Posted by RickCA on March 04, 2002 at 22:34:53:
Looks like I need to do a bit more research or figure an alternate source of income if I’m going to Maui…
Tha idea of moving to Oahu had crossed my mind, but each time I have been there it just seemed that there was soo much traffic and hustle & bustle, that i might as swell stay in San Jose. Of course, the surf there is much better…
Relocating - Is My Plan Flawed??? - Posted by RickCA
Posted by RickCA on March 03, 2002 at 12:16:11:
I am planning on moving from CA to HI later this year. I want to start rehabbing properties. I have about $200K total cash to work with and decent credit, but will have no job when I move.
The Plan:
Purchase a 4-unit apartment or something of that nature, so I can live in one unit and have the rents pay for the mortgage payment - my logic is that I don’t want a monthly rent/mortgage payment out of my pocket when I start out. Ideally, this would be a fixer so i could start working on it while searching for my first SFH rehab.
Purchase, rehab & sell homes using private or hard money to build a strong cash base so I can start purchasing homes outright without financing.
Along the way I should run into a home I like and move into it, probably one of the rehabs.
Sell the 4-plex, because I don’t think I want to be in the landlord business forever, and keep buying-rehabbing-selling.
That’s it in a nutshell. Will this work???
I would greatly appreciate any opinions and advice to help me dial-in my business plan.
I am also trying to start networking with people in the RE business in HI, and would love to hear from anyone out there who knows the Maui market.
Thanks
Relocating - Is My Plan Flawed??? Yes! - Posted by Bryan in Cali
Posted by Bryan in Cali on March 03, 2002 at 19:29:00:
Why are you moving to Hawaii? It’s high cost from gasoline to house prices. The weather really isn’t that great-it’s vulnerable to hurricanes. Somebody once said that if you go to paradise for a vacation, don’t read the local newspaper. If you live in Southern California and worry that you don’t know Spanish well enough to do deals then move north. California has a lot of opportunity, you just have to look for it.
Re: Relocating - Is My Plan Flawed??? - Posted by JD
Posted by JD on March 03, 2002 at 17:40:29:
I’d skip step 1. I would live in the SFR I were rehabbing.
Re: Relocating - Is My Plan Flawed??? - Posted by Ian(Honolulu)
Posted by Ian(Honolulu) on March 03, 2002 at 17:02:46:
Rick,
Why have you decided to move to HI? If it is exclusively to invest in real estate, you may want to reconsider this. That being said… if you’re intent on coming, it can be done. The plus in HI is that there are not as many investors to compete with. The minus? There are good reasons for this. Property prices are very high in comparison to rents. Unless you want to go to the “ghetto” areas of the island where it’s hard to get decent tenants, it’s incredibly hard to make positive cash flow off a property without putting down a large %. Also, appreciation here is less steady than an elephant walking a tight rope. Traditionally appreciation in HI has gone up on a wave scale with large dips and recoveries. Eventually this pattern proves to go up, but only after a long period of time. Our economy is heavily dependant on tourism (government’s been trying to change this for years unsuccessfully). Recently tourism has taken a beating, causing some people to say we’ve hit bottom and are bouncing back. It’s hard to say. But, your idea for rehabbing and selling could work. As I said earlier, there are not many investors here compared to other states. This means less competition, and although the market isn’t “hot,” if it’s priced right (a SFH) it’ll move fast. So if you could find distressed owners and get places for cheap, there are great potential profits. Keep in mind that all of the above statements are regarding Oahu which is the main island of HI. You mentioned you were interested in Maui. I stayed away from it because it didn’t have enough volume (there are only currently 4 houses listed on the MLS in Maui). But, a friend of mine owns 2 rentals on Maui. He said he’s been lucky, referring to the fact that he got them both for very cheap from a distressed investor and found two very good tenant families that have been there for years. So, it can be done. My opinion is there’s just too much forcing… if the square doesn’t fit into the circle, try finding a square to stick it in. If you have any more questions shoot away I’ll try to answer as best I can.
-Ian
Re: Relocating - Is My Plan Flawed??? Yes! - Posted by RickCA
Posted by RickCA on March 04, 2002 at 24:18:27:
I have lived in CA (Northern) all my life and I need to get out for a while. I realize there is plenty of money to be made here, but i am leaving so that I can enjoy life, a little slower paced in Hawaii for 5 years or so… My second choice is Baja California, (my spanish is OK) or I also wouldn’t mind the Lake Shasta area. I would really like to try Hawaii if the numbers are there.
Re: Relocating - Is My Plan Flawed??? - Posted by RickCA
Posted by RickCA on March 04, 2002 at 24:11:14:
That’s probably a good idea, but I have done 2 rehabs (actually just trying to finish up the second) while living in them and it would be nice to not have to move every time I make a deal. I can see that it gets really old for my significant other too… I would like to stay in one place as much as possible and live peacfully - not in a constant construction zone.
Why do you not reccomend the 4-plex as a starter?
Re: Relocating - Is My Plan Flawed??? - Posted by RickCA
Posted by RickCA on March 04, 2002 at 24:46:17:
Ian,
Thanks for the info, I really appreciate your time. I did not decide to move to Hawaii to do Real Estate, I want to move to hawaii to slow down a bit enjoy life. I was just hoping that I could rehab houses for a living and make a decent buck or two while i was there… better than getting a job and making someone else rich. I have experience in remodeling and enjoy it so it kinda makes sense for me.
Only 4 houses on the MLS in Maui? Are you sure? I just went online and saw a whole bunch of homes, but only about 30 below $250K. The pickings do look a bit slim on the MLS. I wonder how hard it would be to find good buys…
I was there in September and did some looking around and it seems that there are lots of houses that could use some fixing up - being able to pick them up cheap is what I’m not sure about.
Ian, one question: What is the current status of the HI real estate market? Have prices dropped recently, are they rising, flat???
Thanks again
Re: Relocating - Is My Plan Flawed??? Yes! - Posted by Bryan in Cali
Posted by Bryan in Cali on March 04, 2002 at 11:57:39:
I live in Sacramento but my goal is to get to Silicon Valley. I will eventually. You might try Reno-good real estate numbers and a slow pace outside of the casinos. In fact, I’ve been considering Reno too, but I’ve decided not to for now.
Re: Relocating - Is My Plan Flawed??? - Posted by JD
Posted by JD on March 04, 2002 at 09:04:49:
It is not that I thought the 4 plex was a bad idea, I just thought living in the property was the best business decision. I know nothing of your personal situation. Since you have done only 2 rehabs, you won’t be acting as quickly as someone that has done 20. I know that when I live in a property I am rehabbing, it is a much more efficient use of my time.
Re: Relocating - Is My Plan Flawed??? - Posted by Ian(Honolulu)
Posted by Ian(Honolulu) on March 04, 2002 at 03:11:53:
Rick,
There certainly are many homes that need TLC on the islands. Yes I just rechecked the MLS listings… there are a total of 28 listings in Maui County. 8 of these are for homes (other are vacant land) while 5 of these are under 2 million dollars. Maybe what you were seeing on the internet was a FSBO listing area. Keep in mind though that as well as with the MLS, often on other internet listings Maui will be under the category “Maui County,” though it may not mention this. Maui County is in fact the islands of Maui, Molokai, and Lanai (food for thought.) As I mentioned earlier, there are many possible rehabs (especially on Oahu with the greater volume of homes.) Because there are so few investors that advertise publicly, you may have an advantage if you advertise aggressively. Moving on to your specific question on the housing market in Hawaii… I’d say it’s luke warm. Sorry it’s late and I’m fighting a cold so I wasn’t able to pull up a lot of numbers, but working with figures from the past 2 years we’ve shown slight appreciation. The “desirable” areas of Oahu such as Manoa, Kahala, Diamond Head, Hawaii Kai, etc. all had slight (less than 5%) increases in price. Volume has also slightly increased. However, many investors in the area are saying that they believe the after effects from Sept. 11 haven’t fully been felt on the housing market as of yet. While it crippled our economy (loss of over 50% in tourism, our main staple), the housing market had stayed strong surprising many people here. However, if Sept. 11 does not have any adverse effects on the housing market, and if it remains on the same wave pattern it has for the past 40 some years, then it should be expected to appreciate slowly for the next few years before hitting another down phase. Keep in mind that the Leeward side such as North Shore and also Waipahu have been irregular in terms of following the set pattern the past few years as both have lost value. Leeward has never had a steady chart to follow making it very hard to predict appreciation. Waipahu has recently had many job cuts since sugar plantations have been going out of business. Waipahu probably offers the best cap rates right now on the island, but it may be hard to find suitable tenants. Some feel that the area is poised for a rebound in the coming years, but this is of course only speculation. Sorry I got to rambling… hope I helped.
-Ian
Re: Relocating - Is My Plan Flawed??? Yes! - Posted by RickCA
Posted by RickCA on March 04, 2002 at 22:40:52:
Reno, huh? I’d get killed gambling away my profits.
Silicon Valley is where the money’s at, but it costs a mint to get in. Sold a house in Sunnyvale a liitle while ago and made a nice chunk - it amazes me what people pay for houses in the area!!!
Re: Relocating - Is My Plan Flawed??? - Posted by RickCA
Posted by RickCA on March 04, 2002 at 22:37:27:
Agreed, definitely a better use of time and saves a mortgage payment.