $1.1 million. And property taxes are fully deductible.
Things get trickier, taxwise, when you use the vacation home as a rental property. “If you rent out your vacation home for more than 14 days a year, you will have to report rental income,” says Jared Callister, a tax attorney in Fresno, Calif. “But you will also be able to deduct rental expenses, like repairs and depreciation.”
What you can deduct depends on how much you use the place personally versus renting it out. Also, most states expect you to pay sales taxes on rental income.
Some cities and counties impose such taxes, too; they may go by other names, such as lodging,accommodations, hotel, bed, tourist or transient occupancy taxes. Be sure to find out whether you’d owe them so you’re not hit with a nasty surprise after you become a vacation-home owner.
In Hawaii, all property owners are required to pay property taxes. If the property is rented, long term rental income (greater than six month lease) is also subject to General Excise Tax. While short term (vacation) rentals are subject to both General Excise Tax and Transient Accommodations Tax. As with all Hawaii income, the income is subject to income tax.
But wait there’s more, Hawaii may impose other taxes when it comes time to sell the property. For more information on taxes, you should consult a local accountant.
Bottom line, even with the management fees, insurance, and taxes, the right deal combined with the right management company, over time, can get you positive return on your real property investment. Just be sure to do your due diligence.
We are an independently owned and operated EXIT Realty Corp. International real estate company serving the greater Oahu area. Our office is located on the ground floor of the Kuhio Village condo-hotel complex. We are in a unique position to advise you on Honolulu’s short term vacation rental market as well as its long term rental market. We use investment case study calculators to project investment cash flow, cap rate, and rate of return on perspective investment properties. The Booming Rental Income Newsletter shares techniques and resources to consider when assessing a fair market rent for your investment. In this newsletter also read about why Dr. Lawrence Yun, the National Association of Realtors Chief Economist expects rents to continue to increase and even double in the next 20 years.
For more information on our real estate investment services visit www.WaikikiWalkingTours.com.
Here it is, what you’ve all been waiting for: Buildium’s State of the Residential Property Management Market Survey Report. This survey is based on nationwide results. Four regions are used to depict the survey results. The results for the West region best represent Hawaii’s State of Residential Property Management. The survey consists of three questions regarding rent income, vacancy rates, and time on market. If you have specific questions regarding Hawaii’s residential property management market, contact Theresa Harden (B) directly at (808) 223-0429. Enjoy!
OwnAmerica’s Case Study Calculator is a tool that enables you to quickly and easily calculate the cash flow, cap rate, and rate of return on a cash flow property.
Experiment with projections for changes in property appreciation, rental cash flow and property expenses, and see graphically how these changes can affect this real estate investment over the long haul.
“Home buying Could Soon Beat Renting” was the title of an article by John W. Schoen, Senior Producer of The Bottom Line on msnbc.com. The Bottom Line is known for breaking news and analysis of real estate and consumer issues.
John writes that “falling home prices have sent many would-be buyers to the sidelines. If all goes well, record low interest rates and rising rents may soon prompt some of them to take a second look at buying.” Historic, US Census Bureau, data on median monthly mortgage payments and median monhtly rent payments depicts how affordable home ownership has become.
Unfortunately, that’s a big “if,” according to Paul Diggle, HousingEeconomist at Capital Economics. Much of the decision to buy a house still depends on your personal finances and preferences, your career or family life, or level of financial security. But if you’re comparing just the cost of owning and renting, buying a house may soon be the better choice, according to Diggle.
Until recently, home ownership was no bargain compared to renting, according tothe analysis. A 33 percent drop fall in median home prices, a plunge in mortgage rates and 15 percent rise in rents since the housing crash has evened the scales. Today, the median monthly mortgage payment of about $700 has fallen to about the level of a median monthly rent check. If mortgage rates keep falling and rents keep rising, the equation will tip even further toward owning.
But that analysis doesn’t include the total cost of owning versus renting. A full accounting includes closing costs, maintenance, insurance and property taxes, tax savings from mortgage deductions, gains or losses from home equity, among other factors. Renters have to think about broker fees and future rent hikes. Both have to make assumptions about future trends in housing prices and rents.