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Greetings from Alaska.
My wife and I plan to visit the Big Island in May and will be visiting mostly with relatives but we will also be searching out possible vacation rental/retirement home while there.
We have a couple more years until we retire but would like to find something now, that we could use a couple months out of the year ourselves and the rest of the time, rent it as a vacation rental.
For the past several months, I have been on many real estate sites looking at different areas from Puna to Kona.
I think I have a handle on all the advantages/disadvatages (Vog or Frogs)to the different areas but I'm wondering if anyone here on PunaTalk might have some suggestions.
Is a vacation rental even a viable option in the Puna area?
Any information would be greatly appreciated.
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A vacation rental can be viable in Puna, but how viable really depends on location, condition of the property, service & timing.
Asking if a vacation rental is viable option in Puna on a week when the paper is touting the increased tourist travel on the east side due to the brand new exciting eruption occurring pin points the timing issues.
As an out of state owner, you will need to have a property manager. Who you choose & how they represent the property is the service key.
Condition of the property will be important in figuring out the expenses in maintaining the property (along with a very conscientious property manager.
And where the property is will also be important.... some properties are very remote, some are shoreline, some are near exciting things to do & some are in the middle of areas with heavy rooster infestations & pocket rockets & sub woofers that may discourage clients....
By the way, most of this goes for either side of the island... the frogs & VOG debate can be mute with some of the other things here...
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Welcome to Punaweb grousehawker,
I like the "vog vs. frog" phrase. Very concise.
Profitable operation of a vacation rental is an iffy business. I am sure others with have things to say. Location, location, location plus condition, condition, condition. Vacation rental will be very tied to the national economy. Ebbs and flows.
Assume the best and ask questions.
Punaweb moderator
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I see Carey and I are on the same page. I was typing as she was posting.
Assume the best and ask questions.
Punaweb moderator
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When we first moved here we rented a series of vacation rentals from landlords who were sooo glad to rent to us for 1 to 3 months at a time, because they couldn't keep the places rented. Many of them had had the same plan as you, or were counting on the rentals to pay their mortgage. Being a successful host requires a certain kind of person: warm, friendly people pleasers who are very knowledgeable about the area, but these are not easy skills to hire for either. Many of our landlords discovered too late that they just weren't that kind of person. Maintaining an up dated website and calendar are also essential to operating a successful vacation rental, too many websites are essentially set up and then ignored, which is not helpful to potential renters. Too many landlords are slack about responding to inquiries promptly too.
We have a friend who lives in Puna and runs a very cute vacation rental attached to her home. She is a warm friendly person who stays on top of her website, responds to all inquiries the same day, and has in the past had many return guests. Last year was super slow, with less than a third of the visitors she had the year before, and this year is only marginally better, even though she is very close to the lava viewing, which has been a big draw in the past. She is really glad that she isn't trying to pay a mortgage from her guest payments.
Unless you are ocean front or otherwise have a truly desirable location you need to stop and ask yourself: who would possibly want to stay in a typical Puna subdivision on vacation in Hawaii? I love my neighborhood in HPP, but it just isn't a vacation destination.
Carol
Carol
Every time you feel yourself getting pulled into other people's nonsense, repeat these words: Not my circus, not my monkeys.
Polish Proverb
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Well, I disagree a bit with Carol. We have a vacation rental in Orchidland ( www.ohiagrove.com) and we've been pretty lucky keeping it occupied. Staying near the ocean is pricier, and some folks want to be centrally located for the volcano park, Hilo town, and the Kehena beach/tide pools. Our bigger lot also offers the privacy that some folks want in a vacation rental. So some folks do like to stay in the subdivisions.
Now, on the question of whether it makes sense for you to buy or not, I'd come down on the "don't do it" side of the equation. Doing the marketing/booking is time consuming, even for a single rental home. Sites like VRBO.com (which you'll pay to advertise on...) allow potential renters to send inquiries to numerous rentals simultaneously, so you'll spend a lot of time responding to emails that don't result in bookings. You'll also need to pay someone to clean and maintain the property (whether you have renters there or not...), which will eat into any income you'll generate. If you want to be strictly legal, you'll pay a higher mortgage rate because this is an investment property, not strictly a second home/vacation home for personal use (most second home/vacation home policies forbid owners from renting their properties). You'll also need to pay for additional insurance coverage. And don't forget the TAt and GET tax forms you'll need to file twice a year in addition to the extra federal and state tax-related work you'll take on. The convenience of owning your own vacation get-away will be overshadowed by the worries you'll take on in the bargain (is my house surviving the weather? What happens if a renter is injured on my property? How can I get the TV/washer etc. repaired if I'm not there? etc.). And at the end of the day, the net income you'll generate will probably only minimally subsidize your mortgage expenses, if at all. Yes, you can deduct some expenses as business expenses, but you'll also have to pay someone to help do your taxes and firgure out all your deductions and depreciation info (unless you want to spend *hours and hours* doing it yourself with Quicken or Quickbooks). Finally, you plan to retire here several years from now, but what if something unexpected happens that changes your plans (medical emergency, change in finances, etc.). You'll now be stuck with a property several thousand miles away that you'll need to unload.
My advice: forget buying and just stay at vacation rentals when you want to visit. Once you find a place you like, make it your designated "home away from home" - the owner will be glad to have repeat business and will probably cut you a deal/do extra errands to make your stay more enjoyable. When you are ready to retire here, use your chosen vacation rental as a base of operations while you shop around and/or build your own place. I'm no real estate expert (I'm sure some of the agents who contribute to PunaWeb will chime in too), but everything I'm hearing is that housing prices will not be rising dramatically anytime soon, so you should still have attractive pricing when it comes time for you to buy.
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I have a vacation rental in Puna, but renting it out long term is easier (I've done that, too). I have been very lucky and my occupancy rate is very high but unusual things do happen. Sometimes very unusual things!
You need to expect the unexpected and expect to be tethered to your property by the very normal human impulse to make sure that your guests are very comfortable and as happy as their natural constitution allows them to be. I've been lucky in that regard, too -- most people find that they are very glad they have chosen to vacation in an off-the-beaten track location such as Puna.
Even with a successful vacation rental, the overhead is very high. In fact, I would hazard a guess that it is higher with a successful vacation rental than with a less successful one because a successful vacation rental will have something special going for it. Part of that "something special" could be you and the spirit that imbues the home. Creating that spirit is an art form. Another part of that "something special" could be an incredible pool, maintained to crystal clarity by a very expensive guy!
I think what I am saying is unless you find that being a "host", even from afar, is gratifying in some way (I do), you will find vacation rentaling to be one of the most exasperating experiences you have ever had!
There's the guest who arrives very late and night and can't extract the keys from their secret location, even though no guest before or since has had any difficulty.
There is the power outage that throws off the timer on the gorgeous decorative fountain, making it rumble on at 3:00 a.m.
Then you visit and notice that the power cable to the entire house is hanging by one single, tiny screw --the other screws having popped out.
The romance of Hawaii is real, but you are at the post-coitus, pre-marriage stage. Do think very carefully about what comes next.
Those of us who have experienced a divorce (from reality!) will be happy to help. Feel free to e-mail me personally if you have questions.
Your comfort is very important to me!
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E-mail me privately and I will e-mail you a couple of files on rentals.
Aloha,
John S. Rabi, GM,PB,ABR,CRB,CM,FHS
888.819.9669
johnrabi@johnrabi.com
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"
(This is what I think of the Kona Board of Realtors http://KonaBoardOfRealtors.info)
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Check to see what it costs to put your rental on VRBO. I was suprised how expensive it was.....
Puna: Our roosters crow first
You make the near-disasters sound funny, Kelena. [  ]
You also have the great next to ocean location, pool, and jacuzzi, right? Of course, you have to compete with the oceanfronts that have really expensive pools ... have looked at a few that are almost mansion looking ... yours has great amenities, price, and MANA, personality.
My rental had no ocean, no view other than the garden, close neighbors, and it was small ... but people really liked it. They said over and over that it felt like they had moved into their own cozy cottage, not a rental. So I can attest that personality is very important.
There are a lot of cookie cutter condo rentals and 3/2 houses on the island -- having some artful touches inside and out is so helpful. A well-maintained and private hot tub is a draw as well, outdoor showers are another thing people go nuts over, lava rock outdoor showers.
"Sometimes it's not enough to know what things mean, sometimes you have to know what things don't mean." — Bob Dylan
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