Posted by Jim V on May 16, 2006 at 03:03:21:
John,
Your comment about the time required to get to one side to the other is especially appropriate for the Big Island. It’s 2 hours plus drive time from Kailua to Hilo, and they are extremely different markets. To me, the question is somewhat similar to asking what the Southern California market is like. It all depends on the location. 
HAWAII Investing - Posted by AJ
Posted by AJ on May 11, 2006 at 12:35:05:
Hi Everyone,
What are your opinions / takes on investing on the island of Hawaii. It is particularly more affordable than the other islands (i.e. Maui). Do you believe that island has potential?
Re: HAWAII Investing - Posted by John Corey
Posted by John Corey on May 12, 2006 at 02:35:08:
AJ,
What do you mean by ‘invest’? Are you looking to hold a property for the income it produces or are you ‘investing’ as a second home?
I own property in HI (Maui). The location does not matter half as much as the cash flow.
If you are investing then you should be looking at all the cash flows (purchase, income produced and sale).
The island of Hawaii might be less expensive than some other location but it still might be a bad idea. Or it could be more expensive and still be a good idea.
To illustrate the point a bit…
If you pay all cash and have no holding costs other than property taxes then maybe the income matters less than if you are going to borrow to buy something. If you did buy for all cash and the property did not go up in value then you have a bad investment.
John Corey
Re: HAWAII Investing - Posted by AJ
Posted by AJ on May 12, 2006 at 12:40:40:
Thank you for the reply. I spoke to several agents in Hawaii and they’ve told me that I can purchase some older properties that are currently for sale, rehab or update the properties, and they would appraise for much higher (i.e. adding a bedroom, bathroom, etc.) after repairs.
Re: HAWAII Investing - Posted by John Corey
Posted by John Corey on May 12, 2006 at 13:32:07:
It is standard practice across the US to look for homes that are below the norm for an area and then add a bedroom and/or a bathroom. In many cases you can make good money. In some cases the cost and the time it takes makes it not worth the return.
Some agents are very practical. Most are friendly and optimistic about what someone else can make when someone else puts their money at risk. Hence I would check things out before moving forward. Definitely check the permit process and the restrictions that might exist about expanding the footprint of a property.
John Corey
Re: HAWAII Investing - Posted by John Corey
Posted by John Corey on May 12, 2006 at 13:29:00:
AJ,
Buying a property and then improving it (smallest house in the neighborhood) is a classic model for RE investing. There is nothing unique about that model and HI.
As you likely know, agents are optimistic about how values will increase. Make sure you are closely watching your numbers or you may find that there is no profitable market for such improvements. I would also be careful about zoning and other restrictions (waste, water, etc). Hence check out the permit process before committing. The agent is not going to offer you cash for their false predictions.
John Corey
Re: HAWAII Investing - Posted by AJ
Posted by AJ on May 12, 2006 at 13:40:08:
I’ve done improvements and full rehabs in my area, so I was curious on the Hawaii market. I do need to check out what the price differences are for older homes, and recently remodeled homes to see if it’s worth the effort. I am in SoCal, so I wouldn’t mind spending time in Hawaii for “business”. If you have any good agents who can orient me on the market, or know of a good REI club down there, would you please e-mail me and let me know? Thanks!
Re: HAWAII Investing - Posted by John Corey
Posted by John Corey on May 14, 2006 at 13:25:16:
AJ,
I have no specific recommendations. There was one Realtor that I met at the last Lenders Workshop. I do not have her card handy.
More important is the fact that the Realtors will focus on specific areas. Definitely specific to an island. Given the time to get to one side or the other many Realtors focus on a specific city and the area close buy rather than the whole island.
What specific locations are you most interested in? By posting the cities you might get some direct responses from Realtors or recommendations from investors.
John Corey