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]]>Reasons to Invest in the Hawaii Real Estate Market
Today we’re gonna go over four reasons why you may want to invest in real estate in Hawaii specifically in Oahu. There are four main reasons why it’s a great place to store your cash, so let’s just jump into it.
#1 Multiple Markets
If you’re looking to purchase a property out here in Hawaii, the one thing that I really like is that we have multiple markets from a buyer standpoint. And what I mean by that, is if you’re going to buy property, you have a local market. That’s basically it.
Let’s face it. Everybody wants to come to Hawaii. Everybody wants to live in Hawaii. Everybody wants a vacation in Hawaii. and we have lots of different submarkets. The presence of military bases out here keeps the economy very much alive in the real estate game. More specifically in the rental, buying, and selling market. This is because they’ll be here for three years and then they leave and then a new crew comes in and they are given a basic allowance of housing to pay to either rent or buy a place. So you have that market.
This is a very strategic place for the military to be and it’s not going anywhere. Then on top of that, you’ve got the foreign market, you’ve got Europe, the Japanese market, the Chinese market, and the Mainland market. Snowbirds, You have this new tech market that’s coming over here, People working remotely. They want to live in this beautiful place So we have so many different markets that come here to either by live invest that if one drops out, there’s three other that are going to take their space. So it’s not like if the market crashes, let’s say in the United States. Well, guess what? You’ve got the japanese the chinese in the europe market that could pick up the slack and there’s lots of different places that don’t have that same situation.
So if the market crashes in the US, a lot of the mainland prices of homes are all gonna crash, right? But that’s not the same for Hawaii specifically because we have so many other markets that pick up the slack.
#2 Appreciation
Another thing is Appreciation. A lot of investor clients that I’ve worked with, especially beginner investors, look at Hawaii and they go, “I would never invest there because the cash flow is horrible, you can never get it” And they’re absolutely right. It’s very difficult to find properties that cash flow. And what I mean by that is basically your expenses, your mortgage payment, all of that. and when you throw a renter in that the rent exceeds your expenses, so that means anything extra You have, you have cash flow and that’s great. But having a couple extra 100 bucks a month doesn’t excite me too much.
If you’re making $200 a month on a property that’s basically $2400 of taxable income, you’re gonna get taxed on that and that’s not gonna change your life. Now remind you, if you get 6,7, 10, 20 doors, then yes, cash flow makes sense. But here in Hawaii, the main strategy is appreciation. And that’s because we have such a strong and stable market for that same reason I mentioned before the multiple markets to pick up the slack when things dip. We’ve seen the prices of homes in Hawaii steadily growing for the last 30 years. On average, the annual appreciation is about 4-7% and sometimes we have crazy years where it’s 10-18 or like this year we had 27% appreciation for single-family homes.
Some people really made out well. And that’s simply for the fact that there’s only so much space we have out here. Everybody wants to live in Hawaii and it just pushes the prices up so it’s really about getting in the game and holding on to that asset for as long as you can and building wealth through appreciation. So if you get cash flow, $200-2400 a year, taxable let’s call it 2000 after taxes. Now if you purchase a property, let’s say a townhouse for $600,000 at a 6% annual appreciation, in the first year you’re gonna make 36 grand in appreciation and that’s equity. That’s 36 grand compared to $2400. And then on top of it that hasn’t been taxed yet. You can pull that equity out and he locked cash out refinance what have you.
But then that starts compounding every single year and that’s where the magic really happens. let’s say that we get a great market and it’s at 6%. So if you bought a $650,000 property at 6% annual appreciation compounding for the next five years. That property is now worth $869,000. So as you guys can see appreciation and with the effect and the eighth wonder of the world compounding interest that’s really where the money’s at, I could really care less about cash flow. I’m more in the appreciation game and you should be as well if you’re looking to investing in Hawaii.
#3 Hold for a minimum of 3-7 years
Now the third thing I want to go over is possibly the reason why you may want to or may not want to invest in Hawaii. And so ,we’re gonna kind of play both sides. My general rule of thumb is if you’re going to own a property for less than three years and that’s the bare minimum I’d really prefer. If you own it for at least five years, then maybe you shouldn’t invest in Hawaii because the time and energy it takes to not only get the property but when you need to sell the property in three years having only three years of compounding interest of appreciation and factoring in, well maybe the market just flattens out or doesn’t appreciate significantly you don’t have the best chances to getting the best return.
The magic area is about 5 to 7 years where you’re going to see massive returns because you can ride the wave right? The real estate market is very cyclical. Fortunately out here in Hawaii it’s pretty steady. But we do have certain times where maybe flattens out for a bit And you want to make sure you own that asset for enough time to allow that compounding interest to kick in because you will have expenses when you need to sell the property. So general rule of thumb, if you’re planning on owning the house for less than three years, don’t invest in Hawaii. But if you are planning on owning it for more than 35 or seven years, definitely invest in Hawaii because compounding interest will be your best friend to building wealth
# 4 Multiple Rental Markets.
Now using that same example I had before, Ohio and North Carolina, you basically have one rental market. Long term renters people that have a six month or one year lease that you can rent? Two. That’s good and great. But what if I told you out here in Hawaii we have three rental markets. First rental market is of course the long term six months to a year plus leases. Those ones you’ll get a good amount of money, hopefully it’ll cover your mortgage. The second one is short term, for 30 days or less. That’s basically like the Airbnbs and the short term rentals. But that’s another way that you can create potentially great cash flow on your property. And the third market that has just recently really started to pop off is the midterm rental market. And that’s for these people who are living out here but working remotely and don’t plan to rent or live out here for a significant amount of time. Maybe they’re looking to live out here for three months or just under six months. That’s another market. The long term, you’re going to charge, bare minimum short term we’re gonna charge the max and the mid 3 to 6 months you’re gonna charge somewhere in the middle. We’re gonna finish the place and do all that stuff. So you have three different markets, you could potentially rent to depending on your zoning, your strategies and things of that nature. But it’s always good to have options, and out here in Hawaii you got options.
Alright guys. So like I mentioned before, those are four reasons why you may or may not want to invest in Hawaii. If you guys have any questions, please put them in the comment section down below or if you’re looking to invest in Hawaii and need someone to guide you through the process, I’d be happy to be that person for you I am a licensed agent out here in Oahu and on the surrounding islands so feel free to contact me.
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]]>How to PASS the Hawaii Real Estate Exam - A Step-by-Step Process
If you found this blog post, and then you are most likely exploring the potential option of opening up your own business and becoming a licensed real estate agent out here in Hawaii. Today, I’m gonna talk about the step-by-step process of all that. It’s actually painless and easy to become a licensed agent just like myself out here in Hawaii. I’ve been in this profession for almost a decade now, and it’s a beautiful business to be in. It’s not easy, but once you figure it out it becomes a very fruitful and fun business to be in.
Criteria
Now to start it all off, there is a couple of small criteria, if you want to become a licensed real estate agent out here in Hawaii. Number one, you have to be 18 years of age or older. Number two, you have to be a U S. Citizen or have some kind of documentation that has you as a U. S. Citizen, and number three you basically have to be able to pass a background check. Other than that, all you have to do is pass the test and you’re ready to rock and roll.
Step 1: Sign Up for Real Estate Approved Course
The first thing you’re gonna need to do is to pass a 60-hour pre-approved real estate course. If you’re looking out here in Hawaii, the one person I would suggest looking into is Abe Lee Seminars. He has an in-person and online course. I personally did the in-person course and was able to finish in three or four weeks. The course itself is very intensive and he really knows his stuff. More importantly, he gives you pretty much all the questions and answers that you need to know to pass the test. And that’s really the goal here. In order to become a licensed real estate agent, you just need to pass that test. Coming from experience, you’re going to learn 70-80% of what you need to know in this business, out in the field. And when you start educating yourself after the license, a lot of the stuff that they teach you in these courses, you’re gonna forget a lot of it. It will just eventually come up later when you cross those bridges.
Step 2: Memorize the Q&A, not the content
The second important thing you need to know is to memorize the questions and answers, not the content. What I mean by this is, you don’t necessarily have to keep on reading and studying the books. Memorizing the questions and answers will be enough for you to pass the exam because in the actual test, the Q&A is pretty much the exact same verbiage, maybe with a couple of little changes. You don’t need to understand the concepts completely by memorizing the paragraph and understanding it inside and out, just memorize the questions and the answers. Now, one of the things that I did when I was studying for the test is my basic rule of thumb is when I went chapter by chapter, I would basically study that. I read a little bit, but I’d probably just go directly to the back where the quizzes are and then I would go through the questions, read through them, and memorize the answers. I’d repeat the same process until I got 100% 3 times in a row. Once I did that, then I would move on to the next chapter. The classes are good for you in terms of getting someone to teach you the general concepts. But at the end of the day, you really just need to memorize those questions and answers because they’re gonna be pretty much the exact same on the actual test. So try to focus your energy on that
Step 3: Create an EHawaii Account
The third important thing is to create an E. Hawaii account. This is basically going to be your internet profile showing that you signed up for this course, passed this class, and so on.
Step 4: Pass the Course Exam
The fourth important step is for you to pass the course that you’re in. This is different from the state or national exam. Whether it’s with Abe Lee or any of these online places, you need to pass that test and get at least 70%, which is great because you don’t have to get everything right. And again, to pass that test just memorize the questions and memorize the answers inside and out. Once you have passed the course exam, that gives you the green light to the actual test or the state and national certified test
Step 5: Schedule your State & National Exam
Now that you have the go signal to take the actual exam, you’ll need to schedule your exam. I highly suggest that you schedule that exam as soon as possible because you have all this information fresh in your brain. All the questions and answers you memorized are still retained. So might as well take advantage of it because you don’t want too much time to go by where you have to re-study a lot.
I would still also suggest that you study right before the national and state test. Another tip as well is, don’t get caught up on the math questions. The exam contains about five or six questions about it, so don’t get too caught up in the math, just basically focus on passing and getting 70%. The two tests are split up into two. You’ve got the national and you have the state. The national exam is 80 questions and you get 100 and 50 minutes to complete that. While the state test is 50 questions and you’re given 90 minutes to complete it. Once you take the exam, you’ll also get an answer that day on whether you passed or not.
Now, if you did not pass that is okay. Keep your head up and just get back to studying, schedule your next exam as soon as possible. Because again they won’t show you which answers you got wrong, but you want to get back in there while that information is still fresh. Restudy and go in that same process. Go chapter by chapter. Memorize all the questions and answers. Don’t go on to the next chapter until you know you’ve got 100% 3 times in a row.
Step 6: Select a Brokerage
Once you’ve passed the test, the only unfortunate thing is you can’t sell houses yet. You need to hang your license with a brokerage. Selecting a brokerage is a huge step and you want to make sure that you do it right. Now, the first thing you need to understand is any brokerage will hire you. They’re basically gonna take a little bit of your commission whenever you do a transaction. Also, keep in mind that you work for yourself, the brokerage you’re in won’t be breathing over you to make sure that you’re working. This is your own business.
When you’re looking at brokerages, you want to focus on a couple of things. Personally, I particularly look at Commission Split, Education, Support, and the Marketing Training that they can offer in order to help me run my business. Now, you can see different kinds of splits. With the smaller brokerages, sometimes they only have a transaction fee, but most brokerages are anywhere between 50/50 or 70/30. To give an example, I was at Keller & Williams and they gave me a 70/30 split. Basically, if I had a $10,000 commission cheque, I would keep 7,000, give them 3,000. But now at the brokerage that I’m at, I get an 80/20 split. If I get a $10,000 commission cheque, I keep 8,000, I give them 2,000, and once I give them $16,000 I make 100% for the rest of the year, which is absolutely amazing.
I personally see this as a game-changer in regards to building wealth and making a lot more money quicker. So, the commission split is definitely something you want to look into because you want to make sure you’re getting the most possible when you’re working hard.
The other thing you want to look into is education, especially if you’re a new agent. Since you’re new to the business, you don’t know exactly what you’re doing yet. A brokerage that’s going to provide you with a lot of education about being in this business is a huge deal. By education, I mean specifically showing you how to do sales scripts, how to find leads, how to do open houses, all these things that you have no idea, you need to make sure that you learn that from them in order for you to succeed in this tough business.
The third thing is support, you have to make sure that the brokerage you’re joining has some kind of support for you. By support, this means that if you have a question or an issue that needs to be addressed, you can call your broker and they’ll help you figure it out, that’s their job. A mentorship program from them would also come in handy. This way, you’re informed and well-aware of what kind of support they have at that brokerage. Lastly, you need to know the kind of marketing material that they’ll provide you. These could be things like business card templates, and how to generate leads online with Facebook ads or through social media.
A lot of brokerages that I’ve seen and I’ve interviewed with, don’t offer high-tech marketing. What they’ll offer you is the general stuff, showing you how to do open houses and generate leads or cold calling. From my experience, the brokerage and team I joined showed us some useful tactics for generating business through video and social media like Instagram. These are some tactics that I like doing, getting to link up with people that I want to work with through social media.
So that’s basically the process of it all. If ever you’re interested in joining EXP Realty or The Wolf Pack, I’m happy to help any other agent who’s looking to join this great community of realtors out here in Hawaii.
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]]>Neighborhood Breakdown in Lanikai Beach, Hawaii
So today we’re gonna do our first neighborhood breakdown. We’re gonna go over the neighborhood Lanikai, my personal stomping grounds and we’re gonna check out what this place has to offer and what’s going on in the market in here.
There’s honestly a lot of cool things about this neighborhood and I absolutely love living here. But first off, what you need to know is that everybody is extremely active in Lanikai. You’re always seeing people running around what we call the Lanikai loop. It’s a three-mile loop one way in one way out, which can be cool but also kind of a bummer sometimes when it comes to traffic because we do have a gorgeous beach. Lanikai is infamous for its beautiful blue waters, the Mokulua Island, and its baby powder dish sand, which is absolutely amazing, it feels just stunning in between your toes. Another cool thing is you can take the kayaks out if you’ve got some or you can rent some down the street, go out to the Mokuluas, jump in the water, get your little island on an island experience and another thing about Lanikai is that everything is pretty close to the actual town of Kailua. It’s a bike ride away, and if you don’t mind sweating when it’s hot, there are also some great restaurants that you could check out.
Now, I’m gonna go over some of the numbers in this market. So you get a better idea of how much it costs to live here and if you’re selling a house, how much and how long a property will stay on the market?
Lanikai Single Family Home Prices
If you want to own a single-family home here, the average price in Lanikai is $3.1 million. So with such a high price point, there’s a lot of reasons for it. Obviously, the beautiful beach is a great factor to it and it’s very exclusive. There’s only a certain amount of homes that fit in the Lanikai Loop. The cool thing is there’s a large price variation. So there’s a couple of homes that just came on the market for about $2 million, but there are some homes that are right on the beach that are up to $6-8 million sometimes even more than that.
So there is some wiggle room there if you got a couple of millions just sitting around. The beach is actually ranked one of the top 10 most beautiful beaches in the world. Now with such high price point homes, naturally what we see is that the average days on market for a home to get sold is much higher than a single-family home in Kailua, which is going to be anywhere between 800 to a million which usually as of now are sitting on the market for about 28 days. So out here in Lanikai, the average number of days on market is up 154 days to sell your home. That’s on average. It’s up from two months ago when it was 98 days and this is naturally happening for a couple of reasons.
At this price point (3-8 Million +) there is a smaller buyer pool which increases the number of days on the market because there are only so many people who can afford a $3-$8 million dollar home. So that’s why we’re seeing these houses sit on the market for 154 days, there’s just not as many people who can afford homes at that price point.
Another thing that’s important we want to look at is the percentage of the listing prices received. Generally as of now, across the island, we are seeing that that’s about 102.2%. and this varies from neighborhood to neighborhood.
But out here in Lanikai, if a house is sitting on the market longer, naturally they’re gonna make that number a little bit lower, meaning, you technically get the house on a bit more of a “discount”. Right now in Lanikai, the percentage of listing price received is 96.8%. So if we do some simple math, if the average price of a home is about three million and what that person is receiving is 96.8%, you’re looking at about $2.9 million. So you’re actually getting the home 100 grand less than what the people are listing it at.
So that should give you some ideas of what’s going on in the market and how that’s affecting the Lanikai single-family home market. So anyways guys that is your neighborhood breakdown. I hope you picked up valuable information from this. If you want me to do more neighborhood breakdowns I would love to hear what neighborhood you want me to check out and what details you want to hear.
Thanks for checking me out and I’ll see you on the other side. Aloha.
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]]>The post Hawaii Real Estate – How To Turn Your Home Into A Rental appeared first on Patrick Longley Realty.
]]>Paying your mortgage on your Hawaii Real Estate can be pricey so why not supplement it with rental income from one of your open bedrooms. Now you cannot technically place an actual kitchen in there because of Hawaii zoning laws but there is a workaround which I will go over in this detailed video
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]]>The post Hawaii Corona Virus & How Its Affecting Real Estate appeared first on Patrick Longley Realty.
]]>We can already see the changes not only in the community and in the streets but also in the Hawaii real estate market. Who is going to want to go out and shop for a home when they are worried about either getting sick, spreading the virus, or going into someone else’s home?
Today in this video I am going to discuss some of the potential pros and cons of the coronavirus in the Hawaii real estate market for buyers and sellers to help you get a better grasp on whether to make a Hawaii real estate investment now or wait till this all blows over.
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]]>The post Hawaii Real Estate – Market Update | (March 2019) appeared first on Patrick Longley Realty.
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Want to know whats going on in your local Hawaii Real Estate Market? Check out this breakdown of the numbers and what they mean to you BUYERS & SELLERS.
I also threw in a little COMEDY in there to assist with the number crunching 
In this Hawaii Real Estate Market Update I will go over the main statistics that assist us in understanding what is happening in the market based on DATA…not guesses or feelings.
There is definitely a shift happening in our local Hawaii real estate market and you want to make sure you have a qualified and educated licensed Hawaii real estate agent guide you through the process.
Feel free to reach out if you have any questions or feel free to leave a comment down below to tell me your thoughts on this market update.
============WORK WITH PAT ======================
Have a question? Want to sell or see some homes in Hawaii? connect with me directly through my website where you can email, call, or text me.
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]]>The post Mortgage Crisis Explained | Hawaii Real Estate {April 2020} appeared first on Patrick Longley Realty.
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Not only will I go over the 2020 mortgage crisis but I will give you my top 3 suggestions on what you should do with your money to take advantage of it.
Keep in mind I am not a financial advisor simply a man who likes to make money on my money through creative investments as well as in a real estate.
The post Mortgage Crisis Explained | Hawaii Real Estate {April 2020} appeared first on Patrick Longley Realty.
]]>The post Hawaii Real Estate & Mortgage Crisis – Freddie Mac Update {April 2020} appeared first on Patrick Longley Realty.
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*************************SPECULATION WARNING********************
Please keep in mind this is only a forecast or prediction from FREDDIE MAC. I am still collecting data and will soon come out with a new market report specific to the Hawai market. If you would like to see that report please comment in the section below.
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