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5 More Tips Canadians (or Any Foreign Buyer) Need to Know Before Buying Hawaii Property

Part one of this series talked about the first five things Canadians or other foreign buyers should know before buying real estate in Hawaii. It is actually fairly easy for a foreign buyer to purchase property, but if the buyer knows in advance what to look for, the process will be even smoother. In this part, the next five tips for buyers are presented.

bigstock_Rainbow_Falls_Hawaii__1413873-2

Incredible tropical scenery is calling to many Canadians and other foreign buyers

So, here’s a look at the next 6 out of 10 things you should know before you buy:

6. You Can Obtain a Mortgage If You Live Outside the U.S.

If you are going to carry a mortgage on the property, you can obtain a mortgage if you live outside the U.S., but there are some special points to consider when getting a loan:

  • You will need to work with a lender that is licensed in Hawaii. If you are getting a loan on a property here on the Big Island, experience teaches that it is best to work with a local lender. Ask your agent for some recommendations of lenders here on the island.
  • You will have to pay a higher interest rate if you are a foreign buyer and you may have to put down up to 40%.
  • All cash to close must be deposited into an existing U.S. bank account.

7. Your Closing Paperwork Will Have to be Notarized

This will mean either having it done in the U.S. or going to a U.S. Embassy in your country. Luckily, there are eight embassies located in Canada. If you need the location of one, here is a link with all embassies around the world.

8. Thinking of Using Your Property as a Vacation Rental?

There are 3 points you should know about renting your property out as a vacation rental:

  • Not all islands are open to vacation rentals. Laws on short-term vacation rentals are set by the laws of the local county government, so be sure to check local laws before making an offer.
  • Condos are very popular as a vacation rental, but some condo projects restrict the use as a vacation rental, so again check before putting in an offer.
  • There are special Hawaii state taxes that apply to short-term rentals, such as a vacation rental.

 
vacationcondo

Condos are very popular to use as a vacation rental, as this use leaves the condo open for “Snowbird” owner occupancy

9. What About Taxes?

And, on the subject of taxes, you should know that if you decide to sell the property, 2 special taxes come into play:

10. If You Stay Too Long, You Will Be Subject to Double Taxation

The number of days you spend living in Hawaii and enjoying paradise is restricted.

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Can’t I just stay forever?

Happy House Hunting!

And, that’s the list of 10 things foreign buyers should be on the look out for when buying their special part of Hawaii. And, as you can see, nothing on the list is overly difficult, just something to work on in advance of your purchase. So, now you’re all set to go out and buy your Hawaiian dream property, eh?

If you have any questions about buying real estate in Hawaii, please contact us.

Aloha.

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Carol Andrews, RB,ABR,SFR

March 9, 2012

Thank you for this very informative information. We have a lot of Canadian visitors and it is great to have a resource like this to share.
Mahalo,
Carol

Carol Andrews, RB,ABR,SFR

March 9, 2012

Thank you for this very informative information. We have a lot of Canadian visitors and it is great to have a resource like this to share.
Mahalo,
Carol

Michelle

February 18, 2014

Hi.
I’m thinking about making a permanent move to the big island with my elderly parents and two children. Do you have any idea how hard it is to immigrate and the time it takes? I understand I’d need a green card but is it possible to bring my parents and is it possible for my parents to get health care there? Does it make a difference how much capital we plan to bring with us?
We are coming for a month this summer to see how we like it and look around.

Thank you.

Michelle

February 18, 2014

Hi.
I’m thinking about making a permanent move to the big island with my elderly parents and two children. Do you have any idea how hard it is to immigrate and the time it takes? I understand I’d need a green card but is it possible to bring my parents and is it possible for my parents to get health care there? Does it make a difference how much capital we plan to bring with us?
We are coming for a month this summer to see how we like it and look around.

Thank you.

Brian PAUL

April 20, 2014

Hi Pat

Myself and eleven friends are contemplating on forming a company and purchasing a condo in Mauii. It would not be for rental purposes and each person would have access to it for one month of the year. Have you any experience with such a situation? We are all Canadians.

Brian

Brian PAUL

April 20, 2014

Hi Pat

Myself and eleven friends are contemplating on forming a company and purchasing a condo in Mauii. It would not be for rental purposes and each person would have access to it for one month of the year. Have you any experience with such a situation? We are all Canadians.

Brian

Pat Strausse

April 22, 2014

@Brian, Hi Brian, thanks for reading my blog. I have worked with 4 Canadians that bought a
condo over here on the Big Island. I haven’t worked with a group of 12 but it’s really the same
process as for 2 or 4 people. It would be easiest if you bought the condo as a cash purchase.
Then it would depend on if the purchase is by the company or as the group of 12 – you can do
it either way – is a group of 12 you could hold title as joint Tenants OR Tenants in common. If it is a company, I’d assume that just one or two people would be authorized to sign for the paperwork. Since all the final paperwork would need to be notarized, it would probably be easier for just the company to sign the final docs instead of all 12 buyers having to go to a notary.
But, then again you could all come over here to Hawaii and have one great big signing party!

Hope this helps you out – sounds like a great way for you to have your own place in Hawaii. Let me know if you have any other questions.
Aloha, Pat

Pat Strausse

April 22, 2014

@Brian, Hi Brian, thanks for reading my blog. I have worked with 4 Canadians that bought a
condo over here on the Big Island. I haven’t worked with a group of 12 but it’s really the same
process as for 2 or 4 people. It would be easiest if you bought the condo as a cash purchase.
Then it would depend on if the purchase is by the company or as the group of 12 – you can do
it either way – is a group of 12 you could hold title as joint Tenants OR Tenants in common. If it is a company, I’d assume that just one or two people would be authorized to sign for the paperwork. Since all the final paperwork would need to be notarized, it would probably be easier for just the company to sign the final docs instead of all 12 buyers having to go to a notary.
But, then again you could all come over here to Hawaii and have one great big signing party!

Hope this helps you out – sounds like a great way for you to have your own place in Hawaii. Let me know if you have any other questions.
Aloha, Pat

Chelsea Jones

January 20, 2015

Hello,

My husband and I are looking into buying land in Kauai or The Big Island. We would like to open a villa/cottage property for vacationing guests. We are both Canadians and may have other investors on board as well (TBD.) We are looking for either a pre-existing business, or land to develop on – however we don’t know just where to start or what the requirements may be. This could be a business we hire out, or perhaps something we may be interested in overseeing ourselves for a portion/majority of the year. Is this something typically Canadians/foreign investors are able to do to your knowledge/ do you have any insight or resourceful direction you could provide?

So appreciate information in the direction,

Kindest regards,
Chelsea Jones.

Chelsea Jones

January 20, 2015

Hello,

My husband and I are looking into buying land in Kauai or The Big Island. We would like to open a villa/cottage property for vacationing guests. We are both Canadians and may have other investors on board as well (TBD.) We are looking for either a pre-existing business, or land to develop on – however we don’t know just where to start or what the requirements may be. This could be a business we hire out, or perhaps something we may be interested in overseeing ourselves for a portion/majority of the year. Is this something typically Canadians/foreign investors are able to do to your knowledge/ do you have any insight or resourceful direction you could provide?

So appreciate information in the direction,

Kindest regards,
Chelsea Jones.

Pat Strausse

January 23, 2015

@Chelsea – It is very possible for you to have a vacation rental business here in Hawaii. While you can buy land and build a property, an easier option would be to purchase a condo here in Hawaii. Resort condos are very popular for vacation rentals and there are many options available for you to choose from on all the islands. Also, Hawaii has many vacation rental property management companies that can oversee your rental properties. Feel free to contact me directly at Pat@hawaiilife.com if you would like more information on condos here in Hawaii. Aloha,Pat

Pat Strausse

January 23, 2015

@Chelsea – It is very possible for you to have a vacation rental business here in Hawaii. While you can buy land and build a property, an easier option would be to purchase a condo here in Hawaii. Resort condos are very popular for vacation rentals and there are many options available for you to choose from on all the islands. Also, Hawaii has many vacation rental property management companies that can oversee your rental properties. Feel free to contact me directly at Pat@hawaiilife.com if you would like more information on condos here in Hawaii. Aloha,Pat

Sam @ Financial Samurai

July 12, 2016

Thanks for your post. I thought there was a foreigner tax if they buy property?

Thanks,

Sam

Sam @ Financial Samurai

July 12, 2016

Thanks for your post. I thought there was a foreigner tax if they buy property?

Thanks,

Sam

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