A Beautiful Hawaii Day

[Tamaradarann]

Tamaradarann: are you the same tiggers we ran into in the elevators at the lagoon towers that had just bought a condo in Honolulu

Probably, we just signed our closing papers even though our closing date is not until mid May. All we need to do is wire the funds for closing.

 

[Tamaradarann]

Probably a different thread, but doing a bit of quick math, if you were to rent that out for, say, 3 months at $300/nt, you’d cover all your monthly costs AND generate a nice return on that $190k outlay. 90 days at $300=$27,000. That leaves a $15k return on the $190k, about 8%. And you can live in Waikiki for 9 months.

Well you have the general idea of why we are renting for the 1st year or so. This condo requires minimum 3 month rentals and the rates are not anywhere near $300/night that Hotels get. More like $100/night, however, with short rentals you get gaps with no rental and no income. Also, with short rental you must pay about 14% tax on top of the higher rates. 14% on $300 is another $42 so Tuggers realize that being able to come to Hawaii with your points is a great saving on booking a hotel.

 

[Tamaradarann]

Congratulations on your new addition. Will you Airbnb the unit when you are not there? or leave it vacant? If the former, I would imagine that you could rent for a significant sum that would offset much of your HOA fees and other expenses for the unit.

I've considered that it would be nice to have a place in Waikiki as we get older to spend as a second home. Waikiki has buses, restaurants, walking trails and activities close-by which provides an ideal location to serve the needs of older folks.

Condo rules prohibit Airbnb, however, we are going to rent for a while until we get our home on Long Island settled. We will either move here permanently in late 2020 or 2021 or settle into a 6 months in Waikiki and 6 months on Long Island and rent here for 6 months mode.

 

[slip]

Well you have the general idea of why we are renting for the 1st year or so. This condo requires minimum 3 month rentals and the rates are not anywhere near $300/night that Hotels get. More like $100/night, however, with short rentals you get gaps with no rental and no income. Also, with short rental you must pay about 14% tax on top of the higher rates. 14% on $300 is another $42 so Tuggers realize that being able to come to Hawaii with your points is a great saving on booking a hotel.

How are your HOA’s there? When I was looking, I was really surprised how much the HOA’s varied between different associations.

 

[Tamaradarann]

How are your HOA’s there? When I was looking, I was really surprised how much the HOA’s varied between different associations.

This HOA seems to be pretty on top of things. It is considered a very well run condominium. They have an office with staff each day and security when the office is not open to handle things that come up. They have some in house maintenance staff and a contractor list for problems that their staff can't handle.

 

[csodjd]

Well you have the general idea of why we are renting for the 1st year or so. This condo requires minimum 3 month rentals and the rates are not anywhere near $300/night that Hotels get. More like $100/night, however, with short rentals you get gaps with no rental and no income. Also, with short rental you must pay about 14% tax on top of the higher rates. 14% on $300 is another $42 so Tuggers realize that being able to come to Hawaii with your points is a great saving on booking a hotel.

So let me see if I’m getting this right. So you rent it out for, say, six months. That generates about $18,000 in rental income, and therefore fully covers your lease costs for the year with a little left over. Now you have the place for the other six months to use as you wish. Is that right? What are the other costs incurred for the rental period besides the lease costs?

 

[Tamaradarann]

So let me see if I’m getting this right. So you rent it out for, say, six months. That generates about $18,000 in rental income, and therefore fully covers your lease costs for the year with a little left over. Now you have the place for the other six months to use as you wish. Is that right? What are the other costs incurred for the rental period besides the lease costs?

Your numbers are pretty good. I figure the rental income after expenses to be about $15,000. In addition to the lease costs is the Association fees which run about $1100/month and taxes which run about $200/month. Therefore, this is not a free ride. It will still cost us about $15,000 a year for the 6 months or 180 nights or so. Using your $342/ night as the cost + taxes for a hotel for 180 nights that is about $60,000. Of course this is a 2 BR condo not a hotel room.

However, our overall plan is to move permanently and sell our house and save the $1700 operating costs per month and the cost of 3 cars which I estimate cost about $500/month since we stay here without a car.

 

[Maverick1963]

First congratulations on the condo purchase. Leasehold is a good choice if it is
more a matter of cost efficiency. And 50 year of lease agreement allows you to
sell your property in 10-20 years or earlier.

I bought one bedroom condo in Waikiki 6 years ago. I still have a half amount of market
value as a mortgage balance while I believe I can finish payment somehow eventually.

When I made the purchase plan initially, I thought I would stay there with my wife
after retirement maybe three months every year. But I have changed my mind and
consider it as a source of income for vacationing. As long as you have a tenant, it's very
care-free and automatic. Monthly rental income covers MF, tax, etc. The balance
is yours.

If you do rentals like airbnb, you need to pay your attention always and it will be
hospitality business and you must play a completely different kind of game. If someone
is thinking of buying a second home first time for your future, I will recommend a place
which carries both business and fun. Waikiki is a good example.

 

[Tamaradarann]

First congratulations on the condo purchase. Leasehold is a good choice if it is
more a matter of cost efficiency. And 50 year of lease agreement allows you to
sell your property in 10-20 years or earlier.

I bought one bedroom condo in Waikiki 6 years ago. I still have a half amount of market
value as a mortgage balance while I believe I can finish payment somehow eventually.

When I made the purchase plan initially, I thought I would stay there with my wife
after retirement maybe three months every year. But I have changed my mind and
consider it as a source of income for vacationing. As long as you have a tenant, it's very
care-free and automatic. Monthly rental income covers MF, tax, etc. The balance
is yours.

If you do rentals like airbnb, you need to pay your attention always and it will be
hospitality business and you must play a completely different kind of game. If someone
is thinking of buying a second home first time for your future, I will recommend a place
which carries both business and fun. Waikiki is a good example.

Thanks for your thoughts Maverick. We will be renting for either 6 months or living there full time depending on our other living arrangements. From what I have read as long as you have at least 30 years left on your leasehold it has excellent resale value. That would give us 20 years to enjoy it and if we live that long we will be 90.

 

[Ralph Sir Edward]

A little music to move by.