Summer is always a busy time of year for families PCSing to and from Hawaii. Working with our military families is something we take great pride in.

We Help Military Families with their Real Estate Needs

Now that summer is upon us, here are some great tips to set Buyer's expectations:

• VA Loans are taking 45-60 Days with the new TRID laws
• Well priced homes are still moving fast in the current Seller's Market
• Have your pre-approval ready to go when house hunting

If you're a Seller, here are some pointers as well:

• Be sure to find a good Realtor with experience helping Military Families
• Keep in mind as well that offers with financing will take 45-60 Days to close (from acceptance)
• Price the home well, unless you have backup plan to rent it out or comfortable paying 2 mortgages

I hope this helps and feel free to reach out to me for a free consultation and how we help our military families.

This past week I attended our East Oahu Regional Group Meeting for the Honolulu Board of Realtors at Waialae Country Club. The guest speaker was Peter Savio, President & CEO of the Savio Group. He's been a successful real estate broker, investor and developer over the past 40+ years in Hawaii and shared with us some of his thoughts on why residential real estate can be such a great investment.

Peter Savio's Speech on the 7 Creators of Wealth in Residential Real Estate

He started the talk about his background in having a degree in real estate, however never had much success in selling real estate. He grew up in a home were real estate is practiced and shared how his mother was a Realtor and was a "million dollar producer" back in the days when homes were only selling for $10,000 - so she had to sell a lot of homes to reach that figure. Once she taught him it's more about educating people than trying to sell them something, his career took off.

To this day he said all of his siblings (he is one of 5 children) are multi-millionaires by owning their own real estate and by doing so were able to stay in Hawaii and not have to move to the mainland in order to seek a better lifestyle and better paying job. Without further ado, here's what he had to share based on the notes I took:

The 7 Creators of Wealth in Residential Real Estate

1. Appreciation

This is one of the more obvious ones. When most people think of investing in real estate, their idea or "hope" is that you buy it and it goes up in value. Over time, this has absolutely been the case in Hawaii (and most part of the country). However, there are definitely market cycles and if you're looking to buy for a "quick flip", you could get stuck. He had a classic quote when one of the Realtors asked him about losing money when buying too high and he said just "don't buy stupid".

2. Leverage

This is another power of wealth creation by use of borrowing money. For example, if you buy a property for $250,000 cash and it goes up 10% in value, you make 10% off appreciation. However if you buy the same property for $250,000 with $50,000 down and borrow $200,000 and it goes up 10%, you'd then make a 50% return on your initial investment of $50,000 (which is 5 times as much as paying cash).

3. Mortgage = Forced Savings

For those that take out a mortgage on a property, every payment you make to the bank is like a forced savings account. This is in contrast to being a tenant. Every payment you make, you can never get back. Whereas during home ownership, every monthly payment builds your equity (in principal payments) by paying down the debt and you also have the tax benefits (see below).

4. Constant Monthly Payment = P & I is Fixed

Contrary to being a tenant where rates typically increase over time, having a mortgage allows you to have fixed (principal and interest) monthly payments. While home values increase over time, your monthly payments go unchanged. Granted property taxes and insurance rates will go up over time, however those increases are minimal when comparing to increases in rent.

5. Tax Advantages

Outside of the mortgage interest deduction, you also have your property taxes you can write off. In addition, he went on to say that on investment property you have other write offs and depreciation. I always advise clients to check with their CPA regarding tax advise.

6. Ability to Make Additional Payments to Mortgage (Savings Account)

You have the ability to make additional payments to principal to pay off your mortgage, thus increasing further leverage to your "forced savings account".

7. Interest You Earn on Additional Payments are Tax Free

For example, if you have a mortgage at say 4% and pay off $1,000 you'd thus be saving 4% that would have otherwise gone to the bank for interest and that savings is tax free.

3 Ways to Prevent Losing $ in Residential Real Estate

I'm not sure if you've heard of Warren Buffet's 2 rules of investing? They are:

1. Don't Lose Money

2. Don't Forget Rule #1.

Along those lines, Savio mentioned the 3 ways not to get burned in real estate:

1. "Buying Stupid" Ie. - if you're buying real estate with the idea of "selling to another sucker", he advises don't even bother buying in the first place.

2. Spending cash flow profits foolishly. Ie - on things that go down in value, Robert Kiyosaki (see below) refers to these as "do dads"

3. Moving Too Fast. Trying to build a portfolio too fast without managing your cash flow or trying to flip property is where you can get into trouble.

What is The Best Form of Wealth Creation?

According to Savio, THE BEST form of Wealth Creation is item #4 above, which is the constant monthly payment, This also follows along the lines of Robert Kiyosaki's philosophy of investing for cash flow. Similar to Savio's saying of "don't buy stuipid", Kiyosaki says "flippers are losers".

Want to Learn More About Investing in Real Estate?

Having been an avid real estate investor since first reading Robert Kiyosaki's book Rich Dad, Poor Dad 15 years ago, I practice what I preach. Unfortunately, there are a ton of Real Estate Brokers on Oahu that have no idea about investing in real estate, which is why Robert has the saying "they're called brokers, because more often than not, they are broker than you".

Here I am with Robert and Kim Kiyosaki at a Book Signing in Kahala

One of the first thing's I'd ask when interviewing a Realtor is asking them if they personally own any investment property. My guess is 90% of the agents on the island do not. It's also sad that I also know tons of Realtors that don't even own their own home... If you're interested in residential real estate investments, feel free to contact me for more information.

I have the pleasure of listing one of the most unique properties in town. It's a home tucked away in the way, way back of Palolo Valley off a private road. It's the home of Dale Hope, author of The Aloha Shirt.

Palolo Valley Estate (MLS # 201513352)  set in the way... back of Palolo Valley

This is such a special place and not many people know about it. When most people think of Palolo Real Estate, they think of old single wall construction (often times cpr'd) plantation style homes built in the 50's in a high density area with 5,000 sq. ft. lots (or less). Comparing this property to those is like comparing apples to oranges. Once you get in the back of the valley, through private road access - it literally feels like you're on the North Shore or a neighbor island. Set on nearly an acre, this offers "country living", yet you have all the conveniences of town.

Palolo Valley Home, Honolulu, Hawaii 

The video here give you an idea of the space, privacy and all that is offered in this rare opportunity.

Bargain Compared to Competition

If you're in the market for something in the $3-3.5 million range in town, some of the options are McMansions in interior Kahala on a quarter acre lot (with not much privacy) or perhaps a newer condo in Kakaako in a building like Waiea or Hokua and having high maintenance fees and very little living area...

Living "Off The Grid"

Although not completely off the grid, this home was revolutionary when built with a 15,000 gallon water catchment system, environmentally friendly composting toilet and also PV (Photovoltaic) panels to offset energy use.

Outdoor Space

Outdoor life in Palolo

Hawaiian Style Decor

Welcome home to Aloha...

Previous Home Accolades

• Surfer's Journal
• The Hawaiian House Now
• Star Advertiser Island Retreat Series

More Information

Mr. Hope has recently returned from a book tour across the mainland. In addition to the references above, the home has also been featured in numerous photo shoots for the retail industry domestically and in Japan, where the Aloha Shirt Book has also launched in Japanese.

For more information or to schedule a private tour (for qualified buyers only), feel free to contact me for more information.

Recently a mid century modern home in Maunawili I sold 7 years ago came back on market. What's special about this one is the woods that were used. Unlike lots of traditional mid century moderns homes that lots of redwood and mahogany, this one had lots of local hardwoods such as Koa, Ohia and also mango wood in the custom kitchen.

Mid Century Modern Home (MLS # 201611637) in Maunawili listed for $1,500,000

As you can see, there are some great views of Mount Olomana from the living area. I haven't been in the home for awhile, however it seems either the wood got "bleached" out over the years or perhaps the photographer tweaked around with the editing software a little too much? Here's some original photos from when I sold it last below:

Photos from 2009 of Living Room, Kitchen and TV Room

In addition, what makes this a true Hawaiian Home was the outdoor space. Set on 17,131 sq. ft. lot, this is much more substantial than your typical "track home" in Maunawili.

Classic Mid Century Architecture on this oversized lot in Maunawili

Contact a Mid Century Modern Expert

If you have more interest on this or other mid century modern homes on Oahu, feel free to contact me for more information.

The residential resale market on Oahu was on fire last month with home sales up 21.7% and condo sales up 21.8%, respectively.

Infographic of March (2016) Sales on Oahu Courtesy of the Honolulu Board of Realtors

Single Family Home Stats

In March of last year, there were 244 homes that sold on the island. This year there was 297, which represents a 21.7% increase! Our market is really showing some resiliency. Although sales are up, prices aren’t shooting to the moon. There’s no doubt buyers are paying more than this time last year, however, the increase was only 3.6% to finish up at $725,000.

This Ocean Pointe home (MLS# 201606550) is listed at March’s median price of $725,000

There’s also been less triggering on the higher end of the market, which can be reflected in that our average sales price actually dropped 8.9% from last year. My suspicion is one of the contributing factors was seeing less foreign investment with the stronger U.S. Dollar. It’s been a healthy market nonetheless for sellers as the median days on market was still just 18 days!

Condo Sales Stats

The condo market was even more on fire with sales up 21.8% and 491 closings compared to only 403 last year. The increase in price on the other hand was only up 1.3% from 2015 to a median of $385,000.

Highlands at Waikele Condo (MLS# 201605766) listed for March’s median price of $385,000

The condo market wasn’t affected as much on the high end as the average sales price was only off 1% from last year. Similar to homes though, they sure weren’t lasting long with the median days on market at only 19 days.

Seller’s Market – Months of Remaining Inventory

According to the National Association of Realtors, anything less than 6 months of remaining inventory is considered a “Seller’s Market.” March was the lowest number we’ve seen in years with just 2.1 months for homes and 2.3 months for condos. Although prices aren’t up drastically from last year, homes (and condos) are selling really fast! If you’re thinking about selling, feel free to contact me about our Smart Marketing and Solid Representation.

As always, all real estate is local. Here are the neighborhoods on Oahu that were hot for sellers and buyers in March:

Neighborhoods “Hot” for Sellers

• Home sales in Kalihi-Palama were up 175%
• Home prices on the North Shore were up 47%
• Condo sales on the North Shore were up 600%
• Condo prices in Ala Moana-Kakaako were up 37%

Neighborhoods “Hot” for Buyers

• Home sales in Moanalua-Salt Lake were down 67%
• Home prices on the Waialae-Kahala were down 27%
• Condo sales in Wahiawa were down 33%
• Condo prices in Waialae-Kahala were down 18%

What’s Happening in Your Neighborhood?

Please consider these are broad overviews for regions on Oahu. To find out what is happening in your specific neighborhood (or street for that matter), feel free to contact me for more information.

Over the weekend, we just reduced the price of the Marks Estate in Nuuanu to $4,599,000. This is over a $1 million reduction since we’ve hit the market last year at $5,643,000. We’ve since been in escrow 3 times, some of which were higher than the original asking price. Please keep in mind, this property was listed as high as $11,750,000 at the bottom of the market in 2010.

This Nuuanu Estate (MLS# 201601765) is now only $4,599,000

Today’s current asking price is a steal and here are 5 reasons why:

1. Land Value

Where else can you find 4.7 acres of residentially zoned property in Honolulu? Not much, correct? Some of the only few that come to mind are the Doris Duke Estate in Diamond Head or the Kaiser Estate in Portlock. Those are both oceanfront and would sell well north of $30-40 million if they were on the market today.

2. Replacement Costs

On tax records, there’s over 13,000 sq. ft. of improvements. To build anything somewhat “luxury” today, you’re looking at $400+ per sq. ft. In other words, to build this today would cost north of $5,200,000! That’s not including the land…Granted this home needs some TLC, however, the materials (which I won’t get into here) are over the top.

3. Comparable Sales in Nuuanu

3019 Old Pali Road – Just prior to coming on the market, a home up the street was 8,676 sq. ft. and sat on a property just under 1 acre. They were asking $3,975,000 and sold for $3,700,000. Only factoring improvements (we won’t even get into how ours has 3.7 acres more of land), this home sold for $426/sq. ft. We’re now priced at only $345/sq. ft., or a 19% discount.

187 Dowsett Avenue – While we were in our last escrow (which unfortunately dragged on for several months), this home on Dowsett went under contract and sold. It was a much more modest 6,735 sq. ft. of interior and sat on 3.7 acres (1 acre smaller than ours). They were asking $7,275,000 and ultimately sold for $6,450,000. Although it was in better condition, it was smaller and the property taxes ran almost $3,000/mo – which leads me to my next reason why we are a steal…

4. Low Property Taxes

Since this property sits on the City and County of Honolulu’s Historic Registry, one of the beauties is the annual property taxes are only $300 per year.

Placard fronting the property designating the Historic Residence

5. Deal Compared to Everything Else Around $4.5-5 Million

If you’re in the market with $4.5-5 million to spend, you can arguably get something with a better view. However, when comparing to the inventory out there in this price range, this is a steal. Since I’ve had this listing, a little (new) home on my street in Diamond Head that sat on only a 5,500 sq. ft. lot sold for $4.8 million. In addition, there are dozens of 2 bed condos under contract at Park Lane and Waiea in this price range. That doesn’t even include the resales available at buildings such as Hokua, Trump Waikiki, and others.

More Information on this Nuuanu Treasure

This is one of those opportunities that doesn’t come around that often. I have a feeling many are going to regret passing this up looking back a few years down the road. If you’re a serious qualified buyer in the market for something truly special in Honolulu, feel free to contact me for more information.

Nearly a year ago I wrote an article about how there were only 15 developer units left at the Ilikai. That was actually the "top floor block" of the 22nd-25th floors. Now the final block has been released which is the 2nd floor, where you have larger lanais. There's been a delay in the launch, however this batch is ready to go now and awaiting new owners! Here's the price list and floor plans:

Developer Price List

Floor plans

The developer is taking offers through the end of this month, so if you're interested in getting your hands on a fully remodeled, turn key unit at the world famous Ilikai, feel free to contact us for more information.

Thank you for our success in Real Estate.  We could not have done it without you!

The properties above represent the wonderful people we were able to work with and successfully purchase or sell in 2015. THANK YOU for contributing to our success in Real Estate!

We are very appreciative for our great clients and network of friends and colleagues who have done business with us and referred our services to others.  As a result, our business continues to grow!