Maui Real Estate for Vacation Rental Income

March 4, 2011

January’s report is in from the Hawaii Tourism Authority¬†(HTA), and based on current economic conditions, now is looking like a very good opportunity to buy Maui condos or homes and use them to generate extra income through use as vacation rentals for at least part of the year. It’s a good way for a Maui property to help pay for itself. Let’s talk about those economic conditions I¬†mentioned.

We’ve been watching the visitor’s industry steadily rebound over the past several months, for all of Hawaii. January was no exception. According to the HTA, year-over-year gains in visitor spending for the month of January tallied up to a 19.8 percent increase for a total of $1.2 billion. For spending to increase by nearly twenty percent is no small thing. How about the number of arrivals?

The HTA reported a 12.2 percent increase in arrivals this past January when compared to January of 2010. The final tally in arrivals was 597,487. Twelve percent is also a pretty distinct improvement. The interesting thing about these statistics is that spending is improving faster than arrivals. That’s great news, because the problem we had, for a long part of the slump, was that we were still getting a decent number of visitors, but they were spending so little, their numbers alone were not indicative of a recovery. Now that we are seeing more stark improvements in spending than arrivals, we know that those vacationing here are once again enjoying a larger vacation budget.

If you can provide a good-quality, desirable Maui condo or home as a vacation rental, and you can undercut the hotels, you may be able to tap into some good income. According to Smith Travel Research and Hospitality Advisors, Maui’s average hotel room rate was $226 last year. The state’s average was $174. Maui hotels charge more because they can. As a vacation rental owner, you have a choice in how much you want to charge, and should keep it affordable and reasonable for the value of the rental.

What about real estate conditions? In January of this year, the average price of a home went up by only 7 percent (compared to the same month last year) to $495,415. Condos, however were 27 percent cheaper on average this January than last at $295,000. Keep in mind that these are just the middle of the road prices and there are plenty more expensive and less expensive options, depending on your purpose. So here we have incredible Maui real estate that is still far more affordable than it once was, and we have steadily increasing visitor arrivals and spending. If that’s not a recipe for opportunity, then what is?

We hope you’ve found this blog helpful and interesting. If you need any assistance with a real estate purchase, you’ll find our contact information at the bottom of the page. Mahalo, and we hope you find success in all your endeavors!

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