Author Topic: condo vs. single family on Kauai  (Read 1673 times)

clarkfan1979

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condo vs. single family on Kauai
« on: September 05, 2015, 12:23:03 PM »
I was wondering if you could help me with a pro vs. con list. At this point, I've decided to wait a year before I buy anything. My wife and I do not have any kids, but hopefully we will have some in the near future.

I found a condo complex that I like within biking distance of work with 2 bed/2 bath (750 sq. ft.) for about 200K. You get a little yard with the condos on the first floor. The complex is 2 levels and has about 450 total units. Their HOA fee is $350 and I think they have a temporary special assessment for $80/month right now to fix something, so the grand total is $430/month. I think the HOA is a little high because of property insurance (hurricanes). Because Kauai has a 160,000 deduction on assessment for property taxes, property taxes will only be around $150/year. With 25% down, I'm thinking the total payment will be around $1300/month.

I've seen a few single family homes around 350K that need a little work, probably 10K-25K. My sweet spot is cosmetic rehabs. I've done it twice in the past. These are 3 bed/2 bath and around 1200 sq. ft. and (.13 acre) lots, which are small. There are a few 2 bed/2 bath houses that have a large covered porch. I think it would be easy to close it in for a 3rd bedroom if we need it at some point. However, I haven't found any single family homes in that price range that is within biking distance to work. I think insurance would be around $300/month and taxes $750/year. With 20% down, I think the payment would be around $1700/month. 

I know that condos are typically a worse investment, but it would be cheaper and I could bike to work. I think we could comfortably afford the condo or single family.

fishnfool

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Re: condo vs. single family on Kauai
« Reply #1 on: September 05, 2015, 06:30:00 PM »
I'll chime in with my $.02 for what its worth. Kauai real estate has been steadily climbing this past year so that is one thing to consider on waiting another year, where will these estimated purchase prices be then? That condo might be in the $300k's and the SFH's that are in your price range that often need a lot of work might me over $400k. Most of the cheaper SFH's are on the West side further from your job or up above Kapa'a where you'll have to deal with a nasty commute. But if you're set on waiting a year you'll have a lot of time to consider all of the pros vs cons.

Condo vs SFH top 3 reasons I prefer a SFH

1. I don'd like condo or assc. fee's.

2. Better appreciation with a SFH.

3. More control over improvements and/or renting out.

I could go on and on but the list would be more about things that pertain to a lifestyle that fits me. Example, I like to kayak, fish, SUP, surf etc etc. Where would I store all of my toys if I live in a condo? Most of the condo units have no garage or very little storage space.

I know that some of this might not make dollars and cents for you depending on what your lifestyle is while living on Kauai. A condo close to work would probably be what most MMM's would tell you to buy.....maybe not? 

Starting a family would be one way to outgrow a condo pretty fast!

But you are probably smart to wait and consider you options over the next year even if the market goes up a little.

Aloha

lhamo

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Re: condo vs. single family on Kauai
« Reply #2 on: September 05, 2015, 06:34:24 PM »
Does the condo allow you to do short-term rentals?  If so, then since you are planning to spend much of your vacation time on the mainland I would go with the condo because you won't have to worry about external maintenance and upkeep while you are away, and you can still rent it out.  Even if you have a kid in the next couple of years you won't outgrow it for awhile.  You can pay extra toward the mortgage/build up equity and trade up if/when you need to.  Being able to bike to work will be good for lots of reasons (saves money, saves time, saves the environment, promotes good health). 

BTW, you are making me seriously want to move to Kauai, even though I've never been there!  Didn't realize reasonably affordable housing was available anywhere other than the Big Island.....

clarkfan1979

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Re: condo vs. single family on Kauai
« Reply #3 on: September 06, 2015, 10:53:38 AM »
Does the condo allow you to do short-term rentals?  If so, then since you are planning to spend much of your vacation time on the mainland I would go with the condo because you won't have to worry about external maintenance and upkeep while you are away, and you can still rent it out.  Even if you have a kid in the next couple of years you won't outgrow it for awhile.  You can pay extra toward the mortgage/build up equity and trade up if/when you need to.  Being able to bike to work will be good for lots of reasons (saves money, saves time, saves the environment, promotes good health). 

BTW, you are making me seriously want to move to Kauai, even though I've never been there!  Didn't realize reasonably affordable housing was available anywhere other than the Big Island.....

Thank you both for the good points. Having enough room for toys is a good point. The people at the condo office said that they allow short-term rentals, but no timeshare rentals. By this, they mean that you can't rent it out weekly. I told them that I would rent it out to one person for one month during the winter and maybe do a house swap in the summer. They said that it's fine. I would need to look at the fine print before I purchased. I would have more control with renting it out if it was a single family home, but then I would have more maintenance when I'm gone.

The housing prices I listed are not typical and are on the bottom of the scale. However, I would argue that they are realistic. My two previous purchases were ugly houses that no one wanted and were significantly below the median for the city. I like buying ugly houses that require a cosmetic rehab. If you want something that doesn't require any work, I think prices start around 450K for a single family.

When you start to get around 500K, many houses have a studio apartment attached that could bring in $1,000-$1,300/month. I think you can charge $1300 if you allow dogs. Very few places accept dogs. I would laminate flooring and allow dogs to get the most out of the studio rental.

I think there are a lot of service jobs on the island that pay $11-$13 and hour, so many people on the island are poor. When people talk about Hawaii being expensive, I think it's a combination of the prices, but also lower service wages. If you have a good paying job, I would do it. If you are moving here to be waiter, it will be tough because you will be competing with everyone else that is trying to do the same thing. If you are 19 and live with 5 other guys in a 3 bedroom house, then maybe you will be able to pay your bills fine.

When I opened my checking account they asked me to pick an income bracket. I think they do this, so they know how to flag larger transactions. My lowest choice was 20K and my highest choice was 65K. I can't believe the highest choice was 65K. I think many people on the island with service jobs are poor.

fishnfool

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Re: condo vs. single family on Kauai
« Reply #4 on: September 06, 2015, 07:49:51 PM »
A house with a ohana (studio) unit would be a plus!