If you are interested in buying a Vacation Rental Condo in Maui, here is some great information to get you started.
There are two types of ownership on Maui (and all of Hawaii for that matter). Fee Simple and LeaseHold. Fee Simple ownership is the type that people are most familiar with. You own a portion of your condominium (your unit) and piece of the entire complex including the common area in the grounds. It is just like the home you may own on the mainland. LeaseHold is a type of ownership where you own the condominium but you are on “long term” or ground lease for the land beneath it. These lease terms run anywhere from 50 to 99 years. LeaseHold Condominiums are about 20 to 30% less expensive than Fee Simple condominiums because there is more uncertainty for the long term and they are considered differently when financing. For the sake of simplicity I am only going discuss Fee Simple condominiums from this point on…
In general, the prices for vacation rental condos in Maui will begin at about $300,000 and run all the way up to $5,000,000.
Prices generally reflect the following features.
Location
Complex / Facility Amenities
Quality of the Individual Units.
Rental history (if available)
Most lenders consider condominiums that vacation rent “condotels”. A 25% down payment is usually required for a condotel although we are seeing some lenders get a little creative with respect to down payment amounts these days. We have a stable of local lenders that we work with. We can provide you with a list if you like. Local lenders tend to manage the transactions better than out of state lenders. They understand how every thing works a little better.
Hawaii is an escrow state, which means that our transactions are facilitated by escrow / title companies. Escrow / Title companies serve as neutral intermediaries who hold all of the funds until closing and help facilitate the transaction. Generally purchases take between 30 and 60 days to close. Some times people will close their cash purchases more quickly than that. We are very accustomed to working with people from the mainland and even other countries so it is very easy for us to facilitate transactions from a distance. I have sold properties to people I never met until after closing.
Monthly maintenance fees for the condominiums which usually cover water, sewer, common area maintenance, garbage and basic cable run from about $250 per month up to $1,000. Sometimes the maintenance fees include electricity.
There are many ways to rent a condo while you are not on island. Some folks opt to rent them out on their own or using a vacation rental by owner site (VRBO) on the Internet. Others use local management companies. Management fees run anywhere from 15% all the way up to about 50% depending on what they include. We have relationships with many of them and can put you in touch with several of these companies if you like.
Our market has been extremely hot over the last several years. The Baby Boomers, Maui’s status as “the best island destination in the world” and short supply have created quite a frothy market. Most people who are purchasing condominiums here now purchase for quality of life (or love of Maui) and anticipation of future appreciation. Because our prices have appreciated so much in the last several years, it is extremely difficult to find a condominium that will pay the mortgage with rentals without a substantial down payment.
If you have more specific questions or would like us to help you find a condo on Maui, Contact the Jalbert Brothers today.
