Should I Invest in Hawaii Real Estate?
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Should I Invest in Hawaii Real Estate?


Dude, have you ever been to Hawaii? It is
the place to be, it is such an incredible place to vacation and you might find
yourself thinking, I need to own some real estate in Hawaii. Today, we’ll find
out if that’s true or not. Alright, friends. Today we’re jamming on Hawaii
because so many of you want to know, Kris, should I invest in real estate in
Hawaii? And for just a moment, it does sound a little bit dreamy, doesn’t it? I’ve got
my investor romantics that are out there like, Kris, you know how cool it
would be? I could own a piece of property out there, I could go visit it from time
to time when it’s not occupied, I can rent it out, I can Airbnb that thing and
Kris, should I invest in real estate in Hawaii? And you know what, I’m going to tell
you right now, I love Hawaii, I’ve been to Hawaii many many times and I’ve been
able to visit most of the islands and what an incredible place in the world to
visit, it’s truly remarkable but let’s jam on real estate and whether
we should be buying real estate there and let’s just start by taking a look at
the big picture economic. First of all, the median home price currently in
Hawaii is $610,000 and my first sniff gut check
says, is that over the national median in America? National median, 220 grand. Is it
over? Yes, it’s triple over which doesn’t mean triple the risk, it means way more
than triple the risk. Last year, the prices went up by over 6%
and they’re projected this year to go up by another 5% so right now the
growth in those markets are fantastic because think about it, if you own a
$600,000 median size home and it goes up 5%,
that’s like pocketing $50,000, $60,000 in your pocket of your
net worth balance sheet saying, man, I’m worth 50 grand more today just because I
owned a piece of property in Hawaii and while it’s a great destination
place, check out the price per square foot. $580,000 per
square foot, makes it one of the most expensive places in the continental
United States to be owning real estate. Not only that but if you’ve
ever been to Hawaii and you talk with the locals, you know what they’re going to
tell you about the cost of living? They’re going to complain about the prices
of gas and milk, they’re going to complain about that cost of living and how much extra
jobs is like, yeah, I moved to paradise and I got to work 80 hours a week just
to kind of float my basics and get you know, all my
expenses taken care of so it’s interesting that instead of being on
island time for many people, it’s a high-stress time and they’ve got to find
a way to become super minimalistic so that they can make that lifestyle work
and don’t forget, Hawaii has sharks so when we talk about is Hawaii really a
good place to invest? You know, one of my number one rules is don’t buy over the
median because the market will course correct. In 6% last year, 5%
this year, that’s going to equate to some really great
growth for yourself that again on a $600,000 home, you take
last year 6 and this 5, you’re up $60,000 that feels really
good but what happens when the market drops 20%? Because they can do
it on a dime and the market moves in cycles and it moves in waves, I think
that if you own real estate in Hawaii for the long haul, it’s only going to go up
in value but here’s my question, can you make the economics of renting at work
because if you don’t live there and you want to rent it out, a lot of this Airbnb
does it rent for 30 days a month like that or even 15 days a month? It can but
it depends so I’m not going to tell you not to do it but I’m going to tell you that
you need to really do your homework on it, you got to really understand how much
that can I rent out and am I renting it to locals or am I renting it to the to
the to all the visitors that are coming there to vacation there? And you got to
have a solid business plan with solid numbers to know that that can work
because as much of a dream as that is it, has a high risk factor and if you show
me a home that can work in Hawaii, I can show you four homes that you can buy on
the mainland that’ll also work but with way less risk and way more consistency.
Oh, Kris, you’re so boring. Oh my gosh. Where’s the fun? Where’s the adventure?
Where’s the joy? Why does it have to be so boring? You’re right. When it comes to
money, I like to treat it with respect and responsibility and respect and
responsibility says that I need to find a way to balance out my risk. Now don’t
get me wrong, I love risk, risk means I’m going outside of my 401k comfort zone,
IRA comfort zone, I’m going out of my home equity comfort zone and I realize
that no amount of savings and those tools that are having a hard time
competing average with the rate of inflation will
ever get me where I want to go so I’m going to have to take risks.
Here we’re talking about smart risks, here we’re talking about risks that have
a high likelihood of giving you what you want and getting you where you want to
go. For me, I need to see that there’s growth on the horizon, I want to be in
markets where I can see good cash flow and I want my investment to sustainably
be paying me this month. I want to pay me every month and I want it to pay me on a
regular basis and if I’m doing those things and if I’m doing it correctly
then guess what, my real estate’s taking care of me. I don’t see that happening in
Hawaii nearly as much as I’m getting it to
happen in my other markets so I like to have the gains with as little
risk as possible. Most of the real estate markets that I’m in I’m getting 15% and
20% annualized returns and Hawaii, can I find a consistent base of
deals that are doing that? I can’t. There’s one other reason why Hawaii is a
no for me though. I love track record and I’m not talking about the track record
of a home, that’s equivalent to all your eggs in one basket. I’m talking about the
equivalent of many homes. When I do my real estate and I compare my properties
and stack them up against each other, the reality is, they more or less all look
the same, they function the same, the ROI’s are the same. That’s me taking,
having respect for my money and having responsibility for it.
The moment it’s like, Oh Kris, there’s this art project, right. There’s this
unique one-of-a-kind property in Hawaii one-of-a-kind can equal greater returns,
just be aware that it also means greater risk so if you want to be a professional
investor and if you want to mitigate that risk by putting your money in a
lot of different baskets and if you want to compound that growth, there are a lot
better ways of doing that than Hawaii but you might find this special
situation the special circumstance on the right home that can really work out
there for you so ultimately it depends, it’s a no answer for me on Hawaii.
Hey, friends. Thanks for checking out that video. Please comment below on your own
thoughts about different markets you want to know about, places you should
maybe consider not consider investing in and please also check out the playlist
right over here so I can share with you some of the hot markets that I am
investing in. Other than that, my friends, subscribe and we’ll see you back here
tomorrow.

16 Comments

  • D. Ho

    Nooo everyone is moving out. Everything is becoming to expensive. I live in Hawaii. And even the houses in kahala (the rich area) aren’t selling. There’s a house that didn’t sell for over a year.

  • Jermaine Allen Agustin

    Hi Kris as a Hawaii resident I agree with you 100%. Thanks for the info, I will be starting outside Hawaii.

  • Kevin Hernandez

    Correction…. Hawaii isn’t part of the Continental United States… it’s the only state that’s not on the continent of North America.

  • Megan Manuel

    I am possibly moving there in 2019! My plan is to rent for the first few years, and to live with others in a house/apartment. My goal is to save 100K+ in 5 years, and buy my own property 🙂

  • dominic garvin

    You forgot to mention the Military population in Hawaii if your considering renting out. if you have a property close to base then your property with attract a lot of military personnel. You also know exactly how much they make a month so you don't have to worry about bad tenants

  • lupe avalos

    I just a cabin in Hawaii to vacation and feel like home . And I am just want a second home . I love Chicago at least it’s cheaper .

  • Lee C

    Oahu housing market is aggressive but easy tbh. Honestly I think the risk of owning property in hi is really low. The kicker is land. It’s limited but demand for homes far out reach supply. I live and own two homes in HI btw.

  • Jim Singletary

    For the most part he's right from a numbers perspective.   He doesn't even begin to touch on the other headaches of being a landlord in Hawaii.   There's some flyover states on the mainland that have a much better upside for the rookie investor.     I have been managing my Hawaii rentals from the mainland for 15 years and I am pretty burned out with it all.  I started getting really knowledgeable with the islands after year 10.  Owning beachfront gets old and owning a duplex in Memphis Tenn may have a better upside for you.   Don't get me wrong,  there are some upsides to rentals in Hawaii but you better be really savvy and have a strong mind to make it work.

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