Foreclosure in Honolulu>Question Details

Cy, Home Buyer in Honolulu, HI

Is there still a market for flipping homes on Oahu? Does it depend on if its a condo or home,?

Asked by Cy, Honolulu, HI Tue Aug 21, 2007

or is that irrelevant? What are the best areas of the island of Oahu for flipping?

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Answers

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Yvonne Ahearn Esq. BROKER’s answer
Yes, there is still a market for flipping homes, but one must be very careful.

The days of crazy appreciation in Hawaii are gone, so profit from flipping will have to be earned primarily upon adding real value to the property -- at a cost which is less than the added value. Assuming a stable market with zero appreciation, with any property type (Single-family home or condo), you must be able to increase the market value of the property (in my opinion) by at least 20%, while keeping your expenses, including carrying costs, realtor fees, etc., to no more than half of that amount. Naturally if your costs are less, you can afford to have less of an increase in the market value of the property.

And, also (in my opinion), the property must be either ever so slightly underpriced or spot on, so it sells rapidly.

The best areas on Oahu for flipping are those that are still appreciating, or that are stable and not declining - and this is provided that you are dealing with property types (e.g. 3 versus 2 BR homes w/ 2 versus 1 BA) and price points with the highest demand (right now the greastest demand seems to be both on the very low end and the very high end for SF homes). Look for foreclosures and eyesores which are really horrible only cosmetically, to get the max return. Right now, there is so much condo inventory that they may not be the best thing for flipping.
2 votes Thank Flag Link Fri Aug 24, 2007
Aloha Cy,

I would be exceedingly cautious in flipping properties here on Oahu. First be prepared for hefty capital gain taxes, rising costs for materials, labor and fuel and shortages in reliable, qualified, labor. The luxury market is probably the safest bet for flipping, but know your market, there are some soft spots even in the multi-million dollar markets here on Oahu. Best of luck-

Kimo Stowell
1 vote Thank Flag Link Fri Sep 5, 2008
seems like there were/are some very bright people on this post. I grew up on Oahu and have lived the island twice. I made some money in Makaha and the N Shore. Any idea when the market will turn around? I read the Bankoh economic reports and they say 2013-2015. Would that be a safe guess?
Im stuck with a couple of rentals that I didn't unload in time and Im playing the waiting game.
1 vote Thank Flag Link Wed May 21, 2008
Rob Gerichs is a very wise man!!!!!!!!!!

I flipped on Oahu for two years and did well and seen other fail miserably.
1 vote Thank Flag Link Wed May 21, 2008
Aloha! You might want to check this site http://commercialinvestmentstrategies.com/ This is a great source. They're good with multifamily housing. Maybe this could help you out!
0 votes Thank Flag Link Mon Feb 18, 2013
If you're patient and have some good team mates (realtors, loan officers, neighborhood scouts, contractors, attorneys, accountants, to name a few), you can find some jewels for flipping. With the cost of rising fuel prices and its effect to the local pocket book and the tourist's splurge money (which translates to less tourism dollars, less business for small business owners, less wealth to go into government coffers), don't be surprised to see more distressed sellers who might want to sell their property quickly at a good price.
0 votes Thank Flag Link Tue Aug 5, 2008
The answer from Realtors is that you "might" be able to Flip homes in todays market.

If you are asking this question, you should not be buying at this time. While you "might" be able to make some cash after your agent makes 6% from your purchase and then 6% when you sell, the Hawaii Market is also FALLING and a reasonable profit is not likely.

Brokers and agents in the past "Bubble" period had the opportunity to "invest" without the cost of the in-out commission. The days of the quick and easy FLIP are over for now and for the forseeable future as are the days of Realtors easy 6% commision. Good Luck.
0 votes Thank Flag Link Tue Jul 29, 2008
I still think you can do it if you are well educated in home values and knowledgeable about costs to repair a home. I have a client who recently purchased a home to flip and I will be listing it in about a month. So we'll see how that will do. In this market. It doesn't matter if it is a condo or a home in my opinion.
0 votes Thank Flag Link Tue Jun 10, 2008
Aloha:

My name is Mike Gallagher and I am Broker in Charge at RE/MAX Honolulu.

Although this is a strictly a Buyer's Market now, flipping can still be done if you do your due deligence and are aware of the nuances within each of the Neighborhood Markets you are looking to make a quick profit.

Condos, which are the preferred choice for this type of action since the risk is much lower than for SFH's and are also in more demand than SFH's.

As a realtor my clients and prospects often times ignore the fact that most of my earnings come from Commissions on sales. This is not true. Most successful realtors will buy and sell property just like anyone else and make profit.

My choice would be to look at Condos as your preferred investment choice. Since most of the buyers in today's Oahu Condo Market are purchasing at the lower end of the price offerings I would look for a condo that is a 1-2 bedroom. Fee Simple, no pool and mostly no amenities that will drive up the Monthly Maintenance Fees.

Look for a Condo within these parameters, but make sure they have at least assigned parking stall and search the MLS for 'at market' or 'below market' offering prices and take it from there.

If you need help in this endeavor, please visit my website at http://www.hawaiirealestatestatistics.com and call or email me at:

Mikeg@hawaii.rr.com 808-384-9015

I wish you much Aloha,

Mike Gallagher
Broker in Charge
RE/MAX Honolulu
0 votes Thank Flag Link Sat May 24, 2008
In my opinion, the best values are older homes that need to be torn down or need extensive work. If you can purchase these at close to the land assessed value (or less of course), then you may have some room to work with. There are many older homes throughout the state that are about fo fall over or in need of serious repair. I think some opportunites can be found here with some legwork and persistence.
0 votes Thank Flag Link Sat May 17, 2008
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