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Maui

Purchasing Rental Property on Maui (Part 4 of 4)

This blog series will focus on our personal journey purchasing four properties on Maui.

From reading parts 1, 2, and 3, you’ve been able to follow our progress purchasing three properties, and moving from upstate NY to Maui. After six months in Kula, our lease expired and we needed to find a new home to rent. We found a beautiful place in Pukalani, and signed a lease. Also, I received my Real Estate Broker’s License, and started my real estate career on Maui with Hawai’i Life Real Estate Brokers during this time period

Tip: Consider All Of Your Options

As we were moving from Kula to Pukalani, we were grateful for the positive cash flow from the three rental properties, as it pretty much covered our rental expense to live on Maui. One issue continued to concern us; we were putting over $30,000 per year into someone else’s equity. We were convinced that we would not be able to purchase a home to live in as we did not have the down payment funds for an owner-occupied home. It seemed out of the question to pursue a fourth property.

It had become a normal process for us to keep up with properties as they came on the market. We noticed a listing for a brand new development at “The Parkways at Maui Lani”. We went to look at the model homes and we were amazed at the quality by Towne Island Homes; 9’ ceilings, 8’ doors, fantastic floor plans. Once we walked in to the “Makena” model, we felt we had arrived home! Having owned a large construction sales company back in NY, we recognized the quality Towne Island Homes put into their product. We were very excited to find a property like this. Now we needed to overcome the issue of where to find the funds for a down payment.

After discussing this together for some time, we came up with the premise of re-financing our first property, Kai Ani. We decided that at the very least, we should consult our lender for his opinion.

After a visit to consult our lender, things began to look much better regarding the possibility of purchasing a home for us to live in. Due to the considerable appreciation over the three years we had owned Kai Ani, we were able to refinance and cash out the amount needed for a 20% owner-occupied down payment. With a purchase price of $540,000, we needed approximately $110,000 for a down payment. We began the process of re-financing our Kai Ani condominium, and once the process was completed, our lender wrote a “Pre-Approval” letter for our purchase of a new home at The Parkways.

We met with the sales team at The Parkways and signed a contract. We are very excited about moving into our new home in August!

The Numbers

The final summary of numbers is as follows:

  • Purchase Price: $540,000
  • Down payment: $110,000
  • Approximate Total Monthly Expense: $2,330.00

 
From our other 3 properties, we see the following positive cash flow:

  • Property #1 Kai Ani – Approximate Positive Cash Flow: $727.00
  • Property #2 Hoonanea – Approximate Positive Cash Flow: $812.00
  • Property #3 Milo Court – Approximate Positive Cash Flow: $1,026.00
  • Total Rental Property Positive Cash Flow: $2,565.00

 
As you can see, we now have three rental properties paying for four properties. We still have an approximate positive cash flow of $235.00 after all property expenses here in Tropical Paradise on Maui the Valley Island!

More Information

Be sure to read my blog “Purchasing Rental Property on Maui – Summary & Definitions.”

For more information regarding real estate on Maui, contact:

Rick Wyffels, Realtor-Broker
808-495-6092
rickwyffels@hawaiilife.com

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Joe

August 29, 2017

Hi Rick, Thanks for sharing and congrats on your 4 properties, you’re living the dream! If I may ask, do you manage the rental properties yourself or do you hire someone else to do it? Are the rentals long term (1-2 year lease) or do you rent them out airbnb style?

ash

January 12, 2019

Hi Rick, thanks for sharing these insights! I’d love to understand –
– do you manage these properties yourself or do you hire someone to do it? If you hire someone/some property management company, what costs do you expect?
– do you rent long-term or airbnb?
– how are you approximating monthly costs (maintenance, property management and other)? Those seem to add up
– what type of properties do you help clients buy as part of your business?
Thank you!

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