Buying property in Hawaii

[Brian Ashton]

I've been mulling the idea over and was wondering if anyone has any food for thought on the idea; good bad or indifferent is always appreciated.

I understand anyone wanting to comment is only giving an opinion which means they're neither right or wrong they're simply opinions which will hopefully give me a bit of a better picture than I have now. So hopefully you'll fire away.

[Rob Russell]

Before we start "firing away", what's the purpose of buying the property? Pure investment? Occasional vacation? Long term retirement? Would you buy raw land and sit on it, land and then build or a lot with house? Where, which island? Your location isn't listed - is Hawaii an easy flight for you or do you have to fly to the west coast first?

[Mitchell Andrus]

I'm buying a house in NC, awaiting bank stuff and the closing. In the thick of it, so to speak.

I've discovered that banks are now VERY reluctant to finance second homes. They can require bigger down payments, higher interest rates, etc. If you tell them it'll be your principal residence, a letter stating that you intend to occupy within 60 days of the closing will be required. They can later check to see if you've moved and if not, bump the interest rate.... it'll be stated in the mortgage if they intend to do this.

A bank ordered assessment will be used to calculate the amount of the loan, NOT the contract price. So if you have a contract stating you'll need a 20/80 loan (to avoid PMI) with a purchase price of $200,000.00 and have the cash for a 20% downpayment ($40,000.00) and the assessment comes in at $150,000.00, you'll get 80% of $150,000.00, not 80% of $200,000.00. This makes your down payment much higher. (You'll either need to make up the difference in the down payment or re-negotiate the contract with the seller). The bank can also drop their loan commitment if the contract is too far out of whack with the assessment.

If this is just land, I'd say to pay cash. Banks are reluctant to finance something you can walk away from without making yourself homeless. Insurance cos. are also weary of placing policies on seconds and investment-only properties.

In some areas, real estate taxes are bumped up on non-owner occupied homes. The taxes currently being paid may not be what you'll pay.

On the other hand, values are depressed, interest rates are low. Smart money says to buy now.

YMMV
.

[Dave Johnson29]

I've been mulling the idea over and was wondering if anyone has any food for thought on the idea; good bad or indifferent is always appreciated.


As has already been asked, what is the purpose? IF it is to retire to, have you lived in Hawaii for any length of time. IF NOT, then I would strongly suggest renting a place for 6 months or more. Hawaii can be nice but it can also be hot, humid and uncomfortable at times. Especially the coastal and near coastal regions.

It is not a good climate for metal machinery as the humidity promotes rust like crazy so you need your shop to be air conditioned 24/7. Either that or forever be cleaning and oiling machined surfaces.

http://www.prh.noaa.gov/hnl/pages/climate_summary.php

More questions need to be asked before asking here if it is a good idea to buy there. :D:D

[mike holden]

Brian,
One other, perhaps quite important, point is: medical care.
There was quite a bit of discussion in the papers there about the lack of medical care available in the islands, even heart attacks often causing evacuation to the mainland - and the attendant cost, which was not always covered by insurance.
This made me think twice about living there, even though my wife and I are in good health. If either of us had developed any major concerns, we would have to move back in a hurry.

Just another aspect of the move to consider.

Otherwise, I would be writing this in Hawaii right now (grin)
Mike

[Mike Henderson]

Buying a second house, if that's what you want to do, puts certain costs and pressures on you. Unless you purchase a furnished house, you have to buy all the furniture, linens, pots and pans, etc. as well as the house. The cost of maintenance is high because you have to get someone to manage the maintenance and you have to pay for someone to do all the repairs. This is not just the lawn maintenance but all the appliance and everything else that breaks in a house. It also means that you have "pressure" to use the house so you don't vacation anywhere else. Then, when you arrive there, you spend about two days cleaning before you can relax and enjoy the place.

My own opinion is that for the carrying cost of a second house, you can take vacations to anywhere you want and stay in very nice hotels, where someone will pamper you and clean the room.

A second home is like a boat - there are two happy days, the day you buy and the day you sell.

Mike

[Dave Johnson29]

A second home is like a boat - there are two happy days, the day you buy and the day you sell.


Gee Mike, what a cynic! :D:D:D My last boat fell right into the old adage that "a boat is a wood-lined hole in the water in which you dump unlimited amounts of money."

[Ted Calver]

I've had friends tell me it is very hard to buy land in Hawaii..it's not cheap and they aren't making anymore. Anyone who owns land rarely want's to sell...long leases are the norm.

[Cliff Rohrabacher]

Hawaii recently had an thoroughly unconstitutional law that prohibited non residents from property purchases.

[Butch Edwards]

having lived there while in the army(admittedly,30 yrs ago)...all I can add is: it's expensive to live in Hawaii. Beautiful islands, with wonderful weather... but it's also crowded beyond belief(was then, has to be worse now). Best of luck with your decision....

[Curt Harms]

Gee Mike, what a cynic! :D:D:D My last boat fell right into the old adage that "a boat is a wood-lined hole in the water in which you dump unlimited amounts of money."

If it flies, floats or fools around, Rent It!!

[Brian Ashton]

Not being very clear am I. Wife hates that too.

I have no idea how to do a group quote so I'll try to respond to what I can remember reading

It will most likely be property with no buildings. Rental agents, it seems, anywhere in North America are next to useless so I don't want the liability of a building that can be damaged.

I was looking primarily at the West side of the Big Island, but Maui has a lot of appeal but also much higher prices.

Someone was mentioning that there's a shortage of land... Not on the big island. That's one thing that's a bit of a concern to me. On the big island they seem to be trying to break the record for the largest subdivisions in the world. I mean when you look at them on google maps they're massive. One things for sure, there's no shortage of land on the big island. Last night there were over 1000 lots forsale under $50,000


It would be a long term thing with no final chapter written. So it could mean that it evolves into purely an investment that's sold sometime in the future. Or, if life allows it, we may look at living there (there's a few more places on this big blue marble I want to live in before I die so that's up in the air right now). My wife and I have been a couple times and still look back on it as our favourite place we've been to on the planet so far. We had an opportunity to live there for a month baby sitting friends kids while they went to Europe. So we're not entirely ignorant to what daily life is like. And there'd be at least one visit before buying.

We already live near the ocean in australia were the weather isn't a lot different. I.e. even stainless steel takes a beating here.

I'm surprised medical treatment would be bad because of the military hospitals that are there. Maybe things have changed since I was there last in 2001. At that time our friends had medical problems with one of their kids and the service was top notch. Obviously, it probably has a lot to do with how much risk you're willing to live with vs insurance costs. I'll have to do some digging on that - thx for the heads up.

Banks won't be a problem with what we're thinking. We could finance or not. When or if it happens we'll look at all scenarios.

If anyone has any more details on non-resident restrictions could you post - thx. I've done a bit of googling on the subject but haven't found anything specifically on non-residents not allowed to buy land. I'm aware of the 50% Hawaiian clause on some land but that's about it.


That should make a few more things i bit clear :D

[Bruce Page]

Gee Mike, what a cynic! :D:D:D My last boat fell right into the old adage that "a boat is a wood-lined hole in the water in which you dump unlimited amounts of money."

BOAT = Bring - On - Anouther - Thousand
:D

[Brent Leonard]

My ex in-laws purchased raw land on Hawaii 25 years ago. When they retired, they sold EVERYTHING on the mainland, built and refurnished the new house in Hawaii. Sure it cost money. Sure it's not cheap to live there comparativly speaking, but.....

They love it and it's a great retirement that someone of middleclass means can do.

IMO, based on what my ex-father in-law tells me (I still get along with him), buying land, paying it off over the course of a working career and then building to retire on, is the way to do it if you are a middle class individual. As far as the cost of living.... I guess it depends on your lifestyle. It's more, but not so much that you can't afford to eat or enjoy life. They live well, but not extravagently.

If you have a ton of money, it doesn't really matter, just buy what you want.

[Paul Ryan]

Brian,

I closed on a raw piece of property on the Big Island in March. We had been to the big Island in Apr 07 and though about it but decided not too. We went back this past Feb and while there for 9 days we started looking at real estate again. We bought a piece of property about 15 miles south of Kona and about 3 miles up the mountain over looking the ocean. It is more of an investment thing than anything. I have wanted to move to hawaii since our 1st time there in 02. We have been back 7 times since but my wife wont move so we bought land instead. It will be hard to move now while rasing kids, so I will have to wait untill the kids move out. So by that time we will build on that land or have sold it for a profit before. Just watch out where you chose land. Anywhere south of kona is in the wake of the volcano. There are places for sale in a subdivision that is completely black volcanic rock, the most recent flow from Mouna Loa. We stayed away from that area by about 40 miles. We spent more on the propery because it "seems" to be in a safer area. The piece we bought is about 1/2 acrea and covered with foliage. So it has been away from lava for a long time and there are other buildings with in sight. My advise is to start looking but becareful as to what you buy, becase the hot stuff can come at any time.

[Pat Germain]

I'm surprised medical treatment would be bad because of the military hospitals that are there.

Brian, only active duty US military, retired US military and their dependents can use military hospitals.

Without getting into politics, Hawaii has been experimenting with government health care plans over the years and it has a big affect on the local system.

[Mitchell Andrus]

On 'raw land'....

Zoning changes. FAR (Floor Area Ratio) changes. Lot coverage rules change. Nearby uses change. Gas stations pop up, as do strip malls and traffic jams.

By the time you go to build your dream house, you may not like the neighborhood anymore. You may also eventually be so restricted that a 2 bedroom bungalow will be all you'll be allowed to build.

Vacant land is not under as much of your control as developed land is. Be very careful.
.

[Brent Leonard]

On 'raw land'....

Zoning changes. FAR (Floor Area Ratio) changes. Lot coverage rules change. Nearby uses change. Gas stations pop up, as do strip malls and traffic jams.

By the time you go to build your dream house, you may not like the neighborhood anymore. You may also eventually be so restricted that a 2 bedroom bungalow will be all you'll be allowed to build.

Vacant land is not under as much of your control as developed land is. Be very careful.
.

I shouldn't have stated "raw" land. I don't really know exactly what kind of property the FIL purchased several years ago. Could have been in a development, I'm not sure. I guess when I said raw land, I meant to say property without a house. I'm not even sure if the property had water lines, electricity, etc....

I still think a person of reasonable intelligence could make a good deciscion in buying land and building a house at retirement.

[Peter Luch]

WOW!

First off I live on the west side of the big island, Kona.
Lived here for over 6 years, lots of friends who have lived here 20 plus. Not locals but mainland people who moved over.

1) You DO NOT have to be a resident to purchase land.
2) You CAN buy land to own and not lease but there are leases on some property.
3) Medical care is NOT that bad but on some of the neigboring islands they do not have specilized care like for heart conditions so you would go to Oahu (Honolulu). Also in certain conditions you may need to go to the mainland for care but it's the same as if your on the mainland and the local area does not have the ability to treat very specific conditions you may have to go somewhere else.
4) No the local Gov has not been trying to start socialized health care.
5) It IS NOT CROWDED everywhere. Oahu (Honolulu) is a crowded island but all the others are not near like that.
6) They ARE MAKING NEW LAND on the big island (10's of acres each year from the volcano) :D
7) You do have to be aware of the lava areas on this island and we also have VOG which are the gases from the volcano so ask about this before you buy!!!
8) It is expensive but then we are a long ways from any large land mass.

Any more questions just PM me.

Aloha, Pete

[Pat Germain]

4) No the local Gov has not been trying to start socialized health care.

To be clear, I did not suggest the Hawaiian government was trying to start socialized health chare. Rather, I said they have been experimenting with multiple, government health care plans; which in fact they have been doing. For example, last fall they had to drop a government health care plan for children because so many people who already had insurance dropped it and signed up for the government plan. It went broke. There have been other government plans as well.

I'm not opining on whether this was a good idea or a bad idea. I'm stating what's been going on as it does have an affect on local health care services.

Similarly, Hawaii experimented with price controls on gasoline for many years. The end result was higher prices and supply issues. Eventually, the price controls were abandonded. I understand things are better now. But local gasoline prices remain high compared to the mainland which is something to consider when relocating to Hawaii.

I am left wondering how a retired Aussie would pay for health care when living in Hawaii. I guess if he was the right age and a resident, he would qualify for Medicare.

[Peter Luch]

Pat,

Just trying be smart :D
The Hawaiian Gov. does not do anything, the state Gov has tried some health care programs but not anything all encompassing.

You're right the gas thing was stupid and even without it we will always have high prices for gas. It's just the nature of living so remotely from a major land mass.
But if there is ever a need for Lava Hawaii will take over the world......:eek:

Just like everywhere else our local politicians are not living in the real world.

Aloha, Pete