Caravan: A Look At 3/2’s In $500-$600K Range

Last week at an Open House someone asked what a 3/2 meant. This is just common terminology for 3 bedrooms and 2 baths. Although a 3/2 is the most common type of home, there are lots of variations.

This week, I hit my own neighborhood of Ka’ono’ulu and Kenolio Estates in North Kihei. It is a very nice neighborhood that is an easy walk to Sugar Beach. Prices have dipped significantly here, making for some very good deals. Except where noted any of these home are in move-in-ready condition.

Reviewed Homes (View MLS Listings)

My BEST BUY of the week would have to be 693 Imahale St. which is listed at $525,000. It has only been on the market for 5 days and won’t last long. This 3/2 with only 1282 square feet was well laid out and felt spacious. A little color on the walls would make it feel more comfortable, but it was in good condition. You enter into a great room with living, dining area and kitchen with well-done laminate flooring (I did a double take because it looked and felt like real hardwood!). Kitchen has ceramic tile and is nice and open. Two small bedrooms are at the front of the house and the master is at the rear with sliding glass doors to the backyard. The bedrooms are small and the bathrooms are simple. The yard is large and simply landscaped. Lot size is 7559 sq ft which is why I made this a best buy over the next home. The home was built in 2002.

Another good buy is 132 Kawailani Circle listed at $505,000. This is the only one not in the estates but is in nearby the Pi’ilani 2 neighborhood and was built in 2001. The biggest drawback to this one is that it is close to the Pi’ilani highway. It doesn’t back directly up to the highway but a tip of the back wall does. Pi’ilani is a true highway with a good eal of noise. I live 2 blocks away and hear the traffic all day and night when our windows are open. This home is a little larger with 1256 sq ft but lot size is 5141 which makes for a small back yard and close neighbors! The seller is providing a credit to put in sound-insulating windows.

698 Alulike St. is a 3/2 home with 1318 sq ft and a large 8539 lot. The list price is $569,000. This one has the best curb appeal and would be a very livable family home. You enter into the great room with the large kitchen off the the right. The biggest drawback to this home is that there is no formal dining area although the kitchen has a large area for a table. Mature landscaping makes for nice outdoor living. The master suite features walk-in closets and a large bathroom with separate tub/shower which isn’t common in this price range.

133 Makalauna St. is a well maintained home. There is a nice front entrance into a compact living area. The kitchen has been fully redone and is adjacent to the living/dining area but does not have that “great room feel”. Bedrooms are small but the layout is nice. Nice backyard but it does back to a street that tends to have some traffic. This one has been on the market for a while.

As an investor, I often look at short sales as potential deals (depending on your exit strategy). 671 MaliMali is a short sale. It is a nice 3/2.5 home with a good sized 8111 sq ft. lot. The lot backs to open space which is designated as a road thoroughfare. Just behind this space is the Pi’ilani highway so I would guess you get significant highway noise. The house is in good condition but the yard needs a little more work. The list price is $539,000 which doesn’t make it much of a “deal” given than short sale processing can take up to 6 months.

All Homes on Caravan (View MLS Listings)

I also took a quick look at some vacation rental condos. The Kihei Holiday unit is one of the lowest priced 2 bedroom units available. The complex doesn’t offer lush surroundings but it is a nice unit with good ocean views (through electric wires) for just $439,000!

Another good buy is the large 1 bedroom at Koa Resort for $367,000. Koa Resort is one of my favorites because of its large spacious grounds and amenities.

If it is the world famous Maui views you are after, check out Menehune Shores 2/2 for $675,000. It on the 6th floor with really fabulous views. Good condition, great price for these views that would cost over a million in South Kihei!

To find out more about these or similar properties, contact me!

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Ka’ono’ulu in Hawaiian means “The Delicious Breadfruit” — three words in the right order! Once you learn a little Hawaiian, the names start making a little more sense. It’s helpful to try and break up a word into its individual parts. For example, the upcountry town where our local winery resides is Ulupalakua, which means Breadfruit (Ulu) ripens (Pala) on the back (Kua)!

Intro to Weekly Caravan

This is the first of what I hope is a weekly blog highlighting some of the houses and condominiums that I see on caravan. A caravan or a broker’s tour is a weekly event where agents are invited to go from house to house in a certain area. It is a great way to see a lot of properties in a short period of time.

In Maui, we have caravans running in the different districts most weekdays, so you could spend most of your time on caravan if you wanted to. Just as an example, here is what our current caravan schedule looks like:

• Tuesday is South Maui and rotates each week between Wailea, South Maui and North Maui (including Ma’alaea).
• Wednesday is West Maui (covering Lahaina, Ka’anapali and Kapalua and rotating between North and South).
• Wednesday is also Central Maui every other week.
• Thursday is Upcountry and North Shore rotating between Kula, Haiku/Pa’ia, Makawao/Pukalani/Olinda.

On each caravan we normally have 10-20 properties and about 2 hours to tour them. Agents don’t always go to every property or in the planned sequence.

Why can understanding caravans benefit a buyer or seller?

• Agents who attend caravan regularly know their inventory! It is one thing to see an MLS listing and pictures. It is a totally different experience to experience a property. An agent who previews properties and knows the inventory will save you tons in time. When interviewing agents, ask them when they last attended a caravan. Many “experienced” agents never attend caravan but the top agents usually do!
• Ask your local agents about when caravans are held in your area. Although they are designed for agents only, they are usually “Open Houses” that are open to the public too. Here in Maui, you may be able to see places that are rarely available for regular opens due to having renters and bookings for vacations rentals. While this may not be as effective as having an agent set up a tour of homes, it may be good thing to consider if you are “just looking”. You can talk to the hosting agents and listen in on comments from other agents as they tour homes.
• Agents work to entice other agents to see their listings. Food and prizes are common. When you interview an agent, ask them about plans to put your property on caravan. For example, I had a listing last year in a condominium that most agents know well. Knowing that it would be tough to get people to see it, I offered a prize drawing and had 23 agents come through! Without the prize, I may have had 5. Of the showings that I had, about 75% were from the agents who saw it on caravan, and I sold the place in 77 days through one of those agents.

Aloha and happy caravan!

Options In Paradise (Part 4)

In this installment of our series, I offer some miscellaneous thoughts for your consideration:

• Many second-home buyers think that a vacation rental unit is the best way to go because they can make lots of income on nightly or weekly rents. The reality in the numbers is that it is often more cost effective and convenient to own a lower priced property and be able to call it yours.
• If you are moving to Hawaii to live, you should know that many people who move here only stay a year or two. It may be best to rent before you buy, or get into a lease option where you can buy if you decide to stay, or decline to buy if you decide to leave.
• If you are an investor looking for cashflow, Maui may not be the best place to look. Appreciation has been pretty good but based on typical properties, you need to put 40-50% down to have a chance of cashflow, which makes for a less than ideal cash-on-cash return. There are ways to cashflow but most opportunities are in residential properties with multiple rental units which are often non-conforming.
• Everyone wants a great ocean view! For a mid-range condo in Maui, you pay an average of $50K more for a limited ocean view, and panoramic views can be much higher. Properties with views often have higher occupancy rates and higher income and appreciation. But buyer beware! Make sure that view won’t be obstructed by growing trees or new construction. Many people prefer a quiet tropical garden setting that is near a beach!

Options In Paradise (Part 3)

Timeshare, Fractional, Fee Simple or Leasehold

In this third segment, we’ll look at some concepts that are more unique to Hawaii than most other places in the country.

Timeshares

With timeshares, you own 1-6 weeks per year in a particular unit, and have a right to use the property for that period of time. Many condominiums have a handful of timeshare units. Most timeshare management companies allow you to “exchange” these units for those in other vacation spots around the world.

I have owned a timeshare in Hawaii since 1983. In my opinion, it has been a great purchase that has allowed my family and me to enjoy many vacations here and other places without having to stay in expensive hotels. Maintenance costs in these units have gone up over the years, but not nearly as much as hotel rates. I like having a home away from home where I can store groceries and have my husband cook me a meal. (Ladies, cooking lessons as anniversary gifts can be the best investment you’ll ever make. Ask me how I know!)

I would not however, classify these as an “investments”. Yes, you can resell a timeshare, but don’t expect to make much money on it. In fact, if you buy one as the result of a typical high-pressure sales pitch, after signing on the bottom line, you may only be able to sell it for about half what you paid.

I would advise everyone to look into timeshare maintenance costs and resale values before buying, and weigh the costs against what you think you’ll be paying for vacations over several years. Keep in mind that if you do take vacations regularly, as I do, you may never want to sell it.

Fractional Ownership

This concept is fairly new to Maui, but many feel it will take off because of the transient nature of many homeowners. In a fractional ownership, you own up to 1/6th (2 months use) of a condo or residential home. It is an official deed and gives you rights very similar to full ownership.

Statistics show that the majority of second-home owners use those homes a total of about 7 weeks a year. Due to Hawaii’s remote location, people don’t typically fly in for a weekend, as they might in other areas of the country. Instead, they typically stay for one to two months at a time. This is an excellent option to consider if you fall into that category.

Fee Simple or Leasehold

The majority of the properties on Maui are now sold as fee simple. This is the traditional mode of ownership, where you own the land as well as the structure on it.

There are still properties that are leasehold. This goes back to the days of old Hawaii, where all the property was owned by the ali’i, the ruling or noble class families. With leasehold, you own the property but you lease the land. Leases are often 50 or 100 years. If the land owner decides not to renew the lease, you lose rights to your property. Most leasehold properties on Maui are right on the beach which is very attractive to buyers and vacationers. This may be a risky investment, but it can be a great one if you’re aware of the time lines of the lease and plan for it with respect to financing and other relevant concerns.

Options In Paradise (Part 2)

Condominiums – Short Term Rentals, Condo-tels

For the second installment in this series, we will explore the possibility of having short term rentals in a condo unit.

If you want to be able to rent your condo legally for a period less than 6 months, the property must allow for short-term or vacation rentals. Short-term rental properties can be rented out nightly, weekly or monthly. Rental occupants are charged transient taxes of 11.25%.

Units that don’t allow short-term rentals tend to have more owner-occupied units and show more pride of ownership. So, if you like getting to know your neighbors, you probably don’t want to choose a short term rental condominium. They can be rented out for a minimum of 6 months.

Many short term rental units have on-site staff. Some of these are known as “Condo-tels” and are operated like hotels, complete with receptionists, concierges and room service . When the owners are not using their units, they can leverage the marketing and management done by a property management group to rent and maintain the condo unit as it would any other hotel room. People sometimes face challenges with financing on condo-tels, but most reputable Hawaii-based mortgage brokers are skilled at handling these details. Property tax rates on condo-tels are also higher. It is important to remember that there are several condominium complexes that allow short-term rentals but are not classified as condotels; check zoning and condo association regulations to be sure.

Options In Paradise (Part 1)

I haven’t met a single visitor to Maui who doesn’t dream of owning a home here at some point. Who can blame them? Our lovely beaches, lush flora, cool trade winds and abundant sunshine are enough to make anyone want a vacation to last forever.

There are ways this dream can become a reality. This is the first in an ongoing series called Options in Paradise, where I will offer things to consider when buying your island home in small, digestible segments to ponder over a mai tai.

Condominium vs. Single Family Residence

• Condominium
• Pros:
• Don’t have to do yardwork, as much of the maintenance handled.
• Some condos have as much living space as a single family home.
• Amenities such as pools, workout rooms, etc.
• Locations are often close to shopping areas and beaches.
• Cons:
• Close proximity to neighbors.
• Maintenance costs.
• Rules and regulations
• Often limited outdoor living space.
• Some older condo’s have special assessment costs to cover items such as roof replacement and elevator upgrades.
• Single Family Residence
• Pros:
• More flexibility in features.
• Ability to make change and upgrades easily.
• More outdoor living space.
• In Hawaii, many residential homes have attached or detached Ohana units (extra space for guests, offices, rental units, etc.)
• Cons:
• Responsible all maintenance and yardwork.

Future related blogs will compare short-term (vacation) rentals to long-term condominium living, discuss timeshares, fractional ownership and compare fee-simple to leasehold properties. Don’t let the beauty of Hawaii allure you without having the knowledge to make great decisions.