Maui Vacation Rentals: The Basics & What You Should Know

Thinking About Buying a Maui Vacation Rental Condo?

You’ve been visiting Maui for the last 10 years and every time you visit, you spend a hefty amount of money on lodging. You’ve already set your countdown to returning to Maui on your phone once the plane leaves the tarmac of the Kahului Airport. Sound familiar? I hear this quite frequently and what usually follows is entertaining the idea of owning a condo that allows short-term vacation rentals.

Keawakapu Beach, Photo Credit Travis Rowan

The next question that usually comes after is “how much money can I make from the unit?” In terms of return on investment, Maui property values are high, which ultimately affects your rate of return. If rate of return is your primary objective…then there are other places that may accomplish it more effectively. Fidelity National Title Year End 2022 Report shows median sales price at $775,000. This figure represents all the condos on Maui, when you shift your focus to condos that allow short-term vacation rentals, the figure is closer to $1M and more for a 2 bed unit.

Keawakapu 302 Ocean View, Photo Credit Travis Rowan

Creating Memories

According to several rental management companies, a buyer tends to purchase a vacation rental property on Maui for the experience and memories while at the same time making some money to offset some of the costs. The key is to hire a good management company that understands the market and maximizes occupancy rate and nightly rate. The management companies are motivated to generate as much revenue as possible since the income reflects the performance of the unit. Rental management fees can range from 25-40% fee. At the time of writing this blog, Hawaii Life’s management fee is 25%.

Keawakapu 302 Luxurious Finishes, Photo Credit Travis Rowan

Location

Choosing the right location is important. If maximum occupancy rate is what you’re after, then selecting a location that is a popular destination makes sense. South Kihei, North Kihei, and West Maui are good places to start. Typical sunny weather, great beaches, and range of dining options make these locations highly desirable.

Photo Credit Travis Rowan

Other Expenses

Other expenses to consider are taxes, cleaning fees, utilities, maintenance fees, insurance, and repairs. Typically, some of the taxes (General Excise Taxes and lodging taxes) and cleaning fees are passed onto the tenant. It would be worthwhile to talk to a management company to get more information and I’d be happy to connect you.

Let’s Keep in Touch

Have additional questions or are interested in purchasing an investment. I’m available to assist you! I can be reached at 808.796.6956 or richwu@hawaiilife.com.