You’ve dreamed of owning your own little part of paradise for a long time now, and you’re finally ready to commit to your fantasies- a glamorous vacation home that you can escape to during the winter season that also serves as a sound long term investment. Great! You’ve decided to buy a vacation home in Hawaii… only, now what? Where do you start?
Location, Location, Location
First you’re going to want to decide on what part of the Island you like best. Of the 9 zones on the Big Island, no 2 are alike. Each offering its residents a unique experience and life style; from the lush, rolling hills of the Waimea countryside to the tourist filled streets of Kailua-Kona. What region you choose to look in will greatly influence the properties ability to create revenue through rental programs. You’ll want to ask a Real Estate professional about more details regarding current rental trends.
House or condo?
Early on, you’re going to want to choose between buying a home or a condo. Each one having it’s pro’s and cons of course- a condominium offers worry free landscaping, pest control and other services that are included with hoa fees- as well as a community setting, where common elements such as pools and BBQ areas maintained regularly. A home, however, may be the right choice- as it offers privacy, lenient or nonexistent cc&rs that will allow you to customize or ad additions to your home. Buying a house also comes with complete control over the acreage within the property boundaries as well. Ask your Real Estate Agent for advice on what rents out better in each area.
Like any business, you’re going to want to calculate every expense that you’ll be incurring throughout the year- giving you a good estimate of what you’re going to need to make off of rentals in order to break even or make a profit. Don’t forget to include HOA fees, cleaning fees, advertising, maintenance, utilities, and decor are all costs that you may incur- you’ll want to ask a Real Estate Professional and other owners in the area about what they spend. Do some detective work and come up with a comprehensive list.
Self managed or property management
You’ll also need to decide your level of involvement when it comes to managing the property. Hiring a property manager or management company has the advantage of experience, maintenance and cleaning delegation and hands free operation. Usually a 15%-20% commission is paid to the company or manager. Sitting down and meeting with a few companies is always a great idea- you want to meet who’s doing what and get comfortable communicating with each person.
Managing the rental yourself is also an option- and one you shouldn’t be afraid of exploring. If you have the time, and the willingness to learn and listen, you’ll find that managing a single rental unit- even from across the sea- can be a simple and rewarding experience. Once again you’re going to want to put on your detective hat and dig up some info. Talk to friends and family that have rentals, ask what their experiences are. Think of when you stayed at a vacation rental- was it run by a property management company or an owner. The pros and cons are subjective and, for some, are inverted depending on the individual.
Don’t forget why you’re doing this
This was meant to be your dream getaway, right? Your haven away from the dark, cold winter drear that gets you so down. The purpose is to own a little piece of paradise, to invest in a place that you enjoy, respect and love. Don’t get carried away with trying to make profit, focus on sustaining a viable budget that can be offset by rentals, and hopefully pay for a vacation out here. This is Hawaii! Land of relaxation, positive vibrations and reward. It is an honor to be, live and invest here, and always remember that.