Why You Should Invest in South Maui Real Estate

January 28, 2022

South Maui perfectly encapsulates the real beauty of Hawaii – stunning beaches, scenic trails, and gorgeous drives. Home to some of the best resorts on the island, South Maui is popular among tourists. It encompasses the towns of Wailea, Kihei, and Maalaea, and they all hold a certain appeal for visitors. In fact, those who plan on investing in real estate in Maui should definitely take a close look into the area of South Maui and very many do. So, it shouldn’t come as a surprise why the South Maui real estate homes and condos for sale are often in high demand.

Below are some reasons why you should consider investing in South Maui real estate.

Consistent Property Appreciation

Maui is a beautiful island with a unique way of working its magic on people from around the world. Because of that, there will always be new visitors who will decide to own a vacation home in this beautiful paradise. Although the real estate market in South Maui does experience some ups and downs, as any market does, South Maui’s allure is constant, and property values often have steady appreciation. For as long as visitors continue to visit the island, some will eventually decide that they want to own a vacation home on South Maui, which explains the consistent appreciation of properties in the area.

Therefore, if you decide to invest in a South Maui real estate property now, you’ll earn a good profit when you sell it in the future. Rents in South Maui also tend to rise over time, leading to higher cash flow.

Rental Income Benefits in the U.S.

While there are other beautiful island destinations in some foreign countries, buying a vacation home in some of those places exposes buyers to unfamiliar and uncertain legal systems, even political instability. Thus, one of the benefits of investing in real estate in South Maui is the safety and security of the U.S. legal system. This is one thing that distinguishes South Maui real estate from other tropical nations, not to mention the financially rewarding income stability that you will get from owning a rental property.

Flexible Opportunities for Vacation Home Investment

The Covid-19 pandemic has proven to everyone that it’s entirely possible to work remotely for an extended period, even if that means working from the beautiful tropical island of Maui. Although Maui is primarily a vacation destination, those who have initially hesitated to purchase a second home in the islands due to work commitments have now realized that they can spend more time on the island while continuing to work. This will most likely encourage more potential buyers to invest in the island.

A Real Estate Portfolio with a Dependable Income

The continued increase of visitors to Maui coming from the U.S. mainland has greatly supported the island’s local economy. According to the Hawaii Tourism Authority, there was a significant increase of visitors to the island coming from the U.S. mainland before the pandemic. As the number of visitors continues to increase in South Maui, residents can benefit economically, giving them the financial capacity to purchase real estate properties, which further supports Maui’s real estate market.

Limited Investment Space in a High Demand Market

The demand for home properties in South Maui is likely to increase, although the supply is limited. Meanwhile, the population of the mainland U.S., which is the most significant source of Maui tourism, is aging. Moreover, the number of people aged 45 to 65 is also increasing. That’s the time of life when people are most likely to invest in a vacation home. Unfortunately, the housing supply of home property in South Maui is limited since a significant percentage of land in the area has been designated for agriculture or conservation and is not available for real estate development. Therefore, there’s less chance that the market could become “overbuilt,” which is usually the case in most holiday destinations.

Luxury Properties Yield Big Returns

A large percentage of visitors who visit South Maui expect to stay at high-end accommodations with top-notch services, which tends to support the high-end market of the real estate in South Maui. A certain percentage of those upscale visitors seek to permanently purchase a second home on the island. As per the Real Estate Stats in December 2021, there is a significant increase of sales in the real estate property in Kihei despite the extraordinary situation brought about by the Covid-19 pandemic. Some realtors expect a low inventory of single-family residential sales for several more years, which will most likely increase the sales of luxury townhomes and condominiums.

Deferring Capital Gains Tax

Aside from all the benefits mentioned above, buying real estate in South Maui is the deferring capital gains tax, including tax deductions and favorable tax treatment for the future once the property is sold. If you decide to put your South Maui property for rent to generate income, you can deduct the maintenance costs, mortgage interest, insurance, and property taxes. Even if you do not use the property to generate income, if you decide to sell the property after a certain period, any increase in the value of the property will be taxed at a capital gains tax rate, which is usually more favorable compared to ordinary income tax rates.

Investing the capital you gained from selling your property in South Maui into other, like-kind real estate allows you to enjoy portfolio diversification, income from rental, and potential for appreciation that the real estate market offers while gaining substantial tax savings.

Invest in South Maui Real Estate

If you are thinking about owning a property in South Maui, get in touch with us. We are expert realtors in Maui and can provide you with the best advice for buying a property on the island. We can help you search for that perfect property in South Maui and guide you every step of the way.

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