What are the merits of investing in real estate properties in Hawaii?

Among the United States, Hawaii is familiar to many Japanese.
There are many Japanese who have a vacation house in Hawaii.
Regard to the investment in the overseas real estate, there are more people who want to invest in familiar real estate properties.
This section introduces the merits of investing in real estate in Hawaii.

There are Japanese Real Estate Agents

It is important to choose the right real estate agent when you invest in the overseas real estate investment. A real estate agent is an individual who conduct a real estate brokerage.
The real estate agent may not be familiar in Japan as it is more general to ask a real estate company for real estate dealings.
However, it is crucial to find a good real estate agent when you invest in the real estate properties in the United States.
There are many Japanese real estate agents in Hawaii as many Japanese residents live there.
Even though you may not be good at English, you can make a transaction in Japanese with the Japanese agents, and they also understand the cultural difference and specific Japanese values.
What makes a agent special is the profound knowledge on the real estate in Hawaii, the analytical ability on the properties, and the negotiation skills.
An real estate agent has a great effect on whether you will be successful on the overseas real estate investment.

You can get a loan from Japanese banks

In terms of overseas real estate, you generally open a bank account in that country and get a loan.
It is an arduous process to open a bank account in a foreign country as there are many necessary documents to submit.
However, it is possible to get a loan in Japan in the case of real estate properties in Hawaii.
It is limited to properties in Honolulu, Hawaii, but Shinhan Bank Japan offers real estate investment loan.
The maximum loan period is thirty five years which is same with a Japanese housing loan.
In addition, security in Japan is unnecessary.
Tokyo Star Bank offers to put up a house located in Hawaii as a collateral for the loan.
However, it might be difficult without personal funds because the maximum borrowing period is as short as five years.

What are the demerits of investing in real estate properties in Hawaii??

Next, let's look at the demerits of investing in real estate properties in Hawaii.

The property price is high

The property price in Hawaii is as high as New York and California which is higher than other places in the United States.
The median house price of Hawaii at the time of January, 2021 is $617,000 which is about 70,000,000JPY in Japanese yen.
The hotel-style condominium with the size of 20㎡ costs about $200,000 which is over 20,000,000JPY.
In Japan, studio type apartments are invested, but the property price of 20,000,000JPY for investment is categorized as high.
You may lose at the end if the cap rate is not high, so it is important to analyze the price and market trends.

Affect by Tourism Industry

Hawaii is one of the world-leading tourist resorts.
It is not too much to say that Hawaii’s economy is supported by the tourism industry, and indeed, Hawaii accounts for the high percentage of the overseas travel destination of Japanese people expect for Asian countries.
Hawaii's economy goes down when the tourism industry goes down.
If that happens, the land price goes down, and it will create the loss.

The Cap Rate is Low

The used houses account for the majority of the real estate market in the United States.
It is no exception for real estates in Hawaii. There are many houses over 50 years old.
Therefore, the building management cost could be rather expensive, and there is a possibility of a decrease in profit.
In the real estates in the United States, the house inspection is generally conducted before the purchase, and if the repair is necessary, it is better to negotiate for the handover of the property after the seller completes the repair.
It is crucial to understand the management cost of the investment in real estates in Hawaii.

Hotel Operations are Restricted

If you want to purchase a condominium to operate as a hotel, the area is restricted.
It is necessary to obtain the Non-Conforming Use Certificate for vacation rental in order to operate as a hotel outside the resort zone.
It is important to confirm the real estate agent about the matters.

The Vacancy Risk is High Depend on the Area

The choice of area is very important in the investment of real estates in Hawaii.
It is the same with Japanese real estate, but there is a vacancy risk in the unpopular area.
Even if you decide to buy a property because it is less expensive, it might cause the loss as a result.

The Areas in Hawaii You Should Know in Real Estate Investment

There is a variety of real estates in Hawaii, and the features may vary depend on the area.
Finally, let's look at the features of the each area of the real estates in Hawaii.

Waikiki

Waikiki located on the southern shore of Oahu Island, is the most visited tourist area by Japanese.
Especially, Waikiki area is a popular sightseeing area where famous hotels and shops are lined up.
Many investors and wealthy people are paying attention to the area as the real estate investment potential.
There are many reinforced concrete structure condominiums, and it is a merit that you can invest as a short-term leasing condo.
The property price is high, but the cap rate is good as the vacancy rate is low.

Ala Moana

The popular area is located in the western Waikiki.
The shopping center in Ala Moana is famous for tourists.
There are many more detached houses in the area as it is further from the resort area, and you might be able to find a property with a reasonable price.

Kaka'ako

The popularity of the area somewhat distant from Waikiki beach, is suddenly rising.
Kaka'ako is located between the Downtown and Ala Moana, and it has the appealing quiet and local ambience compared to Waikiki.
Originally, there are many factories and warehouses in the area, but many condominiums are constructed by the Kaka'ako redevelopment project started in 2012.
The popularity of Kaka'ako is sparked by the art event called POW!WOW! HAWAII which artists gathered from all over the world and painted the walls.
Many more tourists are attracted by this event, and the area is becoming popular.
The construction of the transportation system is underway, and it will be partly opened in 2022.
Now might be the chance to invest in this area as the price increase will be expected hereafter.

Ewa/Kapolei

Those are located on the opposite side of the areas listed above. The area is developing rapidly in recent years.
The coastal area is dotted with golf courses and military facilities. It is the area where many people involved with the military and golf live.
The vacancy risk might be low as there is a demand from the military personnel.
Moreover, the demand is expected to be high as the accessibility to Honolulu will get better by the full open of the railroad.

In conclusion

In this article, we explained about the real estates in Hawaii which is popular among the property investment in the United States.
Hawaii is the area with the high price as much as New York and California.
However, there are secret spots distant from the tourist sites.
It is important to find a good agent and invest in the properties with high cap rate.