Waikiki Sunset 1-bedroom Fee Simple Legal Vacation Rental
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Waikiki Sunset 1-bedroom Fee Simple Suite Legal Vacation Rental
Investors
December 2022 Oahu Hawaii Housing Inventory Snapshot
Oahu Housing Inventory Snapshot as of December 31, 2022The December 2022 Oahu Hawaii Housing Inventory Snapshot represents aggregated values based on Honolulu MLS data as of December 31, 2022. Each inventory category includes a link providing the current Honolulu MLS listings for that particular category. The prices presented in the table are average prices meaning that the presented price includes homes priced well below and well above the average list price. The table is a micro approach in that it only considers data from the past month. The table does not provide the quantified 30-day trends for the list price, sold price, days on market or available listings. If you are interested in a more detailed table with numeric trend percentages, click here to register to receive the monthly report via email. Overall, for the immediate term, the Honolulu housing market is doing well with average list price up from the previous month for all single family homes and condo/townhomes. Even the average sold price was up for all categories with exception for the single family home market which dropped a small 3.41 percent. In general, all categories of home that are sold occurred within a 46-day period. However, the inventory was not replenished with number of listings down. Listings do tend to fall during the winter holiday period.
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Market RelativityAs a buyer, reviewing the new term housing inventory snapshot may seem disheartening, while owners or those listing their home may feel more confident about the market performance. Good news for all, market performance is relative to the period of time being considered. At the micro level the shifts can seem astounding, unrealistic, or possibly unattainable. So lets take a broader look at the market to see if there are any significant trends to suggest that no matter the price point entering the Honolulu real estate market can provide favorable returns. First, we expand our snapshot to consider the past or year. As of November 2022, the number of single family home and condo/townhome resales were down from 2021 with an overall drop of 16.2 percent while the median and average sales prices increased by 11.6 percent for single family homes and 7.4 percent for condo/townhomes. We learn that sales were down but price trended upwards during the past 12 months. If we take a more macro approach and look back 38 years, the change in median sales price and average sales price are up 596.7 percent and 572.4 percent, respectively, for single family homes. The same macro approach applied to the condo/townhome market has the change in median sales price up 467.9 percent and the average sales price are 476.4 percent. As with any investment, you do not suffer a loss until you sell. The market has oscillated in an upward direction during the past 38 years. Holding out now may yield you a little more profit or it may mean that you are entering the market at higher average list prices and average sold prices. Our recommendation is that you consult with your banker to see if you can afford to enter the market. If you don’t have substantial history with a particular bank then reach out to a mortgage broker. If you start getting serious about entering the market then you may want to consult both before presenting an offer. Ultimately the affordability for those who need a mortgage is going to make the market more challenging. Also keep in mind that no matter the market condition opportunity can present itself. For example, investors may just want out of the market for a variety of reasons and for tax purposes may be willing to list at below market values. Other times a listed investment property comes with a substantial amount of future revenue. Such opportunities only come to those who are actively looking and ready to pounce. Ready to AssistIf you know someone who is considering buying or selling a home, please give me a call. I provide professional and courteous service and offer decades of experience on Honolulu neighborhoods and communities. If you are considering selling, our digital marketing strategy and distributed print media ensures that your listing gets exposure. If you want to know what your home is worth in the current market Click Here, or for more personalized service, contact me directly at 808-223-0429 or email TH@Invest808.com. |
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August 2022 Oahu Hawaii Housing Inventory Snapshot
Oahu Housing Inventory Snapshot as of August 28, 2022The August 2022 Oahu Hawaii Housing Inventory Snapshot represents aggregated values based on Honolulu MLS data as of August 28, 2022. Each inventory category includes a link providing the current Honolulu MLS listings for that particular category. The prices presented in the table are average prices meaning that the presented price includes homes priced well below and well above the average list price. The table does not provide the quantified 30-day trends for the list price, sold price, days on market or available listings. If you are interested in a more detailed table with numeric trend percentages, click here to register to receive the monthly report via email.
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The Single Family Home MarketThe single family home market has remained relatively stagnant with respect to average list price and average sold price while inventory has crept upwards. The luxury single family home markets continues to trend upwards with respect to pricing likely associated with less available inventory. The Condominium/Townhome MarketThe condominium/townhome market has experienced an increase in list prices although the average sold price has dropped as has inventory. With dropping inventory, the condominium/townhome market may be ready for an increase in average sold price. If you are in the market for a luxury condominium/townhome, both average list price and average sold price has dropped but so has the inventory. Oahu Housing Inventory SummaryOverall, inventory is providing more options to buyers but prices continue to make records despite the rising interest rates. Ultimately the affordability for those who need a mortgage is going to make the market more challenging. However, no matter the market condition opportunity can present itself. For example, investors may just want out of the market for a variety of reasons and for tax purposes may be willing to list at below market values. Other times a listed investment property comes with a substantial amount of future revenue. Such opportunities only come to those who are actively looking and ready to pounce. Ready to AssistIf you know someone who is considering buying or selling a home, please give me a call. I provide professional and courteous service and offer decades of experience on Honolulu neighborhoods and communities. If you are considering selling, our digital marketing strategy and distributed print media ensures that your listing gets exposure. If you want to know what your home is worth in the current market Click Here, or for more personalized service, contact me directly at 808-223-0429 or email TH@Invest808.com. |
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June 2022 Oahu Hawaii Housing Inventory Snapshot
The June 2022 Oahu Hawaii Housing Inventory Snapshot represents aggregated values based on Honolulu MLS data as of June 30, 2022. Each inventory category includes a link providing the current Honolulu MLS listings for that particular category. The prices presented in the table are average prices meaning that the presented price includes homes priced well below and well above the average list price. The table does not provide the quantified 30-day trends for the list price, sold price, days on market or available listings. If you are interested in a more detailed table with numeric trend percentages, click here to register to receive the monthly report via email.
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| No matter the market condition opportunity can present itself. For example, investors may just want out of the market for a variety of reasons and for tax purposes may be willing to list at below market values. Other times a listed investment property comes with a substantial amount of future revenue. Such opportunities only come to those who are actively looking and ready to pounce. If you know someone who is considering buying or selling a home, please give me a call. I provide professional and courteous service and offer decades of experience on Honolulu neighborhoods and communities.
If you are considering selling, our digital marketing strategy and distributed print media ensures that your listing gets exposure. If you want to know what your home is worth in the current market Click Here, or for more personalized service, contact me directly at 808-223-0429 or email TH@Invest808.com. |
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May 2022 Oahu Hawaii Housing Inventory Snapshot
The May 2022 Oahu Hawaii Housing Inventory Snapshot represents aggregated values based on Honolulu MLS data as of May 31, 2022. Each inventory category includes a link providing the current Honolulu MLS listings for that particular category. The prices presented in the table are average prices meaning that the presented price includes homes priced well below and well above the average list price. The table does not provide the quantified 30-day trends for the list price, sold price, days on market or available listings. If you are interested in a more detailed table with numeric trend percentages, click here to register to receive the monthly report via email.
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| The 30-day trend for the average list price fell marginally for all categories except condominiums/townhomes while the opposite trend occurred with the average sold price. Luxury condominiums/townhomes had a double digit rise in the 30-day trend for average sold price with a 12.1 percent increase. When considering all categories, the average days on market and average days sold fluctuated up and down during the past 30 days. The market has experienced a substantial rise in the number of active listings with the 30-day trend for all categories contributing to any additional 223 listings or a 15 percent increase in available properties for sale.
Not too much can be discerned from the mix trends with average days on market or sold but the marginal drop in average list price along with the substantial increase in supply suggest that the market is cooling off. However, the trend for average sold price also suggests that buyers are paying more than asking to get the home of their choosing. No doubt that building supply chain issues are going to help the resale housing market as builders are having to wait longer to get materials. But inflation is going to keep an upward push on the market prices especially while new housing becomes more and more stagnant. Time will tell if the rising interest rates will help to curtail prices but they are still relatively and historically low. No matter the market condition opportunity can present itself. For example, investors may just want out of the market for a variety of reasons and for tax purposes may be willing to list at below market values. Other times a listed investment property comes with a substantial amount of future revenue. Such opportunities only come to those who are actively looking and ready to pounce. If you know someone who is considering buying or selling a home, please give me a call. I provide professional and courteous service and offer decades of experience on Honolulu neighborhoods and communities. If you are considering selling, our digital marketing strategy and distributed print media ensures that your listing gets exposure. If you want to know what your home is worth in the current market Click Here, or for more personalized service, contact me directly at 808-223-0429 or email TH@Invest808.com. |
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March 2022 Oahu Hawaii Housing Inventory Snapshot
The March 2022 Oahu Hawaii Housing Inventory Snapshot represents aggregated values based on Honolulu MLS data as of March 31, 2022. Each inventory category includes a link providing the current Honolulu MLS listings for that particular category. The prices presented in the table are average prices meaning that the presented price includes homes priced well below the average list price. The table does not provide the 30-day trends for the list price, sold price, days on market or available listings. If you are interested in a more detailed table with trend percentages, click here to register to receive the monthly report via email.
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| The trend for the average list price and for the average sold price for all categories has risen for March 2022. The average days on market has marginally increased for all categories except luxury single family that has accelerated with 31 fewer days on market before having an acceptable purchase contract. Additionally, the number of active listings has decreased for all categories. With supply waning, demand will contribute to increases in average list price and the average sold price. The increase in prices is also likely contributed to supply chain price increases too. Given the near term persistence of the supply chain issues, the potential exists for an upward trend in prices regardless of demand.
No matter the market condition opportunity can present itself but only for those who are actively looking and ready to pounce. If you know someone who is considering buying or selling a home, please give me a call. I provide professional and courteous service and have first hand knowledge on Honolulu neighborhoods and communities. If you are considering selling, our digital marketing strategy and distributed print media ensures that your listing gets exposure. If you want to know what your home is worth in the current market Click Here, or for more personalized service, contact me directly at 808-223-0429. |
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SOLD 34 Days – Waikiki Condotel Studio Investment $95,000 LH
Waikiki Condotel Studio Investment
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February 2022 Oahu Hawaii Housing Inventory Snapshot
The February 2022 Oahu Hawaii Housing Inventory Snapshot represents aggregated values based on Honolulu MLS data as of February 25, 2022. Each inventory category includes a link providing the current Honolulu MLS listings for that particular category. The prices presented in the table are average prices meaning that the presented price includes homes priced well below the average list price. The table does not provide the 30-day trends for the list price, sold price, days on market or available listings. If you are interested in a more detailed table with trend percentages, click here to register to receive the monthly report via email.
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| The 30-day trend for the average list price is indeed trending downward for a second consecutive month for single family and for luxury family homes. However, the average sold price for single family homes has remained relatively unchanged while the luxury single family homes plummeted nearly 23 percent. The condo/townhome and luxury condo/townhome average list price trended upward during the past 30 days while their average sold price fell. The 30-day average days on market for all categories except condo/townhome fell with the largest decrease in the luxury single family home selling in 42 days. The 30-day trend in inventory for all markets has begun to increase from the previous month.
You must keep in mind that the trends are all short term and most purchase and sales contracts take longer to close than 30-days. None-the-less, the short term market movement provides an indicator into rates of change. Given the trends, we are seeing waning demand in the housing markets as seller adjust their prices down with increasing supply indicating a shift toward a buyers market. However, the average days on market suggested that the market is not stagnant and demand remains strong for the condo/townhome markets. No matter the market condition opportunity can present itself but only for those who are actively looking and ready to pounce. If you know someone who is considering buying or selling a home, please give me a call. I provide professional and courteous service and have first hand knowledge on Honolulu neighborhoods and communities. If you are considering selling, our digital marketing strategy and distributed print media ensures that your listing gets exposure. If you want to know what your home is worth in the current market Click Here, or for more personalized service, contact me directly at 808-223-0429. |
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January 2022 Oahu Hawaii Housing Inventory Snapshot
The January 2022 Oahu Hawaii Housing Inventory Snapshot represents aggregated values based on Honolulu MLS data as of January 28, 2022. Each inventory category includes a link providing the current Honolulu MLS listings for that particular category. The prices presented in the table are average prices meaning that the presented price includes homes priced well below the average list price. The table does not provide the 30-day trends for the list price, sold price, days on market or available listings. If you are interested in a more detailed table with trend percentages, click here to register to receive the monthly report via email.
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| The 30-day trend for the average list price has settled down from the previous month’s jump with all categories except condo/townhome dropping. The overall change from the previous month is significant. The luxury single family market 30-day trend in average sold price continued its upwards leap to a 22 percent increase however the luxury condo/townhome market fell by 15 percent. The 30-day average days on market for all categories except luxury single family homes dropped but not by a significant margin. The 30-day trend in inventory for all markets remained relatively stagnant.
You must keep in mind that the trends are all short term and most purchase and sales contracts take longer to close than 30-days. None-the-less, the short term market movement provides an indicator into rates of change. Given the trends, we are still seeing a strong demand for luxury single family homes and condo/townhomes regardless sellers are adjusting prices downward and accepting less money for single family homes and luxury condo/townhomes. With supply remaining flat, we could see upward pressure on prices in the near term. As long as inventory remains low, along with near term mortgage interest rates, the market will continue to favor sellers. Even a market that favors sellers does not mean that deals are none existent. No matter the market condition opportunity can present itself but only for those who are actively looking and ready to pounce. If you know someone who is considering buying or selling a home, please give me a call. I provide professional and courteous service and have first hand knowledge on Honolulu neighborhoods and communities. If you are considering selling, our digital marketing strategy and distributed print media ensures that your listing gets exposure. If you want to know what your home is worth in the current market Click Here, or for more personalized service, contact me directly at 808-223-0429. |
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SOLD 21 Days – Hawaiian King Waikiki Turnkey Investment For Sale $86,000 LH
$85,000 LH, Honolulu, 1 Bed – Nicely renovated in 2015 with new kitchen, appliances, dishwasher added, wood tile flooring throughout, shower and comfortably furnished to sleep up to four with a queen Beauty Rest bed with a Smart motion base and a pull out couch. Hawaiian King offers all the conveniences of Waikiki with Waikiki Beach a short 5-minute walk. Pool, building manager, convenience store and local bar are on site. Pool is to be renovated in Jan 2022. Maintenance Fee includes: water, sewer; electric is sub-metered and billed with the monthly Maintenance Fee. Turnkey investment currently being rented short term.
$85,000
Single Family Home
1 Bedroom
1 Full Bathroom
Interior: 468 sqft
Year Built: 1959
MLS #: 202130307
Photos
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Features
- Single Family Home
- Fully Furnished Turnkey Investment
- Short Term Vacation Rental
- 468 sf Living Area
- 1-bedroom Suite
- Window Air Conditioner Unit
- Include Home Warranty Program
- Garden View from Patio
- BBQ Area and Pool
- Maintenance Fee includes Utilities
- Resident Manager on Property
- Offered Leasehold
Interested? See more information or schedule showing
For more information, contact (808) 735-2221
Anytime, Anywhere, Any Device…We Bring Owners and Tenants Together
Honest, Ethical, Reliable & Supportive TEAM- Full Service Property Management and Sales
- Professional Management Systems
- Long Term Tenant Screening – Credit/Criminal/Eviction Checks
- Inspections, Maintenance and Cleaning Coordination
- Owner’s Portal Online 24/7 Access
- Direct Deposit Monthly Disbursements
- Marketing and Advertising Included (No Additional Cost)
- Marketing Syndications: AirBnB, Booking.com, HomeAway, VRBO, Vacation Rentals, Expedia, TripAdvisor and MORE
- Short Term Guest Management Services with ID Verification
- MAXIMIZING OWNERS BOTTOM LINE!
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.
SOLD – Kewalo Gardens Fee Simple 1-Bedroom with Parking – $315,000 – 19 DOM
Kewalo Gardens Makiki Fee Simple 1-Bedroom with Parking
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Hawaii Re-opening to Tourism on October 15th
Hawaii Welcomes Visitors
As the main hub of the Hawaiian Islands, it is no wonder Oahu is the most visited island. Hawaii serves up big city fun in a small island setting. The Hawaii re-opening is just in time for the winter surf season. In other words, visitors can once again enjoy the best tropical venue the Unites States has to offer.
Winter Surf Session
Hawaii may be synonymous with surfing, but Oahu’s North Shore has earned special bragging rights as a hang 10 mecca. Whether guests head there to watch the waves or carve a few of their own, the destination offers unparalleled surfing thrills. The North Shore is just a one-hour drive from the world famous Waikiki Beach.
The North Shore of Oahu comes to life in the fall and Oahu is opening its doors to tourism after seven months of lock down. This seven mile miracle offers country living at its finest with tons of shops in historical Haleiwa town, outdoor activities, and beaches. Above all, in the wintertime, the North Shore is known for its picture perfect waves.
Hawaii Re-opening Test Program
Of course, the Hawaii re-opening still has concerns over COVID. Albeit the percentage of positive cases in Hawaii remains in the lower single digits. Similarly, Hawaii ranks in the lower percentile relative to the other states. Therefore to mitigate this concern, the Governor has implemented a testing program. The program allows visitors to arrive and test out of the 14-day mandatory quarantine period. Travelers must taken a Food and Drug Administration-approved COVID-19 test from a CLIA lab. The test result must be negative and within 72 hours of traveling to Hawaii in order to bypass a mandatory 14-day self-quarantine.
For the Hawaii re-opening, an accepted pre-arrival test is required of all arriving passengers who want to bypass the quarantine. The testing includes children of all ages. However, travelers who do not receive the results of their pre-arrivals test in time must stay in quarantine until they get their results back. The program is expected to expand the locations where travelers can get tested. Initially testing is available through CVS Pharmacy and through Kaiser Permanente.
Hawaii Re-opening Promotion
Hawaii is also actively working to safely open hiking trails, parks, attractions, restaurants and retail. To promote the re-opening, we are offering a discount available through bookings on WaikikiStay.com. Use promo code SAVE10 and get our low price guarantee. We offer a great selection of Waikiki vacation rentals for all budgets and family sizes. Our rentals are all right in the heart of Waikiki and all within walking distance to the world famous Waikiki Beach. Our vacation rental properties are privately owned and vary by amenities, building, square feet, number of guests, improvements, and views.
Why an Investment Property Should Be Your First Real Estate Purchase
REAL ESTATE NEWS
Brought to you by Theresa Harden, SFR ePro Realtor
Not ready to buy a home for yourself but want to take advantage of great market conditions? Consider buying an investment property! It’s a trend that’s taking over real estate, as savvy investors look to put their money in an appreciating asset. Here are five reasons to consider it.
1. Rates are crazy low. Lower rates mean more affordable lending, or more for your money if you choose to reach higher.
2. Because it will appreciate. According to CoreLogic, “The overall home price index (HPI) has increased on a year-over-year basis every month for seven years.” The long-term price appreciation of real estate can provide one of the safest investments out there.
3. Because passive income is good. Yes, it’s nice to know there will likely be appreciation over time, but the real key to success with investment properties is passive income.
“The best part about rental properties is that they provide a stable income,” said Mashvisor. “What would be better than having a check sent to you every month? In order to have positive cash flow, you have to make sure you invest in a profitable rental property.”
4. To turn it into a short-term rental. The short-term rental market has opened up a new world of opportunity for investors. By buying in the right location—by the beach, near a university, or in close proximity to a popular annual event, you have the potential of making a significant return in a short period of time. Just be sure to check the local laws, as Honolulu has been cracking down on Airbnb and other services.
5. Because it can help you buy the home of your dreams down the line. “Buying an investment property before your first home does not imply that you won’t have the funds to purchase your actual home at some point,” said Mashvisor. “In fact, investment properties that have been purchased wisely and have grown in value can offer you a sizable amount of wealth and equity.”
3 Things to Consider Before Listing Your Home as a Short-Term Rental
Real Estate News
By Tim Harris
The Age of Sharing is here, and it’s a phenomenon that’s expected to grow from $15 billion in 2014 to $335 billion by 2025, with services such as home-sharing and maintenance platforms being a big part of that equation. Many homeowners have seen big economic benefits over the years from home-sharing platforms like Airbnb, but if you’re thinking about jumping in to get a piece of that pie, there are a few things you should consider first.
Know Your Regulations
Not all cities see the home-sharing phenomenon as a win-win. Many municipalities are passing new regulations that are often designed to curb its growth. Before signing up for a service like Airbnb, you should find out a few things. Does your city have a framework for short-term rentals? Are there any legal restrictions? How expensive is licensing?
This is critically important, because ignoring licensing regulations can be very costly. In Portland, Oregon for example, the city implemented fines of $1,000-$5,000 per violation for home-sharing operators. In 2017, it collected over $70,000 in fines and fees from a single operator who was found to be in violation of the city’s regulations.
Know Where You Live
Cities are made up of distinct neighborhoods, and people are proud of where they live, so, you’ll want to think carefully about the impact of a short-term rental on your neighbors before moving forward with your plans. Will the locals have to compete with guests for on-street parking? Will they feel less secure with strangers coming in and out?
You don’t need to get permission before renting rooms, but as a courtesy, you’ll want to let anyone impacted by your decision in on your plans. You’ll also want to establish clear house rules and expectations, especially about noise or late-night outdoor socializing, for your guests.
Know Your Coverage
You’ll hear horror stories in the news regularly about a home-sharing rental gone bad. In London, a short-term renter threw a party for 100 people, unbeknownst to the homeowner, during which floorboards were ripped and a television pulled off a wall. In another widely-reported example, a short-term rental unit was used as a pop-up brothel. Stories about experiences as bad as these are extremely rare; however, they serve to remind us about the financial and legal risks for hosts who allow strangers into their home. It’s important to make sure you have the appropriate coverage if you don’t already have it.
Home-sharing companies such as Airbnb or HomeAway offer basic insurance coverage, but what they offer may not be enough, or could be severely limited by exclusions. Your best option is to ask your insurance provider about the nature of the protection, liability coverage and deductible. For example, if you’re renting out rooms at your primary residence, short-term, on a regular basis, it may be considered a home-based business, and you could be denied coverage.
Hawaii Dream Realty LLC specialized in sales, marketing, exchange, and management of investment properties. For more information on our services visit www.invest808.com or for more information on our short term rental properties visit www.WaikikiStay.com. Hawaii Dream Realty LLC is an independently owner and licensed real estate brokerage.
It’s here! New Vacation Rental Marketplace Website Announcement
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.
Vacation Home Purchase Considerations
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.
Property Management
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.
Property Management Services
Hawaii Dream Realty LLC offers full service property management for Oahu real property owners who wish to retain their investments, increase property value and maximize their return. Many investors are already accustomed to managing accounts online, checking balances, making online payments, and electronically transferring funds. Our approach to investment properties is the same which is why we employ an easy to navigate, Real Property Investment Management Portal. The portal provides the level of transparency into our property management that you deserve and benefit.
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Home Buying Could Soon Beat Renting
“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 monthly rent payments depicts how affordable home ownership has become.
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Unfortunately, that’s a big “if,” according to Paul Diggle, Housing Eeconomist 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 to the 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.
Your O'ahu Real Estate Connection 