Written by: Dennis O’Donnell
Picture this: you're sitting on a golden sandy beach on Maui, sipping a Mai Tai, as you look around, you notice the endless crystal-clear azure & teal waters and the lush greenery surrounding you. You are immediately filled with a sense of peace and tranquility only found on a tropical island in the Pacific.
Now, imagine owning a piece of this paradise (and who hasn’t?!!). Well, your slice of heaven awaits you in the form of a Maui vacation rental condominium, currently one of the hottest segments of the real estate market on the Valley Isle.
The market is rebounding after its decline of the past year with a significant upward trend in the first quarter of 2023. In fact, March’s condo sales volume has not been seen since the summer of 2022!
Curious? Your timing is excellent, especially since hotel room rates have skyrocketed to $1000 per night, and both inflation and mortgage rates have stabilized.
Why Own a Maui Vacation Rental Condo?
The benefits of owning a Maui vacation rental condo abound. First, it offers the potential for a solid return on investment. Second, as your tax planner will attest, investing in a Maui vacation rental condo will offer tax benefits. The tax code generally allows owners to deduct mortgage interest, property taxes, write off the Maui trip and the depreciation on the property, resulting in significant savings for investors, especially those in higher tax brackets. Thirdly, is the substaincial apreciation. So not only do own and enjoy a piece of Maui, but you can reduce your tax bill - what's not to love?
Another benefit to owning a Maui condo is the money you’ll save not having to rent each time you visit. Stop paying someone else’s mortgage, and use those savings for another adventure, fantastic dinners out, or a rental car! You can block out the dates you want to reserve for yourself (or for your friends, family, neighbors, co-workers, etc.) and then keep the remaining days available for paying renters.
Will My Condo be Rented?
Short answer: Yes! Tourists flock to our island year-round (almost 3 million last year! ) to soak up the sun, surf, & sand, but arguably, few can afford to stay in the big luxury hotels. So, if 2.9 million visitors are playing Musical Chairs, the vast majority of travelers will seek an affordable alternative in order to stay on the island for an extended period. Bingo! That’s where your new condo comes in!
Vacation rental condos are popular with larger families or groups looking to accommodate everyone, making them more cost-effective than booking multiple hotel rooms. Plus, they typically come with excellent amenities that can exceed those of a luxury hotel room. Your guests will have a fully equipped kitchen, laundry facilities, and a private outdoor space - balcony or lanai. Most vacation rental complexes have pools, hot tubs, BBQ areas, and some have tennis/pickleball courts, too. These provisions offer travelers the convenience and comfort of a home away from home, making vacation rental condos an attractive option for tourists looking for a more affordable, personalized, and comfortable experience.
Difference Between Buying a Condo vs Buying a Single Family Home/Ohana?
Now you might be thinking, “what if, instead of buying a condo on Maui, I buy a residential family house or ohana/cottage and rent that out as short-term vacation rental?”
GREAT question. The quick answer is unfortunately new County regulations have pretty much ended that possibility. Whaaat? No way? Way.
Call the Romvari Realty Team and we can give you ALL the details (and be sure to look for our upcoming BLOG on this topic).
Ok, you decide, “I’ll just buy a property that already has a Short-Term Rental Home (STRH) Permit”.
Unfortunately, the County Council has ruled that existing STRH permits (less than 180-day leases) for homes in non-hotel/resort zoned areas CANNOT be transferred to a new owner. Furthermore, the new owner of the property must wait 15 (fifteen!) YEARS before they can even APPLY for a permit (and applying doesn’t guarantee approval). Ouch!
“Yes, but what if I buy this as my primary residence and want to rent out the ohana/cottage on a short-term basis? Surely THAT would be okay?”
Nope (and stop calling me Shirley!). Ohana/cottages can no longer be rented out as vacation rentals!
“Ok, ok last chance . . . What if I want to live in the ohana full time, and rent out the main house on a vacation rental basis?”
Well, that could work . . . but you will still have to wait 5 (five) YEARS from the date of purchase to apply for a B&B Permit (and again, applying doesn’t guarantee permit approval).
Obviously, new regulations have made it more difficult if not impossible to operate short-term rentals in residential areas. For those with inquiring minds (and a desire for the details) here is the link to the County Regulations CLICK HERE. Or, you can contact the Romvari Realty Team for answers to your questions.
Romvari Realty Will Guide You Every Step of the Way
Your quest to become a Maui condominium owner is within reach with Romvari Realty’s guidance. We will help you create a feasible game plan for purchasing, decipher the best route and save you invaluable time going down the wrong path.
Did you know that not all Maui condominium complexes have AOAOs allowing rentals of less than180 days? And the popular mainland websites like Zillow, Realtor, and Trulia are incapable of telling you if a Maui condo can or cannot be used as vacation rental. But Romvari Realty CAN! Here is our custom site MauiJustListed.com
We will help you in your decision making process, digging deep, researching prior rental history, gathering proforma invoices, house rules, comparable sales and site maps etc. We’ll discuss things like AOAO fees, County Property Tax classes, and State GET. We’ll provide you with contact information for excellent local Maui lenders that specialize in vacation rental condo loans. And we will give you insight on top quality management companies (SPOILER ALERT: Romvari Rentals is a class above others).
Plus, if you already own a rental unit elsewhere in the country, and are ready to sell, you can shelter your exposure to Capital Gains Tax by performing a 1031 Tax Deferred Exhange. Our Team has vetted the 1031 Tax Deffered Exchange companies, chosen the most proficient and successful experts and we pair you with the best to guide you through the process.
So just push the easy button and contact us today to get started on your path to paradise opportunity! And that, my friends, is no Knock Knock joke.
I’ll leave you with this peaceful view from Puamana Unit 225-4 vacation rental condo in Lahaina:
“If a window of opportunity appears, don't pull down the shade” – Tom Peters
(especially if that window looks out over a gorgeous Maui beach & the ocean! 😎)
