Thinking of Buying an Investment Property or Vacation Home in Hawaii?
Before you jump in and buy a property, I am going to talk about some things you need to think about first.
Aloha I am Stephen Proski with Real Estate Kailua Kona and Corcoran Pacific Properties. As a real estate Broker for more than 25 years, I’ve been assisting my clients successfully buy and sell all types of real estate, from condos, luxury homes, investment properties and more.
After visiting the Big Island on vacation and loving it, you might ask yourself, should I buy an investment property and make some money or a second home so I can avoid paying outrageous hotel and or rental fees in the future?
Over the past several years we have seen an uptick with buyers flocking to Kailua Kona area to purchase an investment property or second home. Yes, the pandemic had an impact with traveling and people wanting to vacation here. So, instead of the typical hotel experience they elected to rent a condo or a home.
So, there are a few options one should consider in deciding: Do I want a vacation home or do I want an investment property? A third option would be: Do I want a second home that can be used as an investment property?
If you just want a second home or vacation property, you are only going to use it for a fixed period of time and when not in use, it will stay vacant.
If you want an investment property that you can generate an income and rent out on a short term basis, then you are going to need a Short Term Vacation Rental Permit to operate
A third option, would be, purchasing a home or condo, use it part of the year and then when not in use, rent out for one to 3 months at a time and generate some income to offset your expenses.
The big misconceptions with a good number of buyers trying to buy an investment property here in Kailua Kona is they believe any property would qualify for a Short Term Vacation Rental and that is not true
Hawaii County established in 2018 regulations on Short Term Vacation Rentals so they could have better control of the growing demand for those types of rentals throughout the island.
Before you jump in and buy a property for the sole purpose of a short term vacation rental, you must make sure the property qualifies for a permit.
Short Term Vacation Rentals are for durations of 30 days or less. Most of our condo complexes in Kailua Kona and the Waikoloa Beach Resort area can obtain a Short Term Vacation Rental permit, unless the complex does not allow based upon their CC&R’s.
You must apply directly to the county and it takes about 30 to 90 days to obtain a decision. With that being said, single family homes generally will not qualify for a Short Term Vacation Rental permit, unless the property was being used as a short term rental prior to 2018. There are 2 types of permits, conforming and non-conforming. So don’t assume your investment property here in the Kailua Kona area automatically qualifies for an STVR permit.
A third option which has become very popular since the pandemic is purchase a vacation home or condo, use part of the year and then rent it out for periods of 1 to 3 months at a time or longer.
We have a limited supply of long term rentals on the island and we are seeing visitors come to Kailua Kona and wanting to stay longer than a few weeks. This is a great way to own a property here, use it to rent out and generate some residual income without having to obtain a Short Term Vacation Rental permit.
A fourth option is also available when you purchase a property here as your primary residence. When doing so, you can rent out a portion of the property as a short term vacation rental without a permit. It is called Hosted rental.
I hope this information was helpful. If you want more information about vacation homes or investment properties here in Kailua Kona, feel free to reach out to me anytime. Contact Me For More Information.
Look forward to seeing you again. MahaloPosted by Stephen Proski on