When it Quacks Like a Duck??

Ok, time to show my age again. If, like me, you can recall a time before residential condominiums existed, you’ll agree that for some time apartments looked like condos and rental units looked about like most condos. The concept that each unit could be individually owned was indeed quite creative.

Truth is, anyone born prior to 1961 predates the first condominium. I recall driving the Northeast Florida coast back in the early ’70s. Even sleepy little Crescent Beach was changing. Condos sprang up everywhere. Ownership caught on quickly. That period was critical to condominium development in Hilo as well. In fact, without notable exception, every condo building in East Hawaii was constructed during the ’70s.

Condominium ownership and occupancy is very different than either a single-family residence or an apartment building. Purchasing a condominium is very involved. There are condo docs noting covenants, conditions and restrictions, reserve evaluation, by-laws and minutes of recent meetings to consider. Remember, technically speaking condo ownership is really ownership of your own airspace with all else owned together with others. Overall maintenance plans are critical. Interestingly, Hawaii was the first in the nation to adopt condominium laws. We have several variations on the condominium ownership theme. Most do not apply to East Hawaii. To my knowledge, Co-op (Cooperative Apartment) ownership (technically a different “duck”) does not exist on Hawaii Island.

Condo-tels, resort condominiums and time shares are very common in West Hawaii but not East Hawaii. There are things you should know about each. Besides the documents and financial information, financing a purchase in a condo-tel or a resort property can prove challenging. Traditional lenders look for a predominance of owner-occupants. Condo-tels pool units renting them like a hotel. Time share units sell increments of time which means each could be owned by 52 (or more) different owners. And then there are those darn HOA (homeowner’s association) fees.

In both East and West Hawaii, these often run in excess of $800 per month. On the West side, resort fees increase the monthly cost of ownership. In East Hawaii, only townhome units are individually metered for power and water. Most condominium associations roll utility costs into the HOA. This means that utilities are not considered part of a buyer’s qualifying ratio for townhomes but will affect both a buyer’s ability to qualify and an investor’s ability to achieve positive cash flow when utilities are rolled into HOA fees.  Interestingly, the condo market seems unaffected by current market dynamics but the real take away is that if you are “duck-hunting”, be sure to choose an agent who knows which steps insure your condo “quacks” without any huge ownership surprises.

About the Author

Denise Nakanishi

Denise Nakanishi is a REALTOR Broker with Hawai'i Life. Denise Nakanishi is one of Hilo's most acclaimed real estate agents. She reached the rank of Major in the US Army and is now known by many as "Major Mom." The nickname fits–not only does Denise bring the discipline and mission-oriented attitude you'd expect, she's also caring and compassionate, always looking out for her clients like they're her own family. Having made the Big Island her home since 1987, Denise combines her extensive knowledge of the area with a sharp focus on customer service and the results speak for themselves. She's the recent recipient of the Best East Hawai`i, Best of Zillow, Chairman's Circle Award, President's Circle, Top Producing Agent since 2001, and Realtor of the Year awards. Denise stays ahead of the curve because she's passionate about education–she served as Education Chair for Hawaii Island REALTORS® for many years. She's one of Big Island's best real estate resources, known for her weekly article in the Hawaii Tribune Herald. Denise leads Team Nakanishi for Hawai`i Life, who is committed to their family, work, and community. In her little time away from work, Denise is a committed runner and Grandy. She also devotes many hours to various Veterans' Organizations, the East Hawaii Cultural Center, and the Hawaii Island REALTORS®. You can email me at denise@hawaiilife.com or via phone at (808) 936-5100.

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