Hawaii Investments

[RealEstateAssistant]

Hi there,

I`m interested in finding out how the Canada market is for investing in real estate (condo`s to be specific) in Hawaii?...

I have a Realtor who specializes in condos in Hawaii (Big Island) and I`ve been thinking about advertising in Canada...he sells luxury, multi-million dollar condos on the Kohala Coast.

If you have any thoughts or interest please let me know.

Many thank you`s!

 

[housingrental]

Target luxury purchase specific media for results
The investor market won`t yield results you`ll be looking for

 

[Thomas Beyer]

I love Hawaii .. especially Kona and Maui !

I have been thinking about buying there for years .. and especially now with a strong Can$ !

BUT: counting condo fees, mortgage rates that are higher for Canadians, property taxes, management fees and property upkeep (new toaster, new TV every few years, lines/towels, ..) I come to the conclusion that "investing" in Hawaii makes sense only if you intend to live there 3-4 months/year AND always want to go to the same place AND always must have the same furniture/pictures/views !

every asset comes with a liability, namely those annual costs, opportunity cost (of money tied up) and its inflexibility ..

However, I am in Hawaii almost yearly .. sometimes 2x/year .. but always RENT as there are many fine Hawaiian islands, many fine beaches, more fine resorts, many specials, many new condo`s being built with even more specials ..

I invest in plain old boring investments like apartment buildings and make 10-16% on the money .. and then spend some of those proceeds on fine resorts on many Hawaiian islands .. that seems to be a better investment to me.

Convince me otherwise and I will listen ..

 

[gwasser]

QUOTE (ThomasBeyer @ Jun 27 2010, 05:25 PM) I love Hawaii .. especially Kona and Maui !

I have been thinking about buying there for years .. and especially now with a strong Can$ !

BUT: counting condo fees, mortgage rates that are higher for Canadians, property taxes, management fees and property upkeep (new toaster, new TV every few years, lines/towels, ..) I come to the conclusion that "investing" in Hawaii makes sense only if you intend to live there 3-4 months/year AND always want to go to the same place AND always must have the same furniture/pictures/views !

every asset comes with a liability, namely those annual costs, opportunity cost (of money tied up) and its inflexibility ..

However, I am in Hawaii almost yearly .. sometimes 2x/year .. but always RENT as there are many fine Hawaiian islands, many fine beaches, more fine resorts, many specials, many new condo`s being built with even more specials ..

I invest in plain old boring investments like apartment buildings and make 10-16% on the money .. and then spend some of those proceeds on fine resorts on many Hawaiian islands .. that seems to be a better investment to me.

Convince me otherwise and I will listen ..

I fully agree and based on painful experience. First of all, investing in recreational properties is highly cyclical and speculative. Also, you`re mixing up you business with pleasure not a good combination as it tends to become a game of emotions. Lastly and far from least, you are investing in markets with which you are less familiar and which are difficult to manage from a distance.

 

[Thomas Beyer]

QUOTE (gwasser @ Jun 27 2010, 05:09 PM) .. you are investing in markets with which you are less familiar and which are difficult to manage from a distance.
if you go to a place 1x/year for 6-7 times you get quite familiar .. but still it makes no financial sense to me ..

although the below analysis show it may make sense on the surface when

a) not counting time invested, and
b) if one has the $200,000 and
c) if one doesn`t mind going to the same place all the time
d) one isn`t too pissed off if the TV is broken or the new carpet filthy (again) the day one arrives

Let`s use an example: a decent 2BR condo near the beach with an oceanview in Kihei (big condo) or Wailea (small condo) in Maui, say $800,000 ..

Mortgage $600,000 (if you can get it) .. say 6% .. so $36,000/year (plus principal paydown not shown here, just cost)
plus
Opportunity cost of the downpayment of $200,000 at say 5% .. so $10,000/year
plus
Condo fees: $8000/year
plus
Property Taxes: $6000/year
plus
replacement cost of furniture, TV, carpets, every 10 years, so 10% of $80,000 or $8000/year

Total cost PER YEAR:
$68,000/year or well over $5000/month

Income: say 30 weeks @ $2000 gross/week or $1500 net i.e. $45,000/year

Net cost: $23,000/year or $2000/month

Thus, if property appreciates only 3%/year or $24,000 you`re break even more or less .. and you can stay 20 weeks for free ?