The single most asked question I get as a Lahaina Hawai’i Life agent is, “What vacation property should I buy for the best investment?” What if I told you a vacation rental property may not be the best plan? Many of my wonderful Buyer referrals want to rent prior to purchasing on Maui to give themselves not only the time to acclimate to their new surroundings, but to settle in, and mostly to make certain they are choosing the right part of the island before buying their new home.
Maui is facing a serious long-term rental property shortage, and for me, it’s affected future home sales. Landlords that allow pets are even in higher demand. Long-term rentals are periods of 6 months or longer and short-term rentals are considered less than 6 months. Here are my current vacation rental listings, in addition to my personal residence below, it could be a great long-term rental property, or perhaps your own personal residence.
118 E Huapala Pl, Lahaina (MLS# 371574)
I also think this listing (MLS# 372933) from my fellow Hawaii Life agent, Ray Chin, has great investment potential, in the heart of Lahaina. Vacation rentals can certainly be lucrative, with nightly rates from $89 – $8,250 according to a basic VRBO search of properties in Lahaina. But, the costs in owning them can prove more expensive.
The State of Hawai’i requires an off-island property owner that rents their property, that they retain an on-island contact, even as a VRBO listing. And management fees are typically higher for vacation properties (30%-50%+ of rental revenue) vs residential properties (10%-30%+ of rental revenue). And you are relying on potentially 52 different clients to rent your unit, if they are staying in one week increments, versus a long-term tenant(s) signing a one-year lease at a time.
Property taxes, maintenance fees, utility costs, and homeowners insurance premiums may all come at a higher expense as well. And if you plan on using your property yourself while visiting our beautiful island, the time of year that your vacation and the length of your stay could greatly impact your rental income, and not in a good way. It may make more sense to buy a property that affords you the opportunity to stay somewhere you may not be able to purchase. It could also be the stepping stone to get you eventually into your dream property. That’s what I’m here for; to help you determine not only the property that best suits your needs now, but the one for your tomorrow.
If you would like more information on buying an investment property on Maui, please contact me.