Blue Lagoon Vacation Home North Shore Oahu

Critical Considerations for Retirees Buying a Vacation Home On Oahu

A vacation home has a lot to offer – it can be a remote working hub, a winter getaway, a gathering place for family, and even a source of passive income. It’s no wonder vacation homes are selling like hotcakes: there was a 16 percent spike in vacation home purchases in 2020, and a 33 percent increase in 2021, according to CNN Business.  

As tempted as you may be to snag one before it gets even more expensive, you should first take stock of your finances, do your research, and make sure it’s the right decision. Home purchases are a major commitment and can quickly become a money sink if you’re not careful. 

Here, Oahu Hawaii Realtor Ralph Gray offers critical advice for retirees looking to purchase a vacation home: 

Can you afford a vacation home? 

Second homes are a major financial investment for retirees, who typically have a limited nest egg. You should only purchase one if you can ably meet all your needs afterward, from living expenses to healthcare, and still have a sizable emergency fund. Get a good overview of your finances (inflow and outflow and use a home-costs calculator to figure out how much home you can afford.  

There are many costs associated with a vacation home purchase on Oahu Hawaii:  

Purchase-related expenses: Down payments, deposits, mortgage fees, closing costs, attorney fees, transport and moving, real estate agent commissions, and more. 

Ongoing expenses: Maintenance, repair, insurance, security, association fees, and more. 

Taxes: You will need to pay a property tax. Also, as a non-primary residence, your vacation home isn’t exempt from capital gains tax if you sell it. 

If you want to sell an existing house to finance your vacation home, be sure to get in touch with a trusted real estate pro like Realtor Ralph Gray to make the process as quick and easy as possible. 

Is it a vacation home, an investment, or a retirement home? 

Having a plan for your vacation home can help you get your ducks in a row and find a house that fits your needs. If you want a vacation home to escape the colder months, then you need to look at warmer locations (say the seaside). If it’s an investment, you will need to research the property market on Oahu and pick something with long-term value. Keep in mind that vacation homes in Hawaii aren’t always good investments – they can’t always be sold immediately, take time to appreciate, and require upkeep and maintenance. If it’s eventually going to be your retirement home, you need to make sure it can meet your needs (like the presence of healthcare amenities nearby).

Oahu Vacation Rentals 

Making money by renting your vacation home out

Some people manage to make a significant amount of money renting their vacation homes out. The income is taxed (after 14 days), but it’s often enough to cover maintenance and upkeep – and sometimes even mortgage payments. Pulling this off will require planning and organization. Some details to hash out are marketing, guest hosting, security, finances, administration, pricing, and legalities. 

It may financially be a good move to rent the vacation home out as an official company as opposed to an individual sole proprietorship. If you set up an LLC, for instance, your personal assets become safe from litigation, as the company confers “limited liability.” Also, there are other benefits like easier paperwork. You can hire a lawyer or use a formation service, whichever is cheaper, to start an LLC in Hawaii.  

Maintenance and security 

You will need to find professionals to look after your home. Some examples are handymen, cleaning crews, security personnel, and general contractors. If you’re renting your home out, it may be convenient for you to appoint a property manager – they typically handle everything, from marketing to customer care. Last, don’t neglect the security. Vacation homes are a favorite target of thieves. Consider getting a security system and having someone house sit when you’re away. 

Estate planning considerations 

Finally, your Hawaii vacation home may become a part of your inheritance if you’re planning to keep it long-term. As such, you may want to ensure you can pass it on to your family, which may require serious estate planning, according to RBC Wealth Management. Also, you may want to talk to your children and keep their wishes in mind before you make an estate plan or update your will to prevent contention later. 


Having a vacation home on Oahu Hawaii can be a solid investment, provided you do your research, don’t bite off more than you can chew, and preferably register as an LLC or other corporation if renting out. Don’t hesitate to involve a financial advisor if you have to – they can help you to take stock of your finances and truly understand how much you can spend without breaking the bank.

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