Many people get the idea of moving to Kauai after they visit here. The beautiful beaches, the mountains, the waterfalls, the quiet way of life, the slower pace … reasons enough! Plus, Kauai has more beaches per square mile than any of the other Hawaiian islands. Since it is the oldest, that would make sense. More beach-making time!
You are probably thinking either about retiring here or investing with the thought that you can use your investment property once in awhile.
It’s a great time to buy here for either reason, due to low interest rates and the lowest prices seen in decades!
How do you get started?
First clearly define WHY you want to buy:
Ø Buy a home or condo and retire now (Option One)
Ø Buy a home or condo now, rent it out for a year or two (anything longer than 3 months is considered long term here) and then move into it when you retire (Option Two)
Ø Buy a vacation rental home or condo with plans to use it once it a year or more (Option Three)
On my Resources/Links page I have links to two different sites to search for Kauai properties. Since search engines vary, you may like one more than the other. Regardless of how you identify a potential property, I’m hoping you will use me as your Buyer’s Agent. J In addition to saving you time and trouble (no contacting multiple agents and trying to keep track of who represents what), a Buyer’s Agent has only the interest of the Buyer in mind throughout the entire process. Then there’s the best news: it doesn’t cost you a thing! A Buyer’s Agent is paid through Escrow by the Seller.
Option One
The first option is relatively easy to accomplish at a variety of prices. You just need to know what area on the island “fits” you; get a Buyer’s Agent (pick ME!) and start looking either virtually (look for my links) or in person or both!
On my Resource/Links page is information about the different “climates” around our island and there are links to Kauai-specific sites. Even if you’ve been here, you may not realize how diverse our small world is. I’ve read that we have eight out of the 11 agricultural zones in the U.S. Some people prefer the drier side to the wetter and vice versa. There’s also everything in between.
WARNING Wil Robinson! Homes and condos on Kauai are MUCH more expensive than most places on the mainland. You may have to downsize to match your budget to your purchase. Things to keep in mind
Ø You do a LOT of your “living” outside, so homes here tend to be smaller for more than just the expense reason.
Ø Low and moderate priced homes (and some higher priced ones too) have small bedrooms for the same reason.
Ø Our year-round climate means it is the exception to have air conditioning (even wall mounted ones) and you’ll only find an occasional fireplace for heat because most places on the island don’t get “cold.” Open windows provide our “air” conditioning! The only exceptions are some condos, but not even all of them are air conditioned.
Option Two
With Option Two, everything goes that is in Option One, but you will need to be more cautious about what you buy, keeping in mind that you will likely want to rent it out (long term) until you make the move here.
This is a good time to explain about rentals on the island.
Ø Even though this is a tourist-based island, it doesn’t mean you can rent ANY (your) home to tourists.
Ø Kauai County has designated “VDAs” (visitor destination areas) where vacation rentals are allowed. In addition, vacation rental permits have been issued to hundreds of home-owners that allow them to rent their homes to tourists. It is not possible to get such permits any longer. They are “pau” as we say here … “over” … “done.” If you don’t have one now, you will not be getting one. Any rentals of less than 3 months are considered transient (vacation) rentals and subject to the same taxes as a hotel.
Ø Rentals over 3 months are considered long term and any home or condo (unless not permitted by a neighborhood association) can be rented to long term tenants. So this is the way to go if you are not ready to move here yet.
Once you buy a property, I highly recommend that you have someone manage it for you. The little you will pay (Aloha Island Properties charges 10% of the rental plus GET [HI version of sales tax]) will save you much more than that in the long run.
Option Three
That leaves Option Three: investing in a vacation rental. The “where” on the island for this will be totally dictated by the VDA, the amount of money in your budget, and the depth of your pockets for fairing bad times.
The prices for vacation rentals vary WIDELY: for condos it’s from as little as $68,000 to as high as $2.75M (as of May 2011). There were actually quite a few on the island for around $30,000, but they are pau now for the most part. If another one comes on the market, it will likely get snatched unless there is something inherently wrong with it. The market is picking up; tourism is picking up; investor money can only stay out of the market for so long and some investment folks recently “came in” and bought all the low hanging fruit.
For homes with a vacation rental permit, the cost is even more. Many sellers treat the permit like the Golden Ticket at the Willie Wonka Factory and price their properties accordingly. They range from $700K to $20M.
When you buy a condo, you have to consider the condo fees into the equation. That’s where the deep pockets can factor in. Condo fees for vacation rental properties range from about $580/month to $1400/month. Buying a single family home (SFH) negates that, but you have to figure in the amount to maintain the outside AND the inside, plus they cost more to begin with.
One more thing to consider with a vacation rental: who will manage it? For most of them you can either handle it yourself (www.vrbo.com and/or www.homeaway.com); hire the on-site management company (condos); hire a local management company; or do a combo of self and a management company. If you do not live here and you are going to manage it yourself, you still must have a local contact number in case of emergencies.
Whether you are Option One, Two or Three, I can help you find the best piece of Paradise for your needs!
Here are descriptions of some of the more affordable vacation rental properties on the island:
Kauai Beach Resort (KBR)
KBR is basically a hotel where the units that someone stays in are privately owned. They are essentially beautiful hotel rooms that can be part of the on-site management or can be self-managed or even managed by an outside vacation management company. In the past, it was part of the Hilton chain. It changed over in December 2009 to Aqua Resorts. They don’t have kitchens and microwaves are not allowed. As I said, they are beautifully appointed hotel rooms.
The grounds are extensive --25 acres of lush Hawaiian tropical landscaping, spas, 3 pools with waterfalls (one has a sand bottom), restaurants, bar, conference rooms and much more.
Best of all, it is on one of the longest walkable beaches on the island. In the future, our famous bike path will take you from Lihue all the way to Anahola, passing KBR along the way. Right now there’s a stretch of it a Lydgate (you can walk to Lydgate along the beach from KBR); they are working on it from Lydgate to Fiji Beach (Baby Beach in Kapaa) and it exists from the small boat access in Kapaa all the way past Kealia to Donkey Beach. A Kauai boardwalk, if you will ….
In a thumbnail, KBR is centrally located on Kauai, so it’s an easy jump north or south/west. You can’t drive AROUND the island because of our famous Napali Coast. It’s located just outside Lihue proper, where the major shopping for the island is found.
The monthly maintenance fees are $918/month which includes insurance for fire and hurricane (for the exterior), electricity, water, maintenance/upkeep for the common area, reserves, etc.
As for real estate taxes, you will notice that different listings have different annual taxes. If you figure something around $1000/year you’ll probably be in the neighborhood once new assessments come in for 2011.
Islander on the Beach (Islander)
Islander on the Beach is a vacation rental complex on the beach in Kapaa, Kauai, Hi. We represent #143 which is listed for $86,900. The connecting unit next door may also be available, if a connecting unit is of interest. Both units have ocean and pool views and are part of the on-site management rental pool.
Islander on the Beach is located directly behind the Coconut Plantation Marketplace in Kapaa. It was a hotel that was converted and renovated in 2004 to condominiums. At 372 square feet, the rooms are quite efficient. They are considered studio units without a kitchen. There are eight three-story buildings within the development, with no elevators in any of the buildings. They offer air conditioning, high speed internet access, travertine stone flooring, wet bars, wood cabinets, granite counter tops, under cabinet lighting, and onyx tile back splash. An under counter refrigerator-freezer, flat screen TV, mini stereo system, cable TV, electronic safes, electronic doors, air conditioning, open lanai, Hawaiiana artwork and island-style furnishings designed by Wayne Parker, Partners in Design Inc. The complex amenities include a Plantation- style front lobby with sitting lounge, a swimming pool with a landscaped outdoor pool deck with quartzite stone flooring, barbeque grills and lounge chairs. Poolside service bar and high speed wireless internet access adjacent to front lobby. Walking distance to shopping, restaurants, beach. Ten minutes from the Lihue airport, this Oceanfront development Hawaiian-style resort is set on six acres of oceanfront property with lush landscaped gardens.
The monthly maintenance fees are $649/month. The fees cover water, electricity, fire and hurricane insurance for exterior; maintenance of the common elements, money towards reserves, and security. The only other expenses you would have would be the real estate taxes, content insurance and the cost to fix or replace something that breaks.
The taxes in 2010 were approx. $778.
Plantation Hale (PH)
Plantation Hale is a very popular visitor destination (and often movie crew housing) with its affordable, true one-bedroom units. Located next to Coconut Marketplace (shopping center), it’s just a short stroll to the beach and across the road from the famed Coconut Grove that gives the area its name: the Coconut Coast. There are miles of picturesque beaches to explore in the area and you are close to restaurants, shops and the island's only Safeway. Plantation Hale has 3 pools, 2 spas, Gas BBQ facilities with picnic tables, and a shuffleboard court for your enjoyment!
The monthly maintenance fees are $650/month and the taxes are approx. $1770/year.