Hawaii Island Real Estate Investing Tips
Hawaii Island real estate is still 40% cheaper than it’s neighboring islands, posing an attractive option for investors looking to build wealth in Hawaii. But Hawaii Island real estate is not without its challenges. Big Island has seven times the landmass of Oahu and less than 20% of the population. This makes it largely rural and quiet. Deals are harder to find and slower to close. Inventory is sparse and is spread out over a large area. If you don’t have a plan you could find yourself doing an awful lot of driving.
We thought we would share some tips we have picked up along the way to see if they can save you money, time and trouble.
Photo by Ethan Robertson
Specialize in an Area.
We call it Big Island because it is the size of Connecticut. To save ourselves some driving time, we decided to focus on one area. In our case we chose the west side of Hawaii Island real estate – from South Kohala to Hounauau.
It’s several zip codes, but we are getting to know it well and we can get to where we need within an hour. We like it because it is less rainy and sales prices are higher.
Do Your Market Research
Our favorite method is “Driving for Dollars.” Iris and I like to get in our car and drive slowly through new areas of town. We look for ugly or abandoned houses and write down their addresses. We note which realtors have listings there and try to get a feel for the neighborhood so we can categorize it in our minds: Lower, median, high-end, or luxury? Which kinds of roofs are standard? How big are the yards? What price range are the houses? Garages? Views?
Best Way to Meet Hawaii Island Real Estate Agents
We like to stop in at open houses. This is a great way to examine first hand the level of finish for comps in the area. You will get a sense of current market prices and how quickly inventory is moving. It is also our favorite way to meet new Hawaii Island real estate agents. We have tried many different methods of finding good realtors, but we find that they are most approachable when they are holding an open house.
You get to meet them while they are working and see if you like the way they operate. They are stuck there for a few hours with nothing to do, therefore they are usually more than happy to meet you and answer any questions you might have. Not always the case if you cold call them on a busy weekday. If you like them, you should cue up a good elevator pitch and interest them in joining your team. Most importantly, exchange contacts and follow up with them. Real estate agents are some of our best allies.
Marketing Strategies
What we found does work here is Craigslist. We have been working a two-fold strategy of Craigslist posts directed towards distressed sellers and cash buyers, and direct mail campaigns.
Right now we are working on a Private Seller 5-touch campaign. We send them one letter a month recommending that they consider private loans backed by real estate as a safe and lucrative option to the stock market. We hand-write them and decorate the envelopes to inspire curiosity and get the receiver to open it. One time we even added hard candies to the envelopes hoping this would make people curious to know what the lump was. The envelopes were returned for insufficient postage because of their irregular thickness.
No Bandit Signs
In the Fortune Builders live workshops and in real estate investing circles, we always hear a lot of talk about bandit signs. We’ve all driven by those, WE BUY HOUSES or FAST CASH NOW type signs tacked to telephone poles. We hear that they work great and that your phone will definitely ring if you implement a bandit sign campaign.
The down side is that it requires someone to sneak around with a customized stapler sticking gaudy plastic signs in high-traffic areas. These signs are not cheap and they are often torn down and become litter on the side of the road. We went down to the Building Department and asked them why we had not seen any bandit signs. They said it was prohibited. We don’t know if they actually issue fines or whether Big Island real estate investors are a civil, law-abiding bunch, but we have not seen a single sign.
Bandit signs are a no-brainer for many new investors because they are low-tech and relatively inexpensive. We opted to implement other strategies. We didn’t want Craft Realty known for posting brightly colored signs all over town.
Price Points
Sales prices seem to have gone berserk here in the islands. Owners have absurdly inflated ideas of what their homes are worth and we’ve seen a trend of banks selling REO properties at near-market price. We have gathered two things:
- Houses over a million dollars sit on the market considerably longer than house under $1,000,000
- It is hard to find good single family homes in Kailua, Kona for under $500,000
These are some tips for investing on the Big Island. Please make Craft Realty your first stop for Hawaii Island real estate.