LUVA Real Estate agents often work with homebuyers who, after looking at the financial requirement of owning a single family home in West Hawaii, or do not want the day to day upkeep of a large home, will decide to look at condos instead. Buying a condo in Hawaii has a variety of aspects that you may not encounter on the mainland, from strict renting rules to financing options and more. To help you avoid pitfalls, here are some of the top things you should know about buying a condo in West Hawaii.
1. Can you do short term rentals?
The first thing you may wish to look at when you are considering a condo purchase is your goals for the condo. If you want to rent it out most of the year for vacation rentals, you need to make sure that short term rentals are allowed in the complex. Be sure to ask your Realtor or Realtor team or you can check the condo complex’s CC&R’s to check the rules of the HOA before purchasing. Some complexes can be very restrictive and won’t allow any rentals that are less than 30 days.
2. Does the HOA have restrictive rules?
Some HOA rules can be very restrictive. From now allowing alcoholic beverages in the pool area to no-smoking on the complex and parking restrictions, you should know about these rules prior to purchase to ascertain if they can fit in your lifestyle. If it bothers you that you can not hang your wet towels on the balcony or that your children can not ride their bikes in the complex, you may wish to consider another complex or a single family home.
3. Allowance of Domesticated Animals
Most condo complexes in West Hawaii, don’t allow pets, however if you have comfort or service animal, you need to check. There ARE a few complexes, such as Keauhou Resort, which allows two animals up to 25 lbs.
4. Obtaining Financing
Buying a condo or condotel in Hawaii is much different from buying a condo anywhere else in the U.S. This is due to the unique characteristics Hawaii’s condominium projects possess.
The category into which a condo falls will impact your down payment requirements and your interest rate. If you are looking to purchase a condo at the Kona Bali Kai, Kanaloa Resort, Kona SeaCliff Resort or the Islander in downtown Kona, these condo complexes are known as Condo-tels . A condo-tel possesses some hotel like amenities such as a front desk for checking in and out, an activity or concierge desk, and daily or weekly maid service. If you purchase a condo in these types of complexes, you may need to put down 30-50% and pay a higher interest rate.
Why? These types of condos were the condos of choice during the run up to the recession, and owners let these types of investments go first and banks are now more leery of financing them.
It is important for you to know that most mainland lenders do not have the experience required to lend on Hawaii condos which have nuances such as condo-tels and occupancy issues. Beware that most mainland lenders do not even realize they can’t finance a Hawaii condo until about two-thirds of the way through the escrow process, which is well after your loan has been approved!
5. Sale-ability Of Your Investment
Easy in does not make easy out when purchasing property. Choosing an out of the way or aging complex to save money on the way into the complex can come back and bite you. Many complexes will need replacements and repairs, especially if they are in close proximity to the ocean and its corrosive salt air, so be sure to check the reserves to make sure the Board has put money aside for major repairs and if there ARE repairs needing to be done, are there any upcoming assessments. These will be a huge factor in being able to resell your condo, as it directly affects the price to the buyer. Also, if you purchase a condo that is leasehold, there may only be a few years left on the land lease, and the unknown readjustments to the cost of the lease may make selling the condo extremely difficult.
As you can see, there are many different aspects to purchasing a condo in West Hawaii that need to be considered and having a trusted Realtor who knows the various complexes and their restrictions is important. Contact LUVA Real Estate today and let us help you find the right condo for your long term goals.