Hawaii Housing News

News, Tips and Opinions About Hawaii Real Estate and Housing

MLS Listing Descriptions – A Super Grain of Salt

by Leave a Comment

As I’m writing this, the Baltimore Ravens are pounding the San Francisco 49ers in Super Bowl XLVII. I really don’t care as, like half the country, I’m only in it for the commercials (and prefer hockey anyway). And so far, the commercials have not performed to standard but there’s plenty of time to be entertained by singing dogs picking stocks and majestic Clydesdales slinging beer in the Rockies. One can only hope.

My Real Estate Listing, My Choice

I noticed something last week as I was helping teach a FortuneBuilders class for new real estate investors who want to get into flipping houses in Hawaii. We were running some comps on recent MLS listings and sold single family houses on Oahu. We went over all the basic info that both homeowners and real estate agents use when running comps, such as:

  • Size of the house (living sqft)
  • Lot size (sqft)
  • # of bedrooms / bathrooms
  • Sold date
  • Proximity to target property
  • Condition

Of course, there are other factors, but these are commonly considered the most important ones when calculating the value of a house. I remember one property in particular — I believe it was in Kaneohe or Kailua — with the condition noted as “ prednisone after surgery go to link source url primary homework help roman empire https://chanelmovingforward.com/stories/assignment-help-service/51/ cheap critical analysis essay editing website for phd source link free essays on scientific method follow essay my leisure time appendix in research paper sample ready to write more from paragraph to essay pdf https://dsaj.org/buyingmg/does-cialis-do-young-men/200/ go to site mini case study template biaxin and avelox interaction enter site genrico viagra nome http://archive.ceu.edu/store.php?treat=levitra-movies-moringa-tea click prednisone for cats inflammatory bowel disease cetomacrogol zalf bijsluiter viagra thesis statement sample ppt https://drexelmagazine.org/compare/msc-architecture-thesis-topics/18/ watch naproxen with synthroid medication altceva decat viagra andrew jackson common man essay art museum review essay outline click lipitor 30 day supply cost Above Average“. For those who aren’t aware, there are predefined categories of house condition from Excellent to Tear Down from which the listing agent is supposed to choose and assign to her listing. This “Above Average” house had a kitchen that needed at least $15,000 in renovations — unless you think red is all the rage and the 1970s are about to make a comeback and take over Better Homes and Garden magazine.

The room had a laugh but it brings up an important point — so much of real estate is subjective, from home value to the actual information on an MLS listing, ex. condition and agent remarks. Sometimes you really need to take it all with a super grain of salt, as in a Biblical Lot’s wife size pillar of salt.

Now, in my experience, most condition category choices are usually on the mark, but there’s a lot of liberty one can take when choosing between “Above Average” and simply “Average”. I’ve seen some homes listed as Above Average that were, in my opinion, well deserving of an Excellent rating.

What is Above Average?

After all, what does “Above Average” mean? It ought to mean better than most of the homes on the market, but instead it’s commonly used to refer to any house that’s been recently modeled or needs few, if any, further upgrades. Sometimes these definitions match up, but not always and that’s where one can be misled.

I’ve learned to take the extra step when running comps to look at all the photos (knowing that itself doesn’t beat visiting the house) instead of just scanning the stat sheet for the condition label. I go back to the red kitchen — without looking at the photos I would have assumed, via the Above Average label, it to be a recently upgraded or built home. Instead, the photos clearly indicate some money’s going to have to be sunk in the property to bring it up to modern Hawaii housing market condition (unless it’s going to be featured in the next Austin Powers flick).

So take it from me — nothing beats doing plenty of homework and legwork before buying a house in Hawaii or anywhere else. Seeing with your own two eyes and trusting your own instinct and inner judgment are the best methods for both making your home search efficient and, ultimately, successful.

How the Fiscal Cliff Affects Homeowners

by Leave a Comment

Aloha, friends. Apologies for the time away, but holidays call and yours truly got engaged(!). But time waits for no one and there’s much to discuss. The biggest news upon us now has been the dreaded fiscal cliff that we narrowly avoided. President Obama was in and out of Hawaii, alternating between vacationing with the First Family in Kailua and presiding over some of the most delicate negotiations to hit Washington in quite some time. And when it appeared that we were all about to go over the cliff like Thelma and Louise, the elephants and donkeys of Congress cut a deal.

But where does the Fiscal Cliff deal leave Hawaii’s homeowners?

Great question. The biggest advantage that many people are talking about is the one-year extension of the 2007 Mortgage Forgiveness Debt Relief Act, which was set to expire December 31 2012. To recap: when a house is sold as a short sale, the difference between the sale price and the mortgage balance is called the deficiency. The banks will normally waive the deficiency to help facilitate the short sale (and avoid a costly foreclosure). However, the IRS considers debt forgiveness to be income, so while the homeowner will largely be off the hook for the deficiency, they would still owe taxes on that amount according to their tax bracket. The 2007 Act allowed the short selling homeowner to waive that tax liability as well, essentially making a short sale free.

The looming fiscal cliff threatened to let that policy expire and, with it, the hopes of many homeowners with underwater mortgages who weren’t able to close a short sale before the end of the calendar year. Now, with the extension through 2013, anyone closing a short sale this year will still be able to take advantage of the tax waiver on their deficiency. That’s THOUSANDS OF DOLLARS in savings when you look at the average deficiency of a mortgage for a short sale in Hawaii! I’ve personally spoken with owners who have been underwater over $500,000. Do the math on the tax savings, even at the lowest bracket, and you’ll see the impact of extending the policy another year.

However, it’s not just about over-leveraged mortgages. The fiscal cliff deal did not really address the nation’s growing debt load which continues to steadily rise. Nor did it help from another tax angle — payroll taxes. You may have noticed this already. Furthermore, the deal postponed any discussion on spending cuts for another two months.

So while a crisis may have been averted, it’s safe to say that there’s more work yet to be done.

Hangover: Tequila or the Market?

by Leave a Comment

How’s Your Head?

If you didn’t notice, yesterday was Cince de Mayo. Most Americans mistakenly believe this is some sort of Mexican Independence Day. In truth, it’s a minor celebration south of the border that commemorates an unlikely victory over French forces in the Battle of Puebla in 1862 (yes, I Wikipedia’d it – don’t tell me you don’t use it, either!). Back when I lived in Washington, DC, we had huge parties downtown as the Latino population in the nation’s capital is quite large. I had friends from every Latino country you could think of: Guatemala, Bolivia, El Salvador, Peru, Honduras, Panama – you name it. I think they even made some countries up just to screw with me (yes, I’m talking about you, Luis from Guatadorexiru).

Well, we have the same thing here in Honolulu, of course. The annual block party last night was full of revelers in the streets, despite the intermittent rains. I bet they even tore it up in the streets of Anchorage and Boise as well. It seems that having a large Mexican population is not a requirement to drown in tequila on a Thursday night (yes, I know we have a Mexican population here, but you gotta admit it’s not the first image that comes to mind when discussing Hawaiian demographics). The biggest questions of the night become:

  • Salt or not salt?
  • Frozen or on the rocks?
  • Would you like me to call you a cab? (which is invariably followed by: “Well I don’t know where you live, either.”)

But while some may have woken to a heightened awareness of cranial sensitivity (re: hangover), there’s another matter on the minds of many Hawaii residents as we approach the midway point of 2011:

What’s going on with the local Hawaii real estate market?

It seems like just a few moments ago everyone was cheering the apparently imminent arrival of a foreclosure moratorium designed to put the brakes on the banks and lenders. But where’s that moratorium now? Last time I checked there were 4 or 5 different versions being floated around the halls of the local legislature. Still hanging your hat on that? Get back to me in September and let me know how that’s working for you.

If you look the stats, they’re in the eyes of the…um… stats-holder. Volume of sales is up while median prices are flat or even down in many places. Do you see signs of recovery? I don’t — not if you take a broad outlook. Anyone who points you to signs of a rebound ahead just based on the previous 30 days’ activity is just jerking you around. Don’t fall for those positive ‘blips’ on the radar. That’s someone with an agenda and you’re smarter than that. Look at three months minimum then see if a trend shows its face. Otherwise there is no trend, no rebound (or dip, for that matter – keepin’ it real just for you).

So as the tender aroma of Jose Cuervo and lime juice dissipates from the streets of Chinatown and the thumping of merengue music stops ringing in our ears, remember that we’re on our own for our market research, our decisions of whether or not to buy or sell our house, whether to seek a loan modification or short sale, whether to buy in Millani or Waipahu, whether to invest in Waikiki condos or to simply sit on the sidelines and wait for better times (although as an investor, I’d say the best time is actually now – if you do it wisely). Do not wait for others — government or otherwise — to lead you down the path.

What’s your take? Are you disappointed in the stalling of the moratorium? Have your 2011 real estate plans changed from earlier in the year? Do you agree with the consensus of another dip in the market or do you see it coming back before year’s end? SHARE YOUR THOUGHTS — BE HEARD!

Keys to Successful Cash Flow Investing in Hawaii

by 1 Comment

Where Passive Income Leads...

What can be better than becoming a successful cash flow investor in the beautiful islands of Hawaii? It’s a dream, right? Having passive income roll in while you play golf  in Lanikai or drink mai tais on the beach in Waikiki? It doesn’t have to be. Making the correct business choices in your rental properties and learning how to properly manage tenants can yield the results you seek.

Once you’ve chosen the perfect condo or house for your investment property, the hard part kicks in. Sure, it took you time to locate just the right place and you may have even had to fix it up a little, but now you’ve got to rent it out. Finding tenants, and good tenants at that, requires time interviewing the (hopefully) large pool of potential renters. Are you looking for students from UH, HPU or KCC for a group house in Manoa or Kaimuki? Or are you looking for an entire family for a house in Kalihi Valley? Or are you turning that Makaha beachside house into a vacation rental?

In order to be a successful cash flow investor in Hawaii, you need to make sure your monthly cash flow stays positive. This may sound like a simple enough concept, however executing it can be difficult. There may be times that the property is vacant, so it’s easy to end up temporarily upside down in the books while you’re paying a mortgage with no rental income. With our dependency on tourism, everyone here knows that the Hawaii housing market can change quickly as a response to other world events and market shifts. This is where the marketing of your Hawaii investment property and the decision of what you charge for rent become very important. You’re competing not just among renters but among other landlords for those same renters.

Deciding on the monthly rent amount is crucial. You’ve got to consider your mortgage payment on the property as well as what the average rent for similar nearby properties is in the current market. Don’t use Pearl City rents to figure out the rent on your Makiki condo. Making other decisions on what the rent will include will affect your potential renter pool. Will you include utilities? Lawn or property maintenance? These will all need to be factored in.

Fine Line Between Cash Flow and Headache

It's a Fine Line Between Positive Cash Flow and Tenant Nightmare

Another aspect of your success depends on the property management. Will you hire a property manager or will you be the landlord? Utilizing the services of a property manager is an added cost that needs to be factored in to guarantee your success. If you’re going to go this route, look around, ask for recommendations from fellow investors and be sure you know all that’s included in their fees. A good property manager should actually save you money (or its equivalent in time). Otherwise, if you’re going to be the landlord yourself, ensure you have the proper amount of time to dedicate. It might be more than you think.

Tenants can literally make or break you. Having a strong lease agreement is very important. You want to lay out the do’s and don’ts so that if they don’t abide by them, you have the right to evict them and that you’ve protected your money. There are plenty of Hawaii specific lease agreement templates on the web but you might also want to consult an attorney to draft one for you.

The agreement, which is a legally binding document, will outline the rent, the length of the agreement and any other terms the owner wants to include, such as what will happen in the event of non-payment, maintenance issues and how the property should be left at the end of the lease. There’s nothing worse than having a bad tenant leave your remodeled Mililani townhouse in poor condition as a new one is getting ready to move in.

Let’s talk about eviction. Eviction is a nasty process for all involved, so try to avoid the situation as best you can. The best way to do this? Spend extra time learning about your potential renters. Ask questions. What do they do for work? How stable is their employment? How long do they plan to stay in Hawaii? How liquid are they?

Even less intrusive questions such as what they do when they’re not working can tell you about their overall lifestyle. You should probably ask if they smoke and/or include such provisions in the lease. And of course, their overall demeanor will tell you a lot about what to expect from your landlord-tenant relationship. Nice people are just easier to have a relationship with, and this is a relationship. You can even order a credit check from a local Hawaii company or an online service such as e-renter.com.

Lastly, be sure to check out the Landlord – Tenant Information website of the Hawaii state government’s Department of Commerce & Consumer Affairs. There is some valuable information there, including the “Landlord Tenant Handbook” which you can download for free.

The idea of owning property in Hawaii and earning passive income from rentals sounds like a great idea, and it is, as long as you have the proper resources and plan in place. Having and maintaining a positive cash flow by properly calculating all of your costs, getting the right tenants and having a property management system are the keys to becoming successful. After that, there’s nothing left but those mai tais in Waikiki.