Should I Buy a 1 Bed or a 2 Bed Vacation Rentable Condo on Maui?
A lot of new buyers entering our Maui real estate market looking for a vacation rentable condo often start out thinking that they want a 2 bed unit. My first question to them is, “do you need a 2 bed unit for your own personal use, or do you want one because you think it will rent better?” If they answer with the latter, I then suggest that they not rule out 1 bed units. There are a few reasons for this line of thinking.
1. 1 Bedroom Units Rent More Frequently
1 bedroom units actually tend to rent more frequently here on Maui than 2 bedroom units (generally speaking). This is because you get all the visitors specifically looking for a 1 bed unit, as well as overflow from visitors who are already spending an “arm and a leg” on travel and want to save some money by having the kids/extra guests sleep on the sleeper sofa/murphy bed (which almost every 1 bed rental unit has).
2. 2 Bed vs. 1 Bed Income Isn’t That Different
From a pure investment standpoint, the difference between how much a 1 bed unit versus a 2 bed unit can generate in yearly income doesn’t differ too drastically, especially when considering the disparity in listing price points between the two. In general, there tends to be around a $200K minimum in difference between a 1 bed versus a 2 bed unit in particular complexes at the entry level price point in our market (*based on the current market on 3/18/22). Also, maintenance fees are typically higher for 2 bed units because they are based on square footage, so that cuts further into the margin as well.
3. More 1 Bedrooms Available for Sale on Maui
For Buyers maxing out at a certain price point, the inventory for 2 bed units can be quite slim as opposed to 1 bed units. For example, right now in South Maui under $1M, there are only two fee simple 2 bed vacation rentable units available, whereas there are 11 fee simple 1 bed vacation rentable units available in that same price point (*based on the current market on 3/18/22). Thus, depending on a Buyer’s price point, there may be more options available to them if they do not rule out 1 bed units.
Of course, some clients absolutely need a 2 bed unit for their own personal use, and there’s no way around that. However, I always like to have this conversation with my clients to make sure that a 1bd isn’t out of the equation, because it sometimes provides more options and bang for their buck. To chat about this further and find out what’s best for you, contact me today!