Hawaii is a tropical paradise that offers modern amenities, beautiful surroundings, and a rich culture. But there’s a catch – it’s not cheap. As most of you know, it’s hard to break into the Hawaii real estate market as the value of a Hawaiian home is roughly three times higher than the average home in the United States. Many believe this is caused by the increasing demand for housing with which supply can’t keep up.
The main reason why supply in the Hawaii real estate market is lacking is mainly due to the fact that it’s an island. Other US states facing an increase in population and development have more space and the ability to expand from urban areas to the suburbs. Hawaii, on the other hand, doesn’t have this option and is running out of space for new property construction.
Nonetheless, if you’re a real estate investor, don’t let this stop you from searching for investment opportunities in Hawaii. You still have a chance to find affordable properties in The Big Island that also have the potential to generate a high return on investment. Keep reading as we list exactly where these properties are located and how we found them for you!
Traditional Investments in Hawaii Real Estate Market
Investing in long-term rentals in Hawaii is a smart investment decision because these properties will appreciate over time. Furthermore, taking the shortage of supply into consideration, there’ll be high demand for your income property, meaning its value will definitely climb up. Our tip: the closer your investment is to the beach, the better! Here are the best places to consider for traditional investments in the Hawaii real estate market:
Kualapuu
- Median Property Price: $129,900
- Price Per Square Foot: $128.87
- Traditional Rental Income: $2,050
- Cash on Cash Return: 10.67%
Mililani
- Median Property Price: $416,426
- Price Per Square Foot: $383.14
- Traditional Rental Income: $1,878
- Cash on Cash Return: 3.04%
Pahoa
- Median Property Price: $348,772
- Price Per Square Foot: $255.81
- Traditional Rental Income: $1,237
- Cash on Cash Return: 3.04%
Volcano
- Median Property Price: $357,391
- Price Per Square Foot: $274.79
- Traditional Rental Income: $1,655
- Cash on Cash Return: 3.02%
Kahului
- Median Property Price: $447,175
- Price Per Square Foot: $353.15
- Traditional Rental Income: $1,795
- Cash on Cash Return: 2.84%
Airbnb Investments in Hawaii Real Estate Market
While a long-term rental is a good investment, a short-term rental is THE BETTER option for property investors in Hawaii real estate. Hawaii is known to be a popular tourist destination and the demand for short-term rentals shows no sign of slowing down. This makes the city one of the best places for vacation rentals and Airbnb investments.
Related: Real Estate Investing: Traditional vs. Airbnb Investments
Here are the places you should consider when going for this rental strategy:
Mililani
- Median Property Price: $416,426
- Price Per Square Foot: $383.14
- Airbnb Rental Income: $5,952
- Cash on Cash Return: 7.54%
- Airbnb Occupancy Rate: 65%
Pahala
- Median Property Price: $234,900
- Price Per Square Foot: $193.65
- Airbnb Rental Income: $2,058
- Cash on Cash Return: 5.83%
- Airbnb Occupancy Rate: 47.09%
Waianae
- Median Property Price: $450,186
- Price Per Square Foot: $407.48
- Airbnb Rental Income: $3,038
- Cash on Cash Return: 5.74%
- Airbnb Occupancy Rate: 69.94%
Maunaloa
- Median Property Price: $242,809
- Price Per Square Foot: $333.75
- Airbnb Rental Income: $1,920
- Cash on Cash Return: 4.78%
- Airbnb Occupancy Rate: 54.13%
Keaau
- Median Property Price: $349,900
- Price Per Square Foot: $217.13
- Airbnb Rental Income: $2,950
- Cash on Cash Return: 4.63%
- Airbnb Occupancy Rate: 62.57%
Hilo
- Median Property Price: $401,930
- Price Per Square Foot: $298.84
- Airbnb Rental Income: $2,811
- Cash on Cash Return: 4.34%
- Airbnb Occupancy Rate: 66.68%
Volcano
- Median Property Price: $357,391
- Price Per Square Foot: $274.79
- Airbnb Rental Income: $2,004
- Cash on Cash Return: 3.12%
- Airbnb Occupancy Rate: 45.39%
Kurtistown
- Median Property Price: $260,375
- Price Per Square Foot: $210.99
- Airbnb Rental Income: $1,848
- Cash on Cash Return: 3.1%
- Airbnb Occupancy Rate: 59.57%
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
How to Find Affordable Hawaii Real Estate Properties
Wondering how we came up with these results? Short answer: with the help of various investment tools offered by Mashvisor. Let’s explain how YOU can also find affordable properties to invest in any city or neighborhood across the US housing market.
Step 1) Using the Heat Map
The first investment tool that’ll help property investors find affordable Hawaii real estate income property is the Heat Map. Using visual cues, this tool shows you how the different areas in a certain city are performing based on the metric you have chosen. The available metrics are listing price, cash on cash return, rental income (both traditional and Airbnb), and Airbnb occupancy rate. So, a real estate investor looking for affordable investment properties can choose to set the heat map to show areas based on their listing price, as seen in the picture below where areas in red are more affordable than areas in green.
To learn more about how to use this investment tool, read “How to Find the Best Investment Property Using a Heat Map.”
Step 2) Using the Investment Property Finder
After finding which areas in the Hawaii real estate market are affordable, the next step is to actually find an income property. Typically, property investors spend months conducting a property search. However, it’ll only take you 15 minutes with this investment tool. Our property finder is heavily customizable, allowing you to find investment properties that match your set criteria.
For example, you can filter your search results to find Hawaii real estate properties that are within your budget, have a certain number of bedrooms and bathrooms, and are ideal for your rental strategy (traditional or Airbnb). You’ll immediately see the results which, then, you can compare and analyze to identify which one you think is best to invest in.
Do you have a free Mashvisor account? Click here to use our Property Finder and find properties in a matter of minutes!
Step 3) Using the Investment Property Calculator
Of course, not all properties have the potential to make money in the real estate business. So, how can property investors in the Hawaii real estate market determine if the property they’ve found will actually be profitable and bring in a good return on investment? You can either take your time and perform an investment property analysis or, alternatively, use our investment property calculator. This is the tool that we’ve used to provide the previous data.
With this tool, you can calculate the different values related to an income property to have an estimation of its profitability. These values include cash on cash return, cap rate, cash flow, and rental income (for both traditional and Airbnb investments). The interest rate, property tax, maintenance, and other expenses are pre-calculated and can be adjusted based on your findings. Meaning, rather than creating spreadsheets, this tool fine-tunes your costs and calculates your returns for you. Hence, this is the ultimate investment tool for any real estate investor!
Related: Investment Property Calculator for Analyzing Real Estate Investments
Thanks to today’s advanced technology, a real estate investor can still find affordable properties even in the most expensive housing markets – like Hawaii real estate. Want to start searching for an income property with the help of our tools? Simply sign up or click here to start out your 14-day free trial with Mashvisor!
