A Realtor’s Guide to Short-Term Rentals on Hawaii Island

If you’re considering purchasing a property here on Hawai’i Island to use as a short-term rental (STR) now and a private residence later, you’re not alone.

This has become one of the most common strategies I hear when working with new buyers. They want to purchase now to take advantage of current pricing and rates while potentially generating rental income in the meantime. However, Hawai‘i is not a plug-and-play STVR market. There are important rules, zoning restrictions, and financial considerations that every buyer needs to understand before purchasing.

First off, what is considered a short-term rental? An STVR is a furnished property rented for stays generally under 30 days and are commonly marketed on websites like Airbnb and VRBO and of course, Hawai’i Life Property Management.

What attracts people to STVR’s?

• Higher nightly rental rates vs. long-term rentals
• The flexibility to use the property personally
• Strong tourism demand on Hawai‘i Island

Potential tax benefits. I mean how often can you write off a trip to Hawai’i? (Please check with your accountant on that.) 

Are Short-Term Rentals Allowed on Hawai‘i Island?

Yes and no… While STVR’s are allowed, not all properties can be used as short-term rentals. This is one of the most important (and most misunderstood) aspects of buying investment property here.

Some key elements that determine eligibility:

1. Zoning – Every area on the island is zoned.

• Resort-zoned areas → STVR’s are typically allowed but within HOA’s,  I have seen By-laws updated to determine a specific number of days required to eliminate one and two night stays. 
• Residential zoning → STVR’s are usually restricted unless previously permitted in 2018 when the big reconfiguration in STVR’s happened. 

2. County Regulations.

• STVR permits or Nonconforming Use Certificates (NUC) may be required

STVR-Friendly Areas on the Big Island

If your goal is to generate vacation rental income, focus on resort communities such as:

• Waikoloa Beach Resort
• Mauna Lani Resort
• Kona Coast resort zones
• Hilo – Bayfront area has some potential complexes.

These areas are designed with vacation use in mind and typically offer the best combination of legal STVR use plus guest demand.

A Recent Realtime Investment Example: Kulalani at Mauna Lani 2305

I recently represented Buyers in a sale in Kulalani at Mauna Lani and it is a great example of a smart STVR investment strategy in action.

Kulalani is located within Mauna Lani Resort which benefits from resort zoning. It is in a convenient location near the Shops at Mauna Lani as well as beautiful beaches. 

Why This Property Worked as an Investment

After connecting with my Buyers, we determined some key factors that were motivating their purchase.

• STVR-permitted location within a resort community
• High guest demand and close to beaches, golf, and dining
• Access to premium amenities (lap pool, lagoon-style pool, fitness center, BBQ pavilion)
• Strong potential for rental income coupled with the a potential for long-term appreciation and the numbers worked for them

The Buyer’s Strategy:

✔ Purchase now
✔ Generate short-term rental income
✔ Transition to personal use in the future

This “buy now, use a little now and a lot later” approach is one of the most popular and effective ways to enter the Hawai‘i real estate market.

Why Short-Term Rental Rules Are Changing

Hawai‘i has been and still is actively working to balance tourism with local housing needs. Even more so now with the housing crisis on Mau’i since the Lahaina fires.

Key Considerations:

• STVR’s can reduce long-term housing availability
• Regulations may become more restrictive over time

It is because of these ever changing rules, I help buyers verify current STVR regulations before starting our search as well as before purchasing, as rules can change.

The “Buy Now, Move Later” Investment Strategy

This is one of the most popular real estate strategies on Hawai‘i Island.

Step-by-Step Approach:

1. Buy a property in an STVR-approved area
2. Rent it short-term to offset ownership costs
3. Use the property for personal vacations
4. Transition into full-time or part-time residency

Benefits:

• Locks in current market pricing
• Creates income potential
• Builds long-term lifestyle flexibility

What Makes a Good STVR Investment Property?

While I have consulted my crystal ball, I do not have a clear picture of the future of rentals. What I can share is this.

Location is Always the Most Important

• Walking distance to beaches
• Resort communities
• Close to restaurants, golf, and shopping

Property Features That Can Help Drive Bookings

• Ocean or sunset views
• Air conditioning
• Well stocked and turn key
• Outdoor living space
• Access to pools, spas, and fitness centers

Investment-Friendly Characteristics

• Proven rental history – This can vary drastically. Exceptional property management is critical and is required if you are an off island owner. 
• STVR-friendly HOA

Costs of Owning a Short-Term Rental in Hawai‘i to Consider

Understanding expenses is critical for accurate ROI projections. Be prepared when shopping for an active STVR. Some owners will share financials without an offer. Others will not provide them until an offer is made and accepted.  

Some Typical Costs Include:

• Hawai‘i GET (General Excise Tax)
• TAT (Transient Accommodations Tax)
• Cleaning and turnover services
• Property management fees. Remember, your Property Manager is your eyes and ears. They will need to keep you informed of potential issues as well as stay on top of routine maintenance. You get what you pay for could not be more relevant when it comes to the care of your property
• Maintenance (salt air + tropical climate exposure need to be taken seriously), furnishings and ongoing upkeep

HOA Rules: A Critical and Sometimes Overlooked Factor

Even in STVR-zoned areas, HOA rules can impact your ability to rent.

HOAs May:

• Limit rental frequency 
• Set minimum stay requirements

This information is usually provided when a property is actively listed. It is also clearly outlined in the condo docs provided during escrow.

Still Thinking About It? Is a Short-Term Rental Right for You?

Best Fit for Buyers Who:

• Want a future home or second home in Hawai‘i
• Are comfortable with variable rental income or no income…
• Plan to hold property long-term
• Value both lifestyle and investment returns
• Are not risk adverse

Not Ideal for Buyers Who:

• Need consistent monthly income
• Prefer fully passive investments
• Are unwilling to comply with regulations

My Thoughts: Buying with Strategy and Local Expertise

Short-term rental properties on Hawai‘i Island offer a unique opportunity to combine lifestyle and investment—but success depends on buying the right property in the right location under the right conditions.

Working with a knowledgeable local Realtor (me) ensures you:

• Understand zoning and STVR eligibility
• Evaluate true rental potential
• Avoid costly mistakes

Start Your Hawai‘i Investment Journey

If you’re exploring the idea of purchasing a vacation rental or future home on the Hawai’i Island, I’m happy to help you:

• Identify STVR-approved properties
• Analyze investment potential
• Navigate Hawai‘i’s unique real estate landscape
• Connect you with a local lender that knows and understands the different condo complexes and their lending intricacies. Not all complexes are the same. If a complex has a “guest check-in desk or has a majority ownership by one entity, it can make lending a little more challenging. It is better to find that information out in the beginning versus weeks into the purchase.

If you are still considering an investment property, let’s talk. I have years of property management and real estate experience to share.