Thinking About Investing in Hawaii Real Estate?
Now might be a good time to jump into the market. Inventory has increased, prices in many geographical areas are softening, and interest rates remain competitive. Some geographical locations are better poised for good buying opportunities, but almost every neighborhood offers some opportunity. If you are thinking of buying Hawaii real estate for investment purposes, there is much to consider.
- Will the property generate enough rental income to cover carrying costs?
- Which properties and neighborhoods hold the best appreciation potential?
- What are the risks and tax implications?
Answers to these questions, along with a thorough analysis and inspection of the property, will go a long way to ensure a successful acquisition.
Owning Property in Hawaii – Long Term & Short Term
Many real estate investors look at the long-term strategy of owning income-producing properties. Hawaii historically does well in that department. Consider that the median price for a single-family home on Oahu was $158,600 in 1985. Fast forward to 2018 when the median for a single-family home was a whopping $790,000, for an overall appreciation rate of 398%! Of course, not everyone holds on to property for decades.
If you are thinking of holding onto property for a shorter period of time, we recommend a minimum of five to seven years to allow an investor to ride through any downturns in the market, thus affording a better chance of experiencing price appreciation. Timing is everything. The market ebbs and flows, so to maximize gain, the key is to buy when the market affords good opportunity. Increased pressure on prices, longer days on market, and attractive interest rates, all signal that now might be a good time to buy.
Flipping Houses in Hawaii
Another strategy for investing in Hawaii real estate is to rehab and flip a property. This can be the riskiest form of investing, but it can result in the highest rate of return. Not for the faint of heart, things to consider include carrying costs while the home is being refurbished, and the time involved in obtaining permits and approvals. It’s easy to underestimate time and costs, so consider the risks before buying properties for the sole purpose of flipping.
Get Professional Advice Before Buying
Whether you are a first-time investor, a savvy investor, or a flipper, it’s important to vet a property thoroughly. Part of a successful strategy is to have a team of professionals in place. An experienced Realtor, a professional home inspector, and a qualified tax adviser are just a few key players you will want to be involved. With the right strategies and the right team in place, most investors agree that buying real property in Hawaii is not only a safe bet, but a good way to build wealth!