Ask a Home Rental Company in Hawaii: Which Kona Property Is a Good Investment?
03 October 2019
Hawaiian Dream Properties
You're starting the next level of your retirement plan, and you want to get into the rental property business with your first property. Maybe you've been a Big Island rental property owner for a while, and you're looking for the next property to add to your portfolio.
Adding growing income to your long-term financial plan is a step toward working less and playing more—as long as you don't suffer any steps backward!
The wrong investment property can delay your retirement plans. When choosing a vacation property or long-term rental, a bad investment can add debt to your finances instead of income. Not every property is an excellent investment property. Here's how to choose the right Kona properties—and avoid the bad ones.
Don't Buy That!
When you're looking forward to leaving the workforce and living a life of luxury, you want to grow your wealth as fast as you can. Maybe you see a property you've had your eye on suddenly come on the market. You feel like you need to act quickly to snag it before another investor gets it.
Grabbing a hot property can boost your portfolio, but it's critical to be smart about any property purchases before acting too quickly. A hot property doesn't mean it's the "right" property for your portfolio. When evaluating a property, watch for red flags.
1. The Price Is Too Low
Does the price seem too good to be true? It probably is. A low price on a property could mean the owners want to unload a money pit on anyone who will take it.
While buying low is a good strategy, weigh a low price against the cost of significant repairs to make the property rental-ready. If you have to spend too much to make it desirable, don't buy that property. Even homes that are set at an appropriate price point may have hidden problems—a home inspection is a great tool to protect yourself when buying.
2. The Numbers Don't Work
You might find a decent property in a desirable neighborhood, but if the numbers don't work for your financial goals, it's not the right property for you.
Before you purchase a property, run a rental analysis. You'll learn about:
The rental history of the neighborhood.
What renters look for in the area.
Whether the best monthly rental rate could generate enough income to justify buying the property.
If the numbers don't work in your favor, it's okay to let a property go to another investor.
Think like a Renter—and a Landlord
Successful rental property owners shift their views on investment properties. Even if you plan to live in your Konarental property after retirement, you have to think like a renter—and a landlord—before deciding if a property is a worthy investment.
What Do Tenants Want?
Make sure the property has desirable amenities to attract—and keep—quality tenants. Think outside the box! Tenants appreciate plenty of safety features, like security lighting and an alarm system. Today's renters also appreciate smart-home features, like a learning thermostat.
These kinds of amenities help you, too! Safety features and learning thermostats can reduce your insurance costs while preparing your Kona rental as a future retirement home. This is one area where your tenants' interests and yours might overlap.
What Upgrades Make Sense?
Tenants don't need fancy features in your rental property. Choose quality upgrades without spending too much. When you spend too much on property enhancements, you risk losing money when the monthly rent doesn't help you recover your costs.
Should I Allow Pets?
This one can be tricky for landlords who aren't "pet people." A pet owner's love for their pet often means they have to search long and hard for a rental home that accepts pets—especially on the Big Island. They won't give up their beloved pet for a place to live, and rentals that allow pets are often hard to find in Kona. While your property is a rental, allowing pets can help you find excellent tenants that renew the lease for multiple terms.
You want the income from your property to help you one day live your Hawaiian dream! Make sure you invest in properties that work best for renters—regardless of your personal preferences.
You Don't Have to Choose on Your Own!
If you're not local to the Kona area, it's a challenge to know if you're buying a good investment property or a money pit. You need help on the Big Island who can evaluate a property with your financial goals in mind!
We are your property management experts with local Big Island expertise. Hawaiian Dream Properties works with rental property ownersto choose the right investment properties for your portfolio. A secretly lousy investment property can delay your long-term financial and retirement plans! We know how hard you're working to save for your future—let us help you choose the best property possible.