Is Buying A Condo In Hawaii A Good Investment
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is buying a condo in hawaii a good investment
There are a few factors that come into play when looking at condos in Waikiki. The first item I look at as a real estate agent when asked about buying a condo in Waikiki is the land tenure. Oftentimes a prospective buyer is looking for condos in Waikiki and will notice some price points that seem too good to be true. If this is the case, more often than not, that condo turns out to be a leasehold condo.
If you are an investor then most likely you are looking to use your potential condo in Waikiki as a cash flow investment vehicle. This can be a tricky business in Waikiki( Honolulu county) due to the zoning laws and permitting by the city for short term rental use.
When buying a condo in Waikiki for short term rental use it may be beneficial to buy a condo that is already permitted for short term vacation rental use. Depending on if the condo is fee simple or leasehold may have an impact on purchase price.
If you are planning on applying for a government loan program, such as a Veterans Administration (VA) or Federal Housing Administration (FHA) loan, verify that the building has been VA or FHA approved before making an offer. Not all condos meet the minimum owner-occupant ratios. Some banks will require a larger down payment for condominium units purchased as rental-income investments. Also, buying a leasehold property may affect the term of your loan, depending on the term of the lease. Check with your lender.
For example, when purchasing $500,000 worth of stock, you would have to pay $500,000. However, to purchase a $500,000 Waikiki condominium, you might only need to pay $100,000 (20%). If prices increase by 5%, the price increase for $500,000 would be $25,000. The Waikiki condo cost you $100,000 to make $25,000 but the stocks cost you $500,000 to make $25,000; this is the leverage that a real estate investment affords.
The best advice when trying to decide between a condo and a home is to do your research on the Hawaii real estate market forecast 2022 (or the year you wish to move) and to plan your best deals and investments in Hawaii real estate.
The Hawaii real estate market and buying a home or property in Hawaii are not always as simple as it may seem. Oceanfront property in Kauai and the neighboring islands can be quite expensive, condo association or not.
As you look for your home on the Big Island, you are likely to find both houses and condos that could meet your criteria and fit your budget. How can you choose between the two? There is no obvious answer, but consider these pros and cons of buying a house or condo to help you decide which is the ideal fit for you in this season of your life.
Remember that a condo usually comes with a higher HOA fee than a housing community, which may have no HOA at all. You also need to find out if the condo is fee simple or leasehold, which will ultimately make a difference on the long term investment potential of the property.
Consider hiring a real estate agent and real estate attorney experienced with the condo searching and buying process. They can guide you through the condo association documents, including the association bylaws, recent regulations and budget, to help uncover any issues that may negatively impact your lifestyle.
To know if buying a condo is worth it, you should evaluate all of the costs. Not only do you need to consider the principal and interest portion of your mortgage payments, you also have condo insurance, association dues, property taxes and mortgage insurance (if applicable) to factor into your costs.
The following example represents a 30-year mortgage on a $300,000 condo with a 7.12% interest rate and 10% down payment. Comparing these costs to that of buying a house might give you a clearer picture of whether buying a condo is worth it.
A non-warrantable condo does not meet these requirements, and it will be harder to qualify for a mortgage. In this case, you might consider buying a single-family home or paying for the condo with cash.
And although Honua Kai units have been outperforming most other Maui properties in terms of return on investment, there are strong performers within this micro-market. Which condo to buy then becomes a reflection of which best meets one's real estate objectives (investment versus personal enjoyment preferences) and the budget allocated for the purchase. 041b061a72