Owning a second home in Hawaiʻi is a dream come true for many! However, managing a second property, especially from afar, comes with unique challenges.
At Hawaʻi Life, we understand the distinctive concerns of second-home owners in Hawaiʻi. With our deep knowledge of Hawaiʻi's real estate market plus our comprehensive property management services, we aim to provide peace of mind to property owners. In this blog, we will address the top five concerns of Hawaiʻi's second-home owners and how the Hawaiʻi Life team can help mitigate these issues.
Property Management with Hawaiʻi Life
Hawaiʻi Life is a premier real estate and property management company with offices on all of Hawaiʻi's islands. Our reputation for excellent service and insider knowledge of Hawaiʻi's property market makes us the go-to choice for homeowners seeking reliable property management.
Whether you are considering purchasing a second home in Hawaiʻi or already own one, our expertise can guide you through the complexities of property ownership in our tropical paradise.
1. Is it Legal to Rent My Second Home in Hawaiʻi?
One of the primary concerns for second-home owners in Hawaiʻi is the legality of renting out their property. Hawaiʻi has stringent regulations regarding short-term rentals, and understanding these rules is crucial to avoid legal issues.
Short-Term Rental Restrictions
Hawaiʻi's government has implemented strict measures to control the proliferation of short-term vacation rentals. The goal is to preserve the local community's character and address the housing shortage. These restrictions vary by island and sometimes even by neighborhood.
For example, Oahu's Bill 89, also known as the Oahu Short-Term Rental Ordinance, restricts short-term rentals in most residential areas. On Maui, Chapter 19.65 of the Maui County Code governs vacation rentals, requiring owners to obtain a permit to operate legally.
Obtaining Permits
Depending on the location of your second home, you may need to obtain a permit to rent it out on platforms like VRBO or Airbnb. The process can be complex, involving multiple steps and compliance with specific zoning laws.
Long-Term Rentals
If short-term rentals are not feasible due to legal restrictions, consider long-term leasing options. Long-term rentals provide a steady income stream and are generally less regulated, but they are a viable alternative, ensuring compliance with local laws while still generating consistent rental income.
Hawaiʻi Life's Expertise
At Hawaiʻi Life, our property management team is always current on the latest regulations and can guide you through permitting, ensuring your rental activities are legal and stress-free. We can handle the paperwork and compliance, allowing you to focus on enjoying your property.
2. Vacation Home Taxes & Additional Expenses
Understanding the tax implications and additional expenses associated with owning a second home in Hawaiʻi is essential. Without attention, these financial aspects can significantly impact your overall investment returns.
Property Taxes
Non-resident property owners may be subject to different tax rates compared to residents. Property taxes in Hawaiʻi can be quite high, especially for non-residents. It's important to estimate these taxes ahead of time so that you can avoid unwelcome surprises.
You can use tools like this Property Tax Calculator to get an idea of your tax obligations.
Transient Accommodations Tax (TAT)
If you rent your property for less than 180 days, you must pay the Transient Accommodations Tax (TAT). This tax is currently 10.25% of the rental income. Compliance with TAT regulations is essential to avoid penalties.
General Excise Tax (GET)
In addition to the TAT, rental income is subject to Hawaiʻi's General Excise Tax (GET), which is 4% statewide and 4.5% in Honolulu. The GET is a business tax levied on all business activities in Hawaiʻi, including rental income.
Homeowners Association (HOA) Fees and Maintenance Costs
Many properties in Hawaiʻi are part of Homeowners Associations (HOAs), which can have more substantial fees. These fees cover the maintenance of common areas like gardens, walkways, shared facilities (gyms, pools), and other amenities. Additionally, maintaining a property in a tropical climate can be costly due to the wear and tear of the weather.
Hawaiʻi Life's Financial Guidance
Our team at Hawaiʻi Life can help you navigate these financial aspects, ensuring you understand your tax obligations and budget appropriately for additional expenses. We provide detailed financial reports and projections to help you manage your investment effectively.
3. Risk of Security & Property Damage
Security and property damage are significant concerns for second-home owners who cannot be present year-round. Hawaiʻi's tropical climate and remote location can pose some singular risks.
Security Measures
Unoccupied homes can be attractive targets for break-ins and theft. Implementing robust security measures can deter potential intruders. These measures include installing surveillance cameras, alarm systems, and smart locks. Seeing activity on a property can also deter break-ins and theft, so it's a good idea to have a property manager do consistent check-ins and have scheduled ongoing maintenance like landscapers.
Natural Disasters
Hawaiʻi is prone to natural events such as hurricanes, volcanic activity, wildfires, and flooding. Ensuring your property is adequately insured and having a disaster preparedness plan in place is crucial.
Regular Maintenance
Regular upkeep is vital to prevent damage from the elements. This includes pest control, roof inspections, and landscape maintenance. The tropical climate can accelerate wear and tear on buildings and infrastructure, making consistent maintenance essential.
Hawaiʻi Life's Property Management Services
Hawaiʻi Life's property management services can include comprehensive security solutions and regular maintenance checks to protect your investment. Our local presence ensures that your property is well-cared for, even when you're away. We coordinate with reliable local vendors and service providers to address all issues promptly.
4. Long-term Investment Potential
Evaluating the long-term investment potential of your second home is crucial. Commonly, this involves considering the property's condition, location, and future developments in the area.
Property Condition
The value of your home depends significantly on its condition. Regular maintenance and upgrades can enhance its market value and appeal. Keeping the property in excellent shape attracts renters and ensures higher resale value. Upgrading kitchens and bathrooms is another way to keep a home looking new, fresh, and well-cared for.
Location & Neighborhood
Proximity to beaches, amenities, and tourist attractions can influence your property's rental demand and resale value. Researching the neighborhood and understanding future developments that may impact the area is essential.
For example, areas near new infrastructure projects, shopping centers, or tourist attractions may increase property values. Conversely, properties near potential negative developments, such as new industrial projects, may experience a decline in value.
Hawaiʻi’s Market Trends
Stay informed about Hawaiʻi's real estate market trends. The market can fluctuate, so understanding these patterns can help you make informed decisions about your investment. Engaging with local real estate experts can provide valuable insights into market dynamics.
Hawaiʻi Life's Market Expertise
Hawaiʻi Life's market experts provide detailed analyses of property values and trends in various regions of Hawaiʻi, helping you make informed investment decisions. Our deep understanding of the local market and Hawaiʻi's community allows us to offer strategic advice tailored to your investment goals and personal preferences.
5. Added Responsibility & Maintenance
Owning a second home entails additional responsibilities and maintenance tasks, which can be overwhelming, especially if you live far away.
Property Upkeep
Regular maintenance is necessary to keep your property in top condition. This includes landscaping, cleaning, and repairs. As mentioned, Hawaiʻi's tropical climate can accelerate deterioration, making proactive maintenance essential.
Financial Management
Managing the financial aspects, such as utility bills, property taxes, and insurance, requires careful planning and organization. For some off-island owners, ensuring all bills are paid on time and keeping track of expenses can be challenging from a distance.
Hiring a Property Manager
Good news! A reliable property manager can handle these tasks, ensuring your property is well-maintained and potentially generating income when you're not there. A property manager can schedule ongoing maintenance and repairs, handle landscaping, and manage service updates.
Additionally, a property manager can help owners find ways to make their property a lucrative investment when they are away. For example, they could rent the home for a few months per year to cover your second home expenses. There are many creative ways that an on-island property manager can support off-island second-home owners in Hawaiʻi.
Hawaiʻi Life's Comprehensive Services
Hawaiʻi Life offers comprehensive property management services tailored to your needs. Our team can handle everything from routine maintenance to tenant management, giving you peace of mind and maximizing your property's potential. We provide detailed financial reports, ensuring transparency and effective management of your investment.
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Owning a second home in Hawaiʻi is a rewarding experience, but as you've read, it can come with challenges. By addressing these concerns and leveraging the expertise of Hawaiʻi Life, you can enjoy the benefits of your property without the stress. Whether you need assistance with legalities, taxes, security, investment advice, or maintenance, our dedicated property management team is here to help.
Contact Hawaiʻi Life's Property Management Team today to learn how we can help you manage your second home in Hawaiʻi and ensure it remains a valuable and enjoyable asset.
We encourage you to embrace the unique real estate opportunities Hawaiʻi offers. For more information about real estate opportunities, Hawaiʻi rentals, and property management services with Hawaiʻi Life, Book a Free 15-minute Consultation or call us at 1-855-447-3685.