I own STRs in Hawaii and so I have a decent idea of the Kona and Maui markets. Some of the more important assumptions are incorrect here. If you’re in a resort condo with the best of the best amenities or you are on the water, you could hope for 80-85% occupancy in Kona and 90-95% for Maui. For the unit you are looking at, I would estimate 70% or lesser. Also, you did not account for property management fees that are a minimum of 25% of bookings and mandatory for owners who are not local. And finally, if you’re looking for a condotel (like this one looks like) in Hawaii you have to put between 30 to 45% down ... not 20%. For smaller items on your spreadsheet, HOA does cover most of the insurance, cleaning fees are closer to $400 and STR license can be easily transferred in Kona for a property that was active previously.
Thanks, James, that was helpful. I am still pretty new at this and appreciate watching your ROI analysis. FYI, when a condo association pays for insurance, that means liability on the common grounds and replacement of the exterior structure in case of fire, etc. You still need insurance for your personal liability and the contents of your unit. That's why that listing also showed several hundred dollars a month for insurance.
I feel like location plays a much larger factor than just saying "Hawaii" as a whole state. We own a few STR on Maui. Oceanfront single family, 2022 cleared 1.15M profit. Two condo units in a luxury resort, a 3bd oceanview unit did 243k and a 2bd mountain view unit did 156k. In our experience Maui as a whole runs around 75-80% occupancy, but it really depends on the property location, amenities, views, etc.
If you don’t mind sharing, how are they doing in 2023 compared to 2022? I have an ocean view 2bd in one of the top luxury resorts in Maui and even though the occupancy is pretty good, the ADRs are lower compared to last year. Are you seeing the same?
We haven't changed our nightly rates (we don't adjust them much unless there's a reason) and bookings are on par with previous years. It's only March, so what the year end numbers will look like remain to be seen. If I run the P&L on the condos year-to-date the 3bd is at 96k and the 2bd is at 47k.
@@brat32179 thanks! That’s great information. Btw we don’t set prices by hand and instead use a dynamic pricing engine. It’s not perfect but it’s supposed to set prices based on supply and demand.
@@brat32179 thanks! That’s great information. Btw we don’t set prices by hand and instead use a dynamic pricing engine. It’s not perfect but it’s supposed to set prices based on supply and demand.
I was just in Kailua-Kona and talked to someone who bought land on the big island, built two units and rents them out on AIRBNB and makes solid income. Makes me wonder if buying an acre or so of land and building a property or two and renting them out would yield higher ROI's. Or even just building a unit and selling everything - would probably yield profit.
Building definitely CAN be profitable if done properly, but it's also a LOT of work and there's lots that can go wrong. If you've got experience with similar projects then it can be a great move, but it's not a strategy that I'd recommend for beginners.
Be careful. Short term rentals will not be permitted on most of the lots on the Big Island. The ones that will be permitted are expensive. An acre of land with short term rental permit will probably cost upwards of 5 million, so think much smaller. Secondly acquiring building permits is an extremely long process on the island. It can take 9 months to a year before you can get a shovel in the ground. Finally there are very few builders or lenders that provide lot loans in Hawaii. It can be a rewarding endeavor, but just know that it’ll be at least twice as hard and time consuming compared to the mainland.
I own STRs in Hawaii and so I have a decent idea of the Kona and Maui markets. Some of the more important assumptions are incorrect here. If you’re in a resort condo with the best of the best amenities or you are on the water, you could hope for 80-85% occupancy in Kona and 90-95% for Maui. For the unit you are looking at, I would estimate 70% or lesser. Also, you did not account for property management fees that are a minimum of 25% of bookings and mandatory for owners who are not local. And finally, if you’re looking for a condotel (like this one looks like) in Hawaii you have to put between 30 to 45% down ... not 20%. For smaller items on your spreadsheet, HOA does cover most of the insurance, cleaning fees are closer to $400 and STR license can be easily transferred in Kona for a property that was active previously.
Thanks, James, that was helpful. I am still pretty new at this and appreciate watching your ROI analysis. FYI, when a condo association pays for insurance, that means liability on the common grounds and replacement of the exterior structure in case of fire, etc. You still need insurance for your personal liability and the contents of your unit. That's why that listing also showed several hundred dollars a month for insurance.
I feel like location plays a much larger factor than just saying "Hawaii" as a whole state. We own a few STR on Maui. Oceanfront single family, 2022 cleared 1.15M profit. Two condo units in a luxury resort, a 3bd oceanview unit did 243k and a 2bd mountain view unit did 156k. In our experience Maui as a whole runs around 75-80% occupancy, but it really depends on the property location, amenities, views, etc.
If you don’t mind sharing, how are they doing in 2023 compared to 2022? I have an ocean view 2bd in one of the top luxury resorts in Maui and even though the occupancy is pretty good, the ADRs are lower compared to last year. Are you seeing the same?
We haven't changed our nightly rates (we don't adjust them much unless there's a reason) and bookings are on par with previous years. It's only March, so what the year end numbers will look like remain to be seen. If I run the P&L on the condos year-to-date the 3bd is at 96k and the 2bd is at 47k.
@@brat32179 thanks! That’s great information. Btw we don’t set prices by hand and instead use a dynamic pricing engine. It’s not perfect but it’s supposed to set prices based on supply and demand.
@@brat32179 thanks! That’s great information. Btw we don’t set prices by hand and instead use a dynamic pricing engine. It’s not perfect but it’s supposed to set prices based on supply and demand.
I was just in Kailua-Kona and talked to someone who bought land on the big island, built two units and rents them out on AIRBNB and makes solid income. Makes me wonder if buying an acre or so of land and building a property or two and renting them out would yield higher ROI's. Or even just building a unit and selling everything - would probably yield profit.
Building definitely CAN be profitable if done properly, but it's also a LOT of work and there's lots that can go wrong. If you've got experience with similar projects then it can be a great move, but it's not a strategy that I'd recommend for beginners.
Be careful. Short term rentals will not be permitted on most of the lots on the Big Island. The ones that will be permitted are expensive. An acre of land with short term rental permit will probably cost upwards of 5 million, so think much smaller. Secondly acquiring building permits is an extremely long process on the island. It can take 9 months to a year before you can get a shovel in the ground. Finally there are very few builders or lenders that provide lot loans in Hawaii. It can be a rewarding endeavor, but just know that it’ll be at least twice as hard and time consuming compared to the mainland.
Don’t forget how much they paid for buying or leasing the properties
I believe I saw that best performing Kona property on the market in 2022 for 14 million