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Running a Bed & Breakfast on the Big Island: What You Need to Know

NOTE: This post, originally published in April 2012, was updated in August 2016.

So, you want to run a B&B on the Big Island…you visit the Big Island and stay as a guest in a Bed and Breakfast (B&B) in Captain Cook or Hawi. You chat with the owners about how they came to live here and explore what their lifestyle is like as a full-time resident. So, the dream begins: why not buy a unique home, move to Hawai’i, and make ends meet running a B&B?

Or perhaps you stay year after year in a wonderful vacation rental in Puako, Kapoho, or along Alii Drive in Kailua-Kona, falling asleep to the sound of the ocean. You see an oceanfront home for sale down the street and wonder if the income stream would make it a good real estate investment, or offset the costs of owning a second home.

Kona Bay Estates home for sale

This Kona Bay Estates home (MLS# 279711) would make a good vacation rental; $2,989,000

Know the Rules & Regulations on Transient Accommodations

Laws and regulations are complex when it comes to transient accommodations in Hawai’i (meaning vacation rentals and bed-and-breakfast rather than renting your property to long-term tenants). The County planning and zoning codes can restrict legal usages of properties and are different for each County (island).

Rentals are also usually subject to rules in the CC&R’s and governing documents of a subdivision or condo complex. If you are considering a property already being rented to tourists, even before looking at the historical income stream, the first question you should ask is whether the rentals are done legitimately or “under the radar.”

If the zoning is RS (residential) and the property layout is right, an application for B&B special permit takes time and money, but still exists on the Big Island. It does require notice to the neighbors, which has proven a problem for some, but most applications are approved.

If the zoning is resort, transient accommodation usage is easier. Remember, to run a B&B (rather than a “vacation rental”), you must be using the property as your primary residence. The full rules can be found in the Hawaii County Zoning Code section 25-4-7.

puako1809

Live in one dwelling, rent the other to vacation guests (MLS# 297979)

Overnight accommodations appear to be difficult to provide on properties classified agricultural by the Hawaii State Land Use Commission, generally zoned “ag” by the County. While the County has been willing to issue special permits, I first saw a ruling in 2013 in which the Land Use Commission denied such an application, saying overnight stays for agricultural tourism are only allowed in Maui County.

Think Net (Not Gross) Rental Proceeds for Vacation Properties

If you are not living in the home, you canʻt run a B&B, but you may have the option of renting out the entire property to vacationers. As you evaluate the potential of homes for vacation rental, you should also keep in mind the costs of marketing and of property and rental management.

Full-service vacation management can cost you as much as 25%-50% of gross rental income. In addition, you will still have your property taxes, utilities, insurance, HOA dues if in a subdivision or condo, and maintenance both inside and out.

Some out-of-state owners do the marketing themselves and deal directly with local cleaning and maintenance staff. The Hawai’i state legislature keeps considering bills that would require vacation properties with off-island owners to be managed by a real estate licensee. You do need to have an on-island “agent” to collect general excise and transient accommodation taxes.

The Stateʻs concern is that off-island owners using vrbo.com, AirBNB, and similar websites to market their properties may not be reporting the rental income and paying the taxes on it.

puako vacation rental for sale

Oceanfront Puako properties are popular vacation rentals, like (MLS# 291568) for $4.4 million.

Multiple Homes or Legal “Ohana:” One to Rent, One For Personal Use

I’ve written before about properties for sale with guest houses and farms or ranches with “additional farm dwellings.”

A new listing near Kahalu’u Beach on Ali’i Drive in Keauhou (Kailua-Kona) has resort-zoning, which allowed two homes to be built with a total of 10 bedrooms, each with its own bath. This listing was on the market in 2012 when I first wrote this post, and is relisted in 2016.

Two houses, ten bedrooms, one block from Kahalu’u Beach for $1,995,000 (MLS# 290017)

This would also be a property suitable for a licensed bed-and-breakfast if you are in residence. Ocean views, a one-block walk to the beach, or farmers market nearby to buy the papaya for breakfast…are you dreaming yet?

A hui hou,
Beth Thoma Robinson, R(B)
Direct: 808.443.4588
Email: Beth@HawaiiLife.com

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Kent Crawley

October 14, 2013

HI!

My wife feel in love with Hawaii when we went to vist last year. She how wants to retire and open a B&B in Hawaii. How hard will this be for us to achive.

Kent and Gigi

Kent Crawley

October 14, 2013

HI!

My wife feel in love with Hawaii when we went to vist last year. She how wants to retire and open a B&B in Hawaii. How hard will this be for us to achive.

Kent and Gigi

Beth Thoma Robinson, R(B)

October 15, 2013

Hi Kent,
I’ve emailed you privately with more detail, but the answer is that you just have to choose the right property so you can get a license. All the islands are cracking down on unlicensed B&Bs.
Aloha
Beth

Gwendaline Day

October 30, 2015

Hi Beth,
My husband and I are tentatively considering running a B&B on the big island. can you send me some info on the permits, licenses, and any other regulations and/or info we should know about on the subject?
Thanks so much!!

Beth Thoma Robinson, R(B)

October 15, 2013

Hi Kent,
I’ve emailed you privately with more detail, but the answer is that you just have to choose the right property so you can get a license. All the islands are cracking down on unlicensed B&Bs.
Aloha
Beth

Gwendaline Day

October 30, 2015

Hi Beth,
My husband and I are tentatively considering running a B&B on the big island. can you send me some info on the permits, licenses, and any other regulations and/or info we should know about on the subject?
Thanks so much!!

Paula Thorne

December 15, 2013

Do Bed & Breakfast Inns on the island of Hawaii need to have a certified kitchen to serve a home cooked breakfast? And if so, how would I find out if a particular establishment has such a license?
Thank you.

Paula Thorne

December 15, 2013

Do Bed & Breakfast Inns on the island of Hawaii need to have a certified kitchen to serve a home cooked breakfast? And if so, how would I find out if a particular establishment has such a license?
Thank you.

Beth Thoma Robinson R(B)

December 16, 2013

Hi Paula, if it is just a licensed B&B, a certified kitchen is not required. If it is an Inn, that might be a different story. Are you looking to buy a property or curious for other reasons?

Beth Thoma Robinson R(B)

December 16, 2013

Hi Paula, if it is just a licensed B&B, a certified kitchen is not required. If it is an Inn, that might be a different story. Are you looking to buy a property or curious for other reasons?

Sam

January 6, 2014

Hi Beth,
Can you tell me the ideal capital (=money) to buy a property and establish a B&B? I like the Hilo side of the Big Island.

Rob & Sue

October 18, 2015

Aloha Sam,
We’ve been running a successful, legal 4-bedroom B&B just one mile from the Hawaii Volcanoes National Park for the past 12 years. THere is practically guaranteed income and traffic here, but as we’re approaching our “Golden Years” we’re thinking of selling and moving on.
Take a look at our website and if you think this area and income might interest you, please feel free to contact us.
Rob & Sue

Sam

January 6, 2014

Hi Beth,
Can you tell me the ideal capital (=money) to buy a property and establish a B&B? I like the Hilo side of the Big Island.

Rob & Sue

October 18, 2015

Aloha Sam,
We’ve been running a successful, legal 4-bedroom B&B just one mile from the Hawaii Volcanoes National Park for the past 12 years. THere is practically guaranteed income and traffic here, but as we’re approaching our “Golden Years” we’re thinking of selling and moving on.
Take a look at our website and if you think this area and income might interest you, please feel free to contact us.
Rob & Sue

Beth Thoma Robinson R(B)

January 6, 2014

Hi Sam
By ideal, do you mean the minimum? That will depend on the neighborhood and size of the property.

My advice would be if you can afford to buy a property that already has a B&B license, you avoid the uncertainty that you might or might not be able to get one for the property of interest. I could refer you to one of our Hilo agents if you’d like the rundown on available properties.
Aloha
Beth

Mat

January 18, 2015

We are interested in opening a bnb in hilo, preferably a place we can live in as well as run the bnb in, can you refer us to an agent for more info, im interested in the properties that have a license vs. ones that dont, but trying to get a feel for pricing and options. Thank you
Mat

Beth Thoma Robinson

January 19, 2015

HI Mat
I privately sent you the name of one of our Hilo office agents who can help you find options. Good luck!
Beth

Beth Thoma Robinson R(B)

January 6, 2014

Hi Sam
By ideal, do you mean the minimum? That will depend on the neighborhood and size of the property.

My advice would be if you can afford to buy a property that already has a B&B license, you avoid the uncertainty that you might or might not be able to get one for the property of interest. I could refer you to one of our Hilo agents if you’d like the rundown on available properties.
Aloha
Beth

Mat

January 18, 2015

We are interested in opening a bnb in hilo, preferably a place we can live in as well as run the bnb in, can you refer us to an agent for more info, im interested in the properties that have a license vs. ones that dont, but trying to get a feel for pricing and options. Thank you
Mat

Beth Thoma Robinson

January 19, 2015

HI Mat
I privately sent you the name of one of our Hilo office agents who can help you find options. Good luck!
Beth

john

September 20, 2014

I own two properties on the Big Island. I was seriously considering doing a vacation rental or B&B on one of them. Both lots are AG lots in a subdivision. It sounds like AG lots are the hardest to get a license for? Is the licensing different for a B&B opposed to a vacation rental? Thank you.

Beth Thoma Robinson R(B)

September 21, 2014

John, the first question would be whether your subdivision CC&Rs allow short term rentals or B&B overnight accommodations. It is definitely different to be a licensed B&B as you will be preparing and serving food. For example, if you own a resort condo, zoning allows short term stays and therefore you don’t need to be licensed, just have to have a licensed manager. Feel free to email be directly with information about where you own and perhaps I can be more specific.

john

September 20, 2014

I own two properties on the Big Island. I was seriously considering doing a vacation rental or B&B on one of them. Both lots are AG lots in a subdivision. It sounds like AG lots are the hardest to get a license for? Is the licensing different for a B&B opposed to a vacation rental? Thank you.

Beth Thoma Robinson R(B)

September 21, 2014

John, the first question would be whether your subdivision CC&Rs allow short term rentals or B&B overnight accommodations. It is definitely different to be a licensed B&B as you will be preparing and serving food. For example, if you own a resort condo, zoning allows short term stays and therefore you don’t need to be licensed, just have to have a licensed manager. Feel free to email be directly with information about where you own and perhaps I can be more specific.

peggy gunther

June 24, 2015

Beth

My husband and I just recently purchased a home on the Hilo side of Hawaii. We were hoping to have one or two room BnB. What are the specs in getting this accomplished?

Thank you for any info you can give us.
Peggy

Beth Thoma Robinson

June 30, 2015

Hi Peggy
Congratulations on your new home! Your best bet is to check directly with the County Planning Department to get current advice and forms.
Aloha
Beth

peggy gunther

June 24, 2015

Beth

My husband and I just recently purchased a home on the Hilo side of Hawaii. We were hoping to have one or two room BnB. What are the specs in getting this accomplished?

Thank you for any info you can give us.
Peggy

Beth Thoma Robinson

June 30, 2015

Hi Peggy
Congratulations on your new home! Your best bet is to check directly with the County Planning Department to get current advice and forms.
Aloha
Beth

Ray Pacheco

July 19, 2015

Aloha Beth,

Like everybody else on this site, my wife and I too, are interested in the B&B dream. We were actually looking to do it on the island of Oahu. I’m not sure if you would be able to help us out much, but anything would be greatly appreciated. I haven’t had much luck with the County website trying to get the rules and regulations. I’ve read article that say it is not permitted on Oahu, then others that say you need special zoning. Could you or maybe one of your associates be able to tell me what zoning I should be looking for?

Thank you
Ray

Erik Hinshaw

July 20, 2015

Aloha Ray, This is Erik with Hawaii Life over on Oahu. Beth asked me to respond re your questions about B & B’s here on Oahu. B & B’s are illegal here on Oahu regardless of zoning unless you have one that was grandfathered in back when they changed the law. Resort zoned areas allow short term (less than 30 days) rentals. Turtle Bay on the North Shore, Ko Olina on the West Side and Waikiki have some areas with resort zoning but these are all condos which would not work for a B & B. Enforcement of these laws is very lax so there are many illegal B & B’s out there. Every year the paper will do a front page story on how the County plans to step up enforcement but that has yet to happen.

Ray Pacheco

July 19, 2015

Aloha Beth,

Like everybody else on this site, my wife and I too, are interested in the B&B dream. We were actually looking to do it on the island of Oahu. I’m not sure if you would be able to help us out much, but anything would be greatly appreciated. I haven’t had much luck with the County website trying to get the rules and regulations. I’ve read article that say it is not permitted on Oahu, then others that say you need special zoning. Could you or maybe one of your associates be able to tell me what zoning I should be looking for?

Thank you
Ray

Erik Hinshaw

July 20, 2015

Aloha Ray, This is Erik with Hawaii Life over on Oahu. Beth asked me to respond re your questions about B & B’s here on Oahu. B & B’s are illegal here on Oahu regardless of zoning unless you have one that was grandfathered in back when they changed the law. Resort zoned areas allow short term (less than 30 days) rentals. Turtle Bay on the North Shore, Ko Olina on the West Side and Waikiki have some areas with resort zoning but these are all condos which would not work for a B & B. Enforcement of these laws is very lax so there are many illegal B & B’s out there. Every year the paper will do a front page story on how the County plans to step up enforcement but that has yet to happen.

Bernie Deguchi

July 19, 2015

I opened a bnb last year. I went to the county tax office in Kona and was told all I needed to be legal was to apply for the transient tax and excise tax licenses. I was told I could not have more than 5 rooms for rent, I have three. I have since been paying the fees associated with both. Is there anything else I am required to get? The gal did not know of any other “permits” for the Big Island. My home was fully permitted when we built an addition with the intent of opening an adult care home. I have have a medical issue and had surgery which left me unable to open the care home. Therefore we decided to do a bed and breakfast. I want to be sure I am “legal”. CVan you give me any assistance or advice?

Beth Thoma Robinson, R(B)

July 20, 2015

Bernie, you need to know what your property zoning is and then check with the Planning Dept, not the tax office. Here is the relevant section of the County Code:

Section 25-4-7. Bed and breakfast establishments.
(a) Bed and breakfast establishments shall be permitted in the RD, RM, RCX, V, CN, CG, CV and CDH
districts. A bed and breakfast establishment may be permitted in the RS districts and RA, FA, A districts,
within the State land use urban district, provided that a use permit is obtained for each such use. A special
permit shall also be required for any bed and breakfast establishment located in either the State land use
rural or agricultural districts

Bernie Deguchi

July 19, 2015

I opened a bnb last year. I went to the county tax office in Kona and was told all I needed to be legal was to apply for the transient tax and excise tax licenses. I was told I could not have more than 5 rooms for rent, I have three. I have since been paying the fees associated with both. Is there anything else I am required to get? The gal did not know of any other “permits” for the Big Island. My home was fully permitted when we built an addition with the intent of opening an adult care home. I have have a medical issue and had surgery which left me unable to open the care home. Therefore we decided to do a bed and breakfast. I want to be sure I am “legal”. CVan you give me any assistance or advice?

Beth Thoma Robinson, R(B)

July 20, 2015

Bernie, you need to know what your property zoning is and then check with the Planning Dept, not the tax office. Here is the relevant section of the County Code:

Section 25-4-7. Bed and breakfast establishments.
(a) Bed and breakfast establishments shall be permitted in the RD, RM, RCX, V, CN, CG, CV and CDH
districts. A bed and breakfast establishment may be permitted in the RS districts and RA, FA, A districts,
within the State land use urban district, provided that a use permit is obtained for each such use. A special
permit shall also be required for any bed and breakfast establishment located in either the State land use
rural or agricultural districts

Bill Ellis

September 14, 2015

Hello Beth,

I am dreaming of opening a B&B in Hawaii in a couple of years. As I was reading through the comments above, I noticed one of the responses pointed out that “B&B’s are illegal here on Oahu regardless of zoning” which got me to thinking, are there other island in Hawaii where B&Bs are illegal?

Beth Thoma Robinson

September 15, 2015

HI Bill, at this point you can get B&B permits on the other islands (Kauai agents, correct me if I’m wrong…but I’m sure about Big Island and Maui).

Which island is of interest? Would you like me to put you in touch with an agent in that area to start answering your questions?

Beth Thoma Robinson R(B) BIC

Bill Ellis

September 14, 2015

Hello Beth,

I am dreaming of opening a B&B in Hawaii in a couple of years. As I was reading through the comments above, I noticed one of the responses pointed out that “B&B’s are illegal here on Oahu regardless of zoning” which got me to thinking, are there other island in Hawaii where B&Bs are illegal?

Beth Thoma Robinson

September 15, 2015

HI Bill, at this point you can get B&B permits on the other islands (Kauai agents, correct me if I’m wrong…but I’m sure about Big Island and Maui).

Which island is of interest? Would you like me to put you in touch with an agent in that area to start answering your questions?

Beth Thoma Robinson R(B) BIC

Michelle

September 20, 2015

We love Hawaii, we love big island. Both me and my husband seriously consider to run a B&B on the Big Island. We didn’t find many B&B listings for sale. We especially hope to get a place with a few acres land for growing something at the same time. Do you have any resources? Thank you!

Michelle

September 20, 2015

We love Hawaii, we love big island. Both me and my husband seriously consider to run a B&B on the Big Island. We didn’t find many B&B listings for sale. We especially hope to get a place with a few acres land for growing something at the same time. Do you have any resources? Thank you!

Ross Sigari

December 24, 2015

how can i find Realtor in big island of Hawaii for look at a few B and B to buy

Beth Thoma Robinson

December 28, 2015

HI Ross, If you have geographic areas in mind, I can refer you to an agent who specializes in that area and can help you find a B&B!

Ross Sigari

December 24, 2015

how can i find Realtor in big island of Hawaii for look at a few B and B to buy

Beth Thoma Robinson

December 28, 2015

HI Ross, If you have geographic areas in mind, I can refer you to an agent who specializes in that area and can help you find a B&B!

Dana

January 7, 2016

In your answer to Bernie, you listed several district abbreviations. What do those abbreviations stand for? I can’t find them online.
Thanks for all the helpful info!

Beth Thoma Robinson, R(B)

January 11, 2016

Dana, you can look them up in Chapter 25 of the County Code: http://www.hawaiicounty.gov/lb-countycode/#countycode

Dana

January 7, 2016

In your answer to Bernie, you listed several district abbreviations. What do those abbreviations stand for? I can’t find them online.
Thanks for all the helpful info!

Beth Thoma Robinson, R(B)

January 11, 2016

Dana, you can look them up in Chapter 25 of the County Code: http://www.hawaiicounty.gov/lb-countycode/#countycode

Kalina Roman

August 7, 2016

Aloha, I just purchased a house on three Acres in Volcano off Alii Kane street and wanted to start a B&B on my land. I see several of my neighbors with B&B. I was going to build but wanted to build it …not so close to my current structure. I know this is Ag land. Could I get a permit to build it away from house? If i permitted it a “barn”?

Beth Thoma Robinson

August 8, 2016

Hi Kalina,
Those are questions for the County building and planning departments. Overnight accommodations on ag-zoned land are a big problem if the State land use designation is agriculture. The State does not believe the counties should give special use permits for transient rentals on ag land. But perhaps a “farm stay” permit. would be something to explore with the County.

Good luck!

Kalina Roman

August 7, 2016

Aloha, I just purchased a house on three Acres in Volcano off Alii Kane street and wanted to start a B&B on my land. I see several of my neighbors with B&B. I was going to build but wanted to build it …not so close to my current structure. I know this is Ag land. Could I get a permit to build it away from house? If i permitted it a “barn”?

Beth Thoma Robinson

August 8, 2016

Hi Kalina,
Those are questions for the County building and planning departments. Overnight accommodations on ag-zoned land are a big problem if the State land use designation is agriculture. The State does not believe the counties should give special use permits for transient rentals on ag land. But perhaps a “farm stay” permit. would be something to explore with the County.

Good luck!

Kalina Roman

August 8, 2016

Mahalo Nui Beth, I’ll check with DPP. Appreciate this blog!

Kalina Roman

August 8, 2016

Mahalo Nui Beth, I’ll check with DPP. Appreciate this blog!

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