Luxury Beachfront Homes for Sale: Your golden Hawaiian investment opportunity
Have you ever considered investing in real estate in the U.S.? Well, not just anywhere in the country, but somewhere that’ll give you the greatest bang for your buck? The challenge for most prospective real estate investors has always been twofold: Where (State, location, city) to invest; and what to buy that’s worth putting money into. You really can’t just buy any type of property in any state or City. The question is: Where can you find real value for your investment?
And, the answer to both these questions lies in taking a closer look at luxury real estate in Hawaii.
Judging by The Data
Data from the world’s most reputed housing price index, the S&P CoreLogic Case-Shiller Index, shows that the index of home prices in the U.S. rose by an average over 11% in Jan 2021, compared to a year ago. And yes, there were outliers to that growth, including cities like San Diego (14.2%), Phoenix (15.8%) and Seattle (14.3%).
These price gains are some of the biggest the country has experienced since March 2014. And, considering that we are in a global state of crisis – that’s saying something! Can you think of a place where there’s a better return on your investment (ROI) than that? Well…we can – in just 4 words: Hawaii houses for sale! And here’s why.
Take Hawaii’s Oahu Island, for instance. The third-largest island in the archipelago State saw median home prices for single-family units cross the $900,000 mark recently. Valued at over $920,000, some units recorded twenty-percent-plus price gains. Now, isn’t that a worthy ROI for anyone looking for real estate investment opportunities in Hawaii – or anywhere in the USA?
The Winning Formula: Location3
There’s the time-tested real estate investment adage that says: Location, location, location! Mathematically, that’s location x location x location – or Location3 for short! And that saying isn’t without merit when it comes to picking your real estate targets in Oahu. It matters not what your intention is for that investment:
· Future retirement home
· Current beach-front vacation getaway
· Rental income property
· A second home
· Resale purposes
· Diversification of your equity/bond-heavy investment portfolio
The fact remains the same: You must choose the right location…or else you’ll never benefit from your investment.
Luckily, when it comes to investing in luxury homes in Hawaii, there’s really no dearth of choice locations – especially in a geographically, culturally, architecturally and historically diverse region like Oahu. There are a choice of locations and communities to invest in, from Sunset Beach and Diamond Head, to Portlock, Niu Valley and Waikiki. And when it comes to the types of homes to invest in, most would-be-investors feel spoilt for choice. Sometimes, the harder choice is choosing between multiple equally good choices – and that’s the only dilemma you, as prospective Hawaiian real estate investor, will be confronted with.
Making That Tough Choice
Whether you are a first-time investor in beach homes for sale in Hawaii, or whether you are an international investor looking to diversify your investment portfolio – there are some things you must consider before making that tough choice. Some international residents might be accustomed to conducting property deals differently; and for some prospective out-of-state (Hawaii) U.S. investors may not be aware of these “Hawaiian peculiarities”. Either way, this information will help you make a more informed choice.
ESCROW & TITLE
Your title transfer and title deeds are typically handled through Hawaiian Escrow and Title companies. Make sure your Realtor/Broker is well-versed in handling such transactions.
There are several fees that come into play when buying/selling property in Hawaii. These may be the same/similar in other jurisdictions, but being aware of them may help you prepare for them. Some fees include Inspection Fee, Title Insurance, Appraisal Fee, Escrow Fee and Attorney Fee.
Like in many states in the U.S. (but unlike some non-U.S. jurisdictions), it’s possible to get an extended mortgage of up to 30-years. To qualify (and benefit) for such financing, you must ensure your lender is a licensed practitioner in the state of Hawaii.
Non-U.S. real estate investors should typically plan on making a minimum of 30% down payment. However, that percentage may vary slightly depending on the communities or specific locations you’re planning to invest in. For instance, some luxury real estate in Hawaii may require down payments as high as 35%.
One additional point of interest to international investors: Be prepared to pay a slightly higher mortgage rate than what domestic Hawaiian buyers might pay for the same property. One factor that may (but not necessarily) help in rate reduction is the presence of a stellar U.S. credit rating.
INCOME and TAX CONSIDERATIONS
If you invest in rental real estate (i.e., for the purpose of renting out your property), make sure you plan to pay tax on your rental income. For foreign rental income earners, there’ll be a 30% withholding tax deducted on that income. Typically, you’ll require to establish a business that’s licensed to collect TAT (Transient Accommodations Tax) GET (General Excise Tax).
Investors must also plan to pay property taxes, which vary depending on what type of assessment the property carries. The rate (calculated based on per $1,000 in assessment value) may be different for long-term rentals, apartment use or owner occupied. There’s also a rate-break offered to owner occupants on the initial $200,000 in assessed valuation.
The Hunt is On!
Ideally, you must do your homework before pursuing or bidding for your investment property. For instance, the best way to hunt for ideal beach homes for sale in Hawaii, is to use the extensive resources available through your trusted broker’s website.
Apply a range of filters to narrow-down your intended investment target. A good broker should allow you to narrow down that list by Region, Neighborhoods and Price points. Because most investors prefer specific types of properties over others – like Single-family Homes versus Multi-Resident tenements – the Broker should allow you to further filter your selection by Type of Property. That’s the minimum required to start your hunt.
However, a reputed Realtor should go the extra mile, and enable prospective investor to search based on additional features – such as age of the structure, number of amenities (bedrooms, baths), area of the home…and much more. Some “hot” areas to get you started on your hunt include: Honolulu, Kailua, Haleiwa, Kaneohe and Waialua…among other popular locations on Oahu Island.