Maui Real Estate Blog
So You Want Buy a Home to Vacation Rent on Maui
Everywhere you turn these days, you are bound to see an ad for Airbnb or VRBO. These businesses are changing where people stay on vacation. They are also leading to an increase in the number of buyers looking for single family homes that they can buy to rent on Airbnb. That said, Hawaii is similar to a lot of other locales in that they are increasing regulations on single family home vacation rentals.
The goal of this post is to delve into the rules and regulations that one might face if they have ambitions to vacation rent. It should be a prerequisite so that you can make an informed decision as to whether or not pursuing a home to vacation rent ultimately makes sense for your needs.
To be clear, this post is applicable to homes and not condos. There are a large number of condos on Maui zoned to allow short term rentals.
Are There Any Legal Vacation Rental Homes on Maui?
Hotel/Resort is the only type of zoning on Maui that allows for vacation/rentals. The bulk of the properties located within this zoning are hotels or vacation rental condominiums. There are literally a handful of homes around the island that have hotel/resort zoning. It is extremely rare that you will see the a hotel/resort zoned home on the market.
If a property does not have hotel/resort zoning, a homeowner could seek one of two different types of permits. 1. Short term rental 2. Bed and Breakfast.
Short Term Rental Permits
The short term rental permit is applicable to those who want to own a second home that they vacation rent. Maui County has legislation in place to regulate vacation rentals of single-family homes and agriculturally zoned properties. The application/licensing process is lengthy. The County does not approve all applications. If there are multiple short term rental homes in a neighborhood, new applications are subject to a formal review and public hearing by the Maui Planning Commission. For those that want to take a deep dive into the short term rental legislation, it is available online via the county website.
Some important things to know about the short term rental rules include the following:
- There is a five year ownership requirement to be eligible to apply for a short term rental permit. In other words, you cannot apply until you have owned the home for five years.
- The short term rental permits do not transfer with the sale of the property. New owners must wait five years and then apply for a new permit.
- Any short term rental on agriculturally zoned land requires Maui Planning Commission Approval.
- Accessory dwellings, also known as ohanas or cottages, may not be rented on short term basis.
- There are geographic caps for permits. In non-planning speak, that means there are limits to the number of vacation rentals in a community. As of this date (April 2019), no areas on Maui have met their caps.
Bed and Breakfast Permit
The Bed and Breakfast permit process is similar to the Short Term Rental Permit process in that there are no guarantees that a permit will be approved. The ordinance is available for review in its entirety online. Here are some key components of the Bed and Breakfast legislation:
- To obtain a bed and breakfast license, the owner needs to be an owner occupant. They need to live on the property.
- You do not need to own the property for five years to apply for a permit. A new owner may submit an application for a permit right after the purchase of the property.
- As with short term rentals, there a caps on the number of bed and breakfasts in a community.
- Like short term rentals, Bed and Breakfasts on agriculturally zoned properties require Maui Planning Commission Approval.
- Like short term rental permits, the county ordinance prohibits the transfer of bed and breakfast permits with a sale.
- Bed and Breakfast owners may serve simple breakfasts, but any more formal cooking would require a separate commercial kitchen license.
The County isn’t the only entity that regulates vacation rentals in a community. Prior to applying for a short term rental or bed and breakfast permit, applicants should check the rules of their homeowner’s association. That is particularly true for the resort communities. All of the subdivisions in Wailea and Kapalua prohibit vacation rentals. All but one of the subdivisions in Ka’anapali prohibit vacation rentals.
Additional Rules and Regulations
The State of Hawaii recently passed a law requiring that any owner renting their property on short-term basis (a duration less than 6 months) must:
- A. Register and obtain a state tax id.
- B. Have an on-island representative.
- C. Include your license and permit information in all advertising (media, web etc).
Taxes on Rentals
State law requires the payment of two state taxes on any rental income from bed and breakfasts or vacation rentals. Most landlords / owners accomplish this by making it a pass through tax (For Example: You advertise your rental as $500 / night plus applicable fees and taxes). These taxes are currently 14.42%, the same amount as guests would pay a hotel or a vacation rental condominium.
Although Maui County has some of the lowest property tax rates in the Country, vacation rental properties are subject to higher property tax rates. Here are the tax rates for 2019:
Residential Rate – $5.52 / $1,000 of assessed value.
Homeowner Rate – $2.85 / $1,000 of assessed value with a homeowner’s exemption of $200,000.
Bed and Breakfast Rate – Commercial residential (plus no exemption) – $4.55 / $1,000 of assessed value.
Short Term Rental Homes – Commercial – $7.28 / $1,000 of assessed value.
Vacation Rentable Condominiums – Hotel Resort – $9.28 / $1,000 of assessed value.
These rates are reviewed on an annual basis and may be subject to change. The changes usually are not very drastic.
Penalties and Fines
There are quite a few properties on island that are being vacation rented illegally without permits. We can neither condone or recommend this practice. The county of Maui recently raised the stakes for vacation renting illegally. Voters recently voted to raise the penalty for illegal rentals to $20,000. The fines combined with advanced enforcement efforts make illegal rentals a particularly risky proposition.
Is it Worth it?
When we present clients with the information provided above, most have refocused their efforts on vacation rental condos. We have a fair number of buyers who want to buy now and move to Maui in the long term. If that is the case, they may decide to buy a home and rent it long term until they are ready to relocate. Those that want to open a Bed and Breakfast have a less strenuous path than those who want a short term rental permit. That said, the permit process isn’t easy. We do not assist with this process, but we may be able to line you up with some resources who could help. Contact the Maui Real Estate Team with questions or for additional assistance.
Maui Real Estate Blog
Close to it All in Kuau
This charming, Hawaii Plantation Style home is located in the heart of the North Shore. The three bedroom, two bath home also has a detached garage. Some of the highlights of the home include newer appliances and a spacious deck that is ideal for entertaining or just enjoying the trade winds.
The location of this home is truly ideal for those that enjoy the North Shore lifestyle. It is within walking distance of surf spots. There are a variety of spots within a mile for SUP, surf, windsurfing, kitesurfing, foiling and more. Ho’okipa Beach Park is less than a half mile from the house. The world renowned Maliko Run for downwind paddling runs just off shore from this stretch of coastline. Paia town is less than a mile from the house. Paia offers restaurants, shopping, the best little health food store around and a number of yoga studios.
This is one unit of a CPR property. This unit includes 8,441 square feet of land.
This home is offered for $879,000. The listing agent of the property is the father of the owner. Check out the 21 Meha listing page for additional photos and details of the property. Contact The Maui Real Estate Team to arrange a showing or to ask questions about the property.
Maui Real Estate Blog
Paradise Found on The North Shore of Maui
Our office has an exceptional new listing in the Hanawana Valley, deep in windward Maui. This is a property for those that truly feel the pull of the natural beauty of this corner of the island. A short walk from the property takes you to a tranquil waterfall located on state land. Accessed via a pathway of swaying bamboo, the fifty foot waterfall and swimming hole are the stuff of dreams. The property has deeded access to the ocean. A trail along a stream takes you to the majestic shoreline. A lava rock point stands in stunning contrast to the vivid blues of the ocean. Calm days open opportunities for swimming or diving. The tide pools on the lava rock point are teeming with life.
The property itself is filled with botanical treasures. There are massive and majestic common mango trees that stretch towards the sky. There are edibles like coconut, avocado, banana and papaya. Ginger adds splashes of color around the property. An old green house would be a great spot to raise orchids or as a place to raise starts for other plants.
There are two existing dwellings on the property. One is a simple two-story home. While modest, it makes for a great spot to enjoy the valley’s beauty. The second home is in need of considerable repair. It could be a project for those that want to fix things up or you could start a new with the spot making a wonderful building site. The true value of the property lies in the land itself.
This tropical getaway on the North Shore of Maui is offered for $1,425,000. Check out the 7939 Hana Highway listing page for additional photos and details. Contact The Maui Real Estate Team with questions or to arrange a showing.
Maui Real Estate Blog
Classic Hawaii Plantation Style Home in Kula
We have a brand new listing in Upcountry Maui. The property includes 3.136 acres of fully fenced, gently sloped land; a classic three bedroom, two bathroom Hawaiian Plantation Style Home and a detached ohana.
Hawaiian Plantation Style in Kula
The main home for this property was originally constructed in 1936. There was a significant addition that added a new master suite in 2006. The builder took considerable effort to ensure that the addition blended seamlessly with the style and charm of the original home. Some of the features of the home include a cedar shake roof, fir floors throughout the home, a wood burning stove in the living room for cooler Upcountry nights and a clawfoot tub in the master suite bathroom. The kitchen was updated in 2013 with butcher block counter tops and subway tile back splash.
There are three generous lanai spaces off the back of the home. The two covered lanai are located in front of the master suite and the living room respectively. There is a large uncovered lanai space in front of the kitchen. The lanai spaces make for great locations to take in the stunning views of both the North Shore and South Maui Coastlines, the big blue ocean, island of Lanai and West Maui Mountains. It is tough to beat watching the sun dip in to the Pacific on a cool evening Upcountry.
Other Structures on the Property
The home has a detached two car garage. There is a good space in the garage for a small work shop. There is also an office with a half bath off the back of the garage.
The detached ohana is located downslope from the main home. The distance and topography results in good separation and privacy between the structures. The ohana also has its own discrete entrance to the property.The structure itself is configured as a studios. It has a good sized kitchen with tile floors. The rest of the ohana has laminate flooring. There is a covered lanai space for taking in the ocean and mountain views.
The 3.14 acres is fully usable. It mixes beautiful landscaping around the home with the rest of the land set up well for agricultural pursuits. The lanscaping includes a number of beautiful native trees including ohia and koa trees. There is a common mango tree in front of the home that has one of the more impressive collections of staghorn ferns, Pele’s Hair (Spanish Moss) and a smattering of colorful orchids. Fruit trees on the property include lemons, avocado, bananas and figs. One of the large avocado trees has a great tree house. There are a number of separate pasture areas that have been set up for goats or even a couple of horses.
Find out More About this Kula Classic
This Upcountry Classic is offered for $1,700,000. You can see more photos and details of the property on the 785 Kekaulike Avenue, Kula listing page. Contact The Maui Real Estate Team if you have questions or you would like to set up a showing. Not on island? You can take a 3D tour of both the main house and the ohana.
Maui Real Estate Blog
Welcome to the Team!
It has been a busy last couple of months for the Maui Real Estate Team. We have been working with a lot of buyers and bringing some great new listings to market. Our brokerage is also excited about having two new agents join our team. We want to welcome Michele Crompton and Matt Pritchard to the ranks.
Michele is a Maui resident for the last 16 years. Her prior work experience has been a personal assistant and concierge to a number of clients along the North Shore of Maui. Her tremendous organizational skill and assistance in helping her clients manage their residences will suit her well as a Maui Realtor. Michele and her husband Ulli live in Kuau. They enjoy an active outdoor Maui lifestyle. Michele can surf and ride circles around the author of this post.
If you are an avid windsurfer, Matt’s name probably rings a bell. He is a three time world champion. His windsurfing career brought him all over the world. He ultimately chose to reside in what many consider to be the mecca of the sport. It takes considerable effort and determination to achieve a world title. He brings those skills as well as natural instincts to the table as a new Maui Realtor. Matt lives in Haiku with his wife and two kids. He still gets in the water a lot giving private lessons and running clinics around the globe.
Not only do these new agents considerably raise the level of our office’s ocean skills, they both bring skill sets and work ethics that will serve their clients well. Welcome to the Team!
Maui Real Estate Blog
Last of its Kind on Kuau Point
Kuau Point stands out as one of the best oceanfront neighborhoods on the island. Quiet streets, a couple of oceanfront access points for water sports, a neighborhood beach and the island’s most renowned restaurant are what puts this community on the list. This new listing offers a special, last of its kind opportunity in the neighborhood.
Hawaii Plantation Style Home on Kuau Point
The existing home is a restored Hawaii Plantation Style Home. The restoration maintains the charm of the era when it was constructed. The home has three bedrooms and one a half baths. The floors have been refinished and stained dark adding an additional warmth to the home. The home provides more than ample storage for your water toys. Take a 3D Tour of the Home to see more of the interior and to see the floor plan.
There Aren’t Many Lots Like This left on Kuau Point
This home is located on a large 17,481 square foot lot. The R-1 zoning allows for an additional home and an accessory dwelling. The seller acquired a second water ensuring that there is sufficient water for any new construction. Walk around Kuau Point and you will quickly see that there aren’t many properties with this type of opportunity for additional construction. Develop a family compound, CPR the property or plant more fruit trees. The choice is yours.
An Ideal Location on Kuau Point
Walk out the front door of this home and you are roughly 100 feet from the Public Ocean Access and 200 feet from the waters of Tavares Bay. There is another ocean access roughly 1000 feet from the front door. That spot gives you access Noriega’s and the Mama’s Surf breaks which are popular for surf, SUP and windsurfing. It is less than five minutes drive to the waves at Ho’okipa Beach Park. Drive less than a mile to Paia town for restaurants, groceries, shopping and yoga. If you don’t want to venture far from home, the Kuau Store offers sandwiches and tasty Poke. Head to Mama’s Fish House for some of the finest dining available on the island.
This Last of its Kind Opportunity on Kuau Point is offered for sale for $1,750,000. Check out more photos and details on the 17 Malie Place listing page. Buyers may also Contact The Maui Real Estate Team with questions or to arrange a showing.