Investing in Build to Rent Properties in Hawaii

Hawaii is a vacationer’s paradise, but savvy real estate investors see more to the islands than hula dancing and pristine beaches. Hawaii real estate investment provides some unique opportunities to profit – but you have to know where to look.

We took a deep dive to see whether Honolulu is one of the best cities to invest in real estate. Here are three unique characteristics we found in Oahu when it comes to Hawaii investment property.


Fix and Flips in Hawaii Are Rare But Profitable

The fix and flip market is a good news/ bad news situation. The good news is that flips in Hawaii are incredibly profitable. The average profit for a fix and flip project is $150,000—more than double the national average. This is remarkable on its own, but especially when you consider how rare it is to profit this much in an urban environment where home prices are expensive. The fact that real estate investors can average 22% profit on a Hawaii fix and flip makes these kinds of projects an attractive option.

However, fix and flips are very rare on the island of Oahu. Less than 1% of all home sales are flips – compared to nearly 6% nationally. That means houses to flip in Oahu are hard to find. When you find them, the profit can be significant. But it’s hard to make fix and flips the keystone of a scalable strategy for Hawaiian real estate investment.

aerial view of build to rent community in Oahu Hawaii


Homes Sell Fast at Increasing Prices

Owning rental property in Hawaii may seem like a dream, but building a real estate investment portfolio is tough because of how fast the real estate market is currently moving. Homes in Hawaii stay on market for a median of just 9 days, according to the Hawaii Board of Realtors, which is an indicator of an incredibly tight market. No wonder then that the median single-family home price in Hawaii is up 20% year over year to $1.15 million, according to the Hawaii Board of Realtors. And with the rent to price ratio is just 4.3%, in the bottom quarter of all U.S. mid-sized metros, according to Roofstock.

While the market of renters is solid in Hawaii, it’s not one of the best rental markets in the U.S. right now because of these costs. Buying homes from existing stock will be difficult and expensive—which means Hawaii may not be one of the best places to buy investment property this year, at least in terms of amassing a portfolio from existing home stock.


Construction Hasn’t Boomed in Hawaii Yet

Across the country, the tight market for homes has caused investors in Hawaii to consider build to rent communities as investments. But the trend of build to rent communities hasn’t hit Hawaii in earnest yet. Single-family home construction permits have decreased year over year, while they are up 17% nationwide.

New construction can be a profitable option when it comes to Hawaii real estate investing if you can navigate issues like supply-chain problems and materials shortages. And if you can find a plot of land in the Hawaiian islands for a build to rent community, the demand for renters or buyers will definitely be there once construction is complete.


Should You Invest in Real Estate in Hawaii?

Hawaii offers opportunity, but investors need to hone their approaches to enter this competitive and expensive market for real estate investing. Part of this is having the right partner for rental property loans for investors. The answer is Lima One Capital. We’re financing deals in Hawaii and across the United States, in 46 states and Washington D.C. We offer the industry’s most complete suite of products, so whether your strategy is to invest in fix and flip, single-family rentals, multifamily, new construction, or build to rent communities, we’re ready with a financing solution. Our team closes loans efficiently and professionally, with processes designed to ensure your success.

Let’s get started on your next Hawaiian real estate investment. Contact us today or get started now through our online portal.