Investing in luxury homes in Hawaii is a wonderful proposition, but there are some treacherous pitfalls to be avoided if the investment is going to be rewarding. The Hawaiian real estate market is different from the rest of the United States in that a larger portion of homes in the Hawaiian Islands are in “prime” locations.
Even seasoned real estate investors have to be extremely careful when selecting a Hawaii luxury home to invest in, as oftentimes the best investment isn’t necessarily the most luxurious home available, it’s the home that’s sold as a “handyman’s special” or a “fixer-upper” which scares a lot of investors away, being unsure as to what those descriptions will really get them into in terms of an investment property on the Hawaiian Islands.
The first decision that has to be made is the intended purpose of the investment. Obviously, the purpose of any investment whether in Hawaii Luxury Homes or oil futures is to make a profit, but the real estate investor must choose how that profit is going to be made, whether from buying and then renting a Hawaiian luxury vacation home, or from purchasing a home for less than market value, investing some money into refurbishing it, and then selling it to realize the profits.
There is also the hybrid of the two methods, where a home is purchased and an additional investment is made in restoring or remodeling it, and then it is rented out on a weekly or monthly basis as a vacation property, and then finally it is sold when the investor is ready to realize the overall profit on the initial investment.
The down side to this hybrid method is that often, the investor is actually losing money on the property every month, as the rental income doesn’t cover the mortgage or the cost of remodeling the asset, and a profit isn’t seen until 10 or even 20 years after the initial investment. If the investor in Hawaiian luxury homes has a long-term strategy, and is willing to continue to sink money into their original investment, this hybrid plan often yields a greater return, but also carries with it a greater risk, of waiting for a longer-term, and may be of higher initial investment.
Selecting a luxury home in Hawaii to purchase is the first step in real estate investing on the Hawaiian Islands, and is often the biggest hurdle potential investor face. Working under the guidance of a qualified and trustworthy real estate agent is the ideal way to address this hurdle: A Realtor is familiar with the market in his area, and can help potential investors avoid pitfalls and poor investments by doing the initial legwork on their behalf. Before signing a contract with any real estate professional, a real estate investor looking for a luxury home in Hawaii should let the Realtor know up front what his objectives are.
By making the realtor aware of the investors intentions, both parties are better prepared for budgets, negotiations, and all of the necessary steps that are required for the Hawaiian real estate investment to see its eventual profit for everyone involved.