My Maui Vacation Rental 18 month update - AirBnBust ???
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- čas přidán 1. 08. 2024
- Hawaii Investment Property. AirBnBust on Maui??? In this video I share a full update on how my Short Term Rental Investment Property on Maui has done after renting for 18 months. I give full details on rental income and discuss how the properties value has increased since I purchased at Kamaole Beach Royal In Kihei Hawaii. We also compare my rental income from 2022 vs 2023 to see if Maui is experiencing AirBnBust.
#hawaiirealestate #investmentproperty #airbnbbusiness
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Jesse G. Wald R(B)
(808) 446-5841
Jesse@MauiExclusiveRE.com
This is a great video very informative
Thanks for the knowledge Jesse!
You are so welcome!
Great video
Thx.
6:30 Your unit is very nice and I'm sure it's one of the best units.
Good job Jesse. You've done really well.
Thanks for the details on the numbers. It really helps! Right now I think I'll have the money to buy a condo or a sailboat in about 2 years. One appreciates in value and one doesn't. We'll see if I choose wisely when the time comes 🫣
Thanks Carson, I always appreciate the support. I agree my unit is one of the best ;). I suggest, buying the Maui Condo and getting your boating fix by taking boat excursions when you are on island... but everyone has to decide for themselves how to live their best life.
@@JesseGWald My debate is mostly about a sailboat boat being the ultimate waterfront property. You can move it from beach to beach and wake up with a fresh view whenever you want. If anything about the local environment or politics bothers you then you can leave at a moments notice. It's tough to put a dollar value on those things.
It's important to also note that this debate is mostly over which one I'm going to buy first. I'm afraid that the Hawaii market is going to get very difficult to enter once interest rates reverse course so that complicates this decision even more.
Mahalo for sharing. 2022 was very hot and January through March had good performance. Starting April, there has been some softness and starting summer, things are not getting booked in advance much at all even with dropped prices. The market has cooled as the pent up demand from COVID for Maui has gotten exhausted. You can see on Airdna how market occupancy is dropping rapidly from 90%+ in 2022 to 50-70% this year. Investors buying now are mostly using 2022 performance data and buying at inflated prices without realizing the market has started to cool already.
Everything that is now happening on Maui with the cooling market has already happened at other COVID boom travel destinations, but Maui is just delayed because Hawaii had banned travel during COVID for a long time. We are already experiencing a moderate Airbnbust on Maui and it very well may get worse.
You are correct that unlike most other markets, there is limited supply of listings on the island, so the absolute number of rentals is limited. However, there are a lot of listings that hadn't been on Airbnb or VRBO that are now coming online that are effectively increasing the supply on these platforms. More listings are also remodeling and making competition worse.
Thanks for sharing your thoughts. One thing I love about reviewing my past rental income in my videos is that the numbers don’t lie. As you saw in the video my rental income for the last three months was about the same as 2022.
I’ve looked at Airdna in the past and their numbers are not always accurate. It’s similar to Zestimates, the algorithm doesn’t always work.
In my opinion, if an owner is really only getting 50% occupancy there must be something wrong. Either the property manager is asleep at the wheel or the property itself has issues. Only time will truly tell what will happen in the future and no investment is ever guaranteed.
One thing is for sure, I’ll keep everyone posted on my numbers and offer full transparency. If my income does go down, you will see it in future videos.
I see both sides of this argument but lean more towards feinty5561's sentiment. I closed on an oceanfront STR in Maui in Feb of this year from an owner who had hired a property manager who was asleep at the wheel last year. I on the other hand hired the best property manager on the island hoping that even with a slowing market they would be able to come close to last year's returns. I also created a direct booking site and advertise on social media, things the previous owner didn't do. What I am seeing however is
1) Occupancy dropped from 90%+ last year to ~82% this year
2) ADRs this year are lower than last year
and so the overall returns this year so far for me is ~80% of what the property's previous owner saw last year. I wont call this AirBnBust or I don't think what we are seeing on most of the mainland cities will happen in Hawaii, but I too wouldn't use last year's revenue numbers if I were to buy another property on Maui now either.
2023 Jan - March was still good. The cooldown started in April 2023 and is getting worse over this summer. You can see many half empty calendars going forward browsing listings.
@@poonekar We are for sure seeing a slow down in our bookings after Whale season. We used our place in May this year for pretty much the month of May, so I can't say how May was for others, but June, July and Aug are just so so. Our Manager (Who we are very pleased with) has had to cut prices to stay competitive. We don't care, because we were able to roll the proceeds from a 1031 into Maui and our mortgage is really small compared to people that put 30% down. We are still getting pretty decent bookings for the fall at regular prices, but what I'm concerned with is that some of those people will cancel as the time gets closer if prices continue to fall. If they booked at $249 a night and can get it for $169 the closer it gets I suspect we will all be trading bookings. They will cancel at one place, that place will reduce prices and someone else will book......What I am surprised with is that the sales prices are still staying high and even increasing. We bought in Feb of 2022 and a unit on our floor sold in Feb 2023 for 100K more than we paid in the crazy 2022 market. All the units are ocean front, and their furnishings were pretty much like ours when we bought. So the only difference is the time. We are only looking for appreciation and breaking even on the costs, so if we book 50% or more at decent pricing we'll be fine, and I'll get to use it for a couple of months a year.
Congrats Jesse! I am very happy for you.
I am not entirely convinced that appreciation is what matters more than cashflow though. First of all, if you take your monthly income of $1152, multiply it by 12 and divide by your investment amount of 193K, you get a 7% CoC return. That is well over the average and hard to replicate with today's prices and rates. Now unless you sell the property (and why would anyone do that with a 7+% CoC return) or refinance your property to get the equity out (which you wont because you locked in a low rate), you will probably never dip into that equity you built through appreciation. You could get a heloc for a short term from time to time and that's nice, but for the most part that appreciation doesn't really matter.
The cash flow on the other hand does grow over time and not only does it help you buy more properties, but by the time you decide to retire, this property alone might be able to pay your living expenses. Now that financial freedom is what excites me.
Hi Rahul. I always appreciate your thoughtful comments. I know everyone has a different investment strategy and I understand your point, but for me it is all about wealth creation. I track my net worth on a quarterly basis to make sure I am making progress. Right now I don't need access to the equity in this property but when I do I know I can use a HELOC in the near term. Interest rates will eventually come down and when they do I will likely refinance to pull cash out to reinvest.
I would luv to invest in a daily rental - we purchased a townhouse in Lahaina (not a daily rental) and the rent covers all mortgage and costs but would love to consider a daily rental in the future! Ty!
Thanks for sharing. The great thing about short term rentals is you can use the property between bookings.
Wow, were you affected in the fires?!
@@JesseGWaldI wonder if the above commenter was affected.. going through your videos just a few minutes ago. Wild. The guilt must be tough, at the same time being very grateful. Best of luck 🙏🏼💯
Do you have to have 30-90 min stay for air b and b or is being in the hotel zone allow shorter term? I ask because I’m interested to buy one :)
Which management company do you use? Thank you :)
My property is hotel zoned. So no minimum stay required. Feel free to call or email me directly if you want to work together.
Unfortunately, it is this kind of desire to make a profit on our very limited housing here that has caused our housing shortage. Too many people trying to make a buck at the expense of long term housing for residents.
I think this is an over simplification of a more complex problem. Hotels and short term rentals are a critical part of our economy. Yes, there is a shortage of long term affordable housing… but the solution is to build more affordable housing… not convert short term rentals into long term housing. Most of the existing short term rentals are not designed and equipped to accommodate long term tenants. Also, much of the funding for building affordable housing comes from taxes collected on short term rentals.
@@JesseGWald the building you bought into (and most of the buildings there) were built for long term housing, not for short term, and were allowed to be converted, thereby taking from the inventory for long term housing. It is unrealistic to think that we can build ourselves out of the mess we are in, precisely because of the proliferation of short term vacation rentals. What is crucial to our economy is having housing that our workforce can afford to live in. Short term rentals are what has ensured the lack of availability of affordable housing here.
@@kaiduponte4091 The building I bought into is in Hotel/Resort Zoning. It was never intended for long term housing only. There was never a conversion from long term rentals like you stated, it is being used as it was intended and as the zoning allows from the very beginning. What you are saying is factually incorrect in this particular case. Yes, Some vacation rental properties are Not in Hotel/Resort Zoning and they were approved short term rentals decades ago, but many are in the same Zoning as the Westin or Marriot for example. Once again you are oversimplifying a more complicated situation.
@@JesseGWald I’m glad that your building was intended as hotel from the beginning and that you are not part of the problem. I remember when those buildings were built, and people lived in them long term, but I must be mistaken about your particular building. I agree with you that there is nothing wrong with STVRs in areas zoned for hotel/resort. All the other STVRs are taking from long term housing and are the reason for our affordable housing shortage. Too many people are eager to make a profit from Maui, not caring about the consequences to regular working people who are trying to buy or rent a home. We can’t have a society with only the rich and tourists and no working people, it just doesn’t work. I’m not speaking for my own concern; I am retired and own a home.
bit optimistic on the value-lol.
What would you estimate the value to be? My second floor neighbor just listed their one bedroom for sale at $880k and it went under contract almost immediately.
well, i might be wrong then. haha. i probably should have commented asking where in the blds your place is (ie beside a road/looking at a parking lot/looking at another bld/sun side?/corner uit/etc/etc).
anyway, the chart was a pretty small sample, but 900k seemed quite high since the only one that sold over 900 was lucky enough (i suspect) to have had a bidding war and went way over ask. it was also, from memory, on the top floor. there seems to be a pretty big gap floor to floor. also, i know a lot of ppl who simply wont live on the first 2 floors of any multi-floor residence.
it is most likely i am just jealous you got a unit on the best beach on maui. hehe
@@JesseGWald
Interested! Set you an email. Thanks
Shinda
I’ve noticed first hand and heard anecdotally that things aren’t booking as far in advance this year compared to last, especially this summer. Have you out the property managers had to change pricing strategies? Get more aggressive?
Hi Ray. This is true. This year my unit is booking out around 2 to 4 weeks in advance compared to last year when my property would book out around 3 months in advance. So far it hasn't impacted my rental income. My occupancy rate is still high, people just are not booking as far in advance. I'll do another video in a few months to update you on my summer rentals to see if the booking timeline affects my rental income.
@@JesseGWald Yes also seeing rentals drop a lot compared to last year. We have had to cut prices a lot and still not getting far advance bookings. The Maui Airbnbust is here. There was tremendous pent up demand for Maui in 2022 and early 2023 because of Hawaii's COVID travel restrictions, but the demand has now dropped.
Have you guys already experienced a significant drop in your past rental income or are you projecting future declines based off of what you are seeing from future bookings?
@@JesseGWald Both. I am seeing lower YOY monthly rental income and lower ADRs for future bookings (with the exception of Jan and Feb of this year). I have two STRs, one in Kona and one in Lahaina and they both have different superhost level property management companies. They are seeing the same pattern island wide and so are recommending lower ADRs to boost occupancy and projecting lower revenues for this year.
Similar to Poonekar.
Why I don't see TAT & Get TAX ?
Great Question. GET and TAT are collected from renters in ADDITION to the rental revenue and remitted directly to the State. It is a pass through expense that never hits my bank account because my Property Manager handles all the GET and TAT monthly filings. The cleaning expense is also treated this way... it is collected from the renter in addition to the nightly rate and my property manager pays the cleaners directly without it ever hitting my bank account.
@@JesseGWald Hi Jesse. Congratulations on your investment condo. The location is so wonderful, and I am sure this place will appreciate for many years to come!
Regarding your gross rental income in the spreadsheet, could you possibly help me understand this better? Does that amount include the money collected for GET and TAT (which is then paid to the state)?
Mahalo
@@thinkbigforbusiness2289 The rental income shown does not include GET it TAT. My property manager collects those taxes from the renters (in addition to the nightly rent) and pays the tax directly to the state on my behalf.
@@JesseGWald
Thank you for your reply. In that case, those are some amazing numbers! We own in N. Kihei and do pretty well, but your occupancy rate is stellar. Great job on this one!