So if you've been reading my analysis of the first two properties, you will know that yields on properties are pretty horrible even when considering good occupancy numbers.
I've pretty much to this point focused on properties that are over $600K and below $850K. I am now going to start opening my search up to properties in the $300-600K range and see if yields are better.
I personally did not want to go into lower class properties because my family and I would like to be able to stay at our own property when we visit. But I can't make a stupid financial decision just because I want to vacation in a high quality unit for a week. My better bet would be to pay for a hotel or even vacation rent at whatever property I want instead of losing money.
So therefore, I am now going to start looking to the area of Kihei, Maui which is the South part of Maui. Units are cheaper here and brokers have been telling me there has been a growing demand of vacation renters here making it a good investment. Kihei has prices ranging from $200K - 400K but the thing I've been noticing here is that most of these units are built in the 1970s. So, I've pretty much told my broker to narrow it down to the following:
1) Newly renovated unit within the past 5 years. The more renovation the better.
2) History on VRBO or other vacation rental method
3) Ocean view only - this way the property price will hold up
4) Complex that is at least 3 start to appeal to vacation renters that are a bit more classy (and therefore won't tear up my property!)
5) HOA friendly
I am waiting for numbers on a couple of units and will post when I get them. I am ideally looking for a 8% yield on an all cash offer so that way I can do some side financing either through friends or family.
I've pretty much to this point focused on properties that are over $600K and below $850K. I am now going to start opening my search up to properties in the $300-600K range and see if yields are better.
I personally did not want to go into lower class properties because my family and I would like to be able to stay at our own property when we visit. But I can't make a stupid financial decision just because I want to vacation in a high quality unit for a week. My better bet would be to pay for a hotel or even vacation rent at whatever property I want instead of losing money.
So therefore, I am now going to start looking to the area of Kihei, Maui which is the South part of Maui. Units are cheaper here and brokers have been telling me there has been a growing demand of vacation renters here making it a good investment. Kihei has prices ranging from $200K - 400K but the thing I've been noticing here is that most of these units are built in the 1970s. So, I've pretty much told my broker to narrow it down to the following:
1) Newly renovated unit within the past 5 years. The more renovation the better.
2) History on VRBO or other vacation rental method
3) Ocean view only - this way the property price will hold up
4) Complex that is at least 3 start to appeal to vacation renters that are a bit more classy (and therefore won't tear up my property!)
5) HOA friendly
I am waiting for numbers on a couple of units and will post when I get them. I am ideally looking for a 8% yield on an all cash offer so that way I can do some side financing either through friends or family.
Aloha Sachin, did you ever conclude as to whether the lower end of the market may yields a better return than the upper tier?
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