Great news for Oahu real estate - lower taxes in the future

Oahu real estate owners got some good news this week. The Advertiser reported that the City Council is going to hear a plan to make property taxes in Honolulu adjust each year based on inflation instead of assessed value under a bill.

The taxes on Oahu real estate are already low compared to states California, Texas, and New York, where people pay between 1-5% of the property value in taxes.

The bill is intended to make property taxes avoid spikes caused by rises in the Oahu real estate market. Oahu property taxes are currently $3.59 to $3.29 per $1,000 of assessed value.

"Under the proposal, the assessed value of taxable residential real property would be determined each year by adjusting the previous tax year's assessment for the property by the most recent change in Honolulu's consumer price index."

The growth in real estate taxes over the last several years has been a real burden. The Advertiser said that "about 7,000 owners appealed their assessments in 2006, according to the city."

More Military means good news for Oahu Real Estate!

The army announced this week that they want to bring several thousand more soldiers to Schofield Army base, which is great news for everyone that owns real estate within 15 miles or so. There are already over 10,000 people working at and living at Schofield, and 2000-3000 new soldiers would greatly increase the need for housing in Mililani, Wahiawa, Royal Kunia, Kapolei, Waikele, and Ewa Beach.

Even those who are young enlisted guys can afford a nice condo in Mililani, and anything is better than living on base. The officers that come to Hawaii usually bring a good sized family with them, and a huge housing allowance around $3000. In Central Oahu, that’s plenty to buy a great house, especially in Royal Kunia.

Royal Kunia has a great back road access to Schofield that nobody else really travels. It’s about 20-25 minutes up Kunia road to Schofield, and the homes in Royal Kunia are great. Built after about 1995, all the homes in the area are nice and large, well built, and have a nice yard for the kids or dogs, or just lounging around.

Oahu has over 50,000 soldiers living here, and many of them buy homes and sell them a few years later for a great profit. With massive Hawaii basic housing allowances, the government is basically buying them homes here.

Right around Schofield there are some nice areas too. Mililani is one of Hawaii’s most desirable areas, with newer homes, older trees, and beautiful ocean and mountain views. Yes you can see the ocean from the center of Oahu, because it’s quite elevated.

In Mililani Mauka, you can buy a nice single family home for around $650k, and just one freeway exit north, you can get one for about $550k in Launani Valley, in Woodcreek. I recently sold 2 homes in Woodcreek that were both about that price, and both 4 bedrooms with a great little yard.

The military housing at Schofield is awful, so the opportunity to buy a home in nearby communities is a great option for anybody there. Now, the main point is that this is all very good for Oahu real estate in general.

Think about what would happen if just 5% of the 2000 new soldiers decided to buy a home here! That’s 100 new buyers in a market where only a few hundred homes sell each month on the entire island. Our market is greatly impacted by just a few new buyers.

If you’re coming to Oahu with the military, contact me and buy a home now!

Hawaii real estate for investment

Investors around the country are picking up bargains these days, with prices down and inventory up. If an investor is looking for Hawaii real estate, where should he buy right now?

Answer - Oahu condos. Conds on Oahu rose in price to an all time record price last month, even as single family homes declined over 12% from their record a year ago. Also, rents in Oahu are still at record levels with no sign of cooling off.

There are nearly 1 million people living on Oahu, and that means there is a terrible shortage of good rentals. So if an investor is looking to 1031 exchange or purchase new investment property in Hawaii, condos are the answer.

In particular, I like Hawaii Kai and Kailua condos. In Hawaii Kai, a 3 bedroom condo or townhouse can get about $2500-$2800 in rents right now, and it costs about $450k-$500k to own one of them. That means with about 20% down you can just about cover your mortgage.

For Hawaii Kai condos, you should consider Lalea, Mariner's Village, Nanea Kai, Moana Kai, and a few others that are not as well knows but still get plenty of rent.

Kailua condos are all around the same neighborhood, just off of Aoloa st. You can get about $2200-$2500 for even a 2bedroom in Kailua, if it's in great shape. It will cost around $400k-$500k to buy one at Poinciana Manor, Gardenia Manor, Hokulani, Windward Cove, Windward passge, or a few others that are less well known.

Condo values continue to rise because there is always a need for a the cheapest real estate. In a slowing market, the lowest priced property always does the best, as people hunt for bargains. $400k on the East side and Windward side of Oahu is about the least you can pay to get into Oahu condos.

Investing in Oahu is like a no-brainer. As the population grows, the island's property just continues to rise. There is no end in sight to the population growth, and therefore an Oahu Condo is a great long term investment.

Hokulani Condos in Kailua

There are several condo options in Kailua town, starting at about $300k and up to $700k. One great option that is close to the beach and within walking distance of just about everything else is Hokulani.

Hokulani in Kailua was built in about 1990, with a great location off Aoloa st, so you can walk to the grocery store, Starbucks, and anything in Kailua town. These 2 story townhouse style condos are about 800sqft, most with 2 bedrooms, and a decent grounds. The monthly fees are lower than Poinciana Manor or Gardenia Manor because the grounds are not as elaborate. No koi ponds, no pool, no tennis courts like Windward acres.

Hokuani has nice modern construction, and many of them have been nicely updated. At about $360k for a 2bedroom condo, the prices are hard to beat. You can have a nice mountain view from Hokulani, and it's about a 15 minute walk to the beach.

Condos in Kailua are a wonderful investment, as renters abound. Because it's only 5 minutes to the marine corps base, you can get a nice influx of renters every season. If you buy a unit here with only 1 parking spot, which is common, you might be able to rent a spot from someone else.