Last updated on June 21st, 2023
airbnb property investment Honolulu
Let’s talk about why Honolulu, Hawaii, can be the best investment decision you’ll ever make! It’s a fact that owning a beachfront property is a dream for the majority of people. If you are eager to make this come true by earning a passive income at the same time, then purchasing a property with a beautiful view of the sea is ideal in Honolulu!
Airbnb rental arbitrage is preferred by investors who have a limited budget to purchase a property, which means you can do Airbnb by just renting it! As long as you adhere to the Airbnb rules in Honolulu, there should be no problems of breaching the laws. However, the main question is: will Airbnb properties be profitable in that area?
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“One of the best places to purchase an investment property is arguably metro Honolulu. The area has a modest growth but has the strongest job market of all the islands.”
– Home River Group on Honolulu Property Investment
Let’s not get carried away by a property’s design or its proximity to major tourist areas because the primary step is to determine profitability. In this article, we’ll discuss the metrics in order to gauge the best property investment, specifically when buying a property investment in Honolulu.
This includes the best website recommendations for property investment, the prices and properties for sale in Honolulu, along with each property type’s gross rental yield, cash-on-cash return, and annual revenue.
Pros of buying an Airbnb Property in Honolulu
The capital and most populous city in Hawaii, Honolulu, is located on the southeastern shores of the island and is widely known for its tropical weather, dreamy landscapes and cultural diversity. However, there’s more to learn about why we recommend purchasing a property in this city. Here are some of the major reasons why you should consider buying a property for Airbnb in Honolulu:
1. Enjoy the natural scenery of this touristy city
If you want to invest in tourist accommodations, then, allow me to tell you that Honolulu is a great place for you! Being a tourist destination by excellence, Honolulu receives a great number of visitors each month, especially during its peak season which goes from December to February. In tourist season, this city welcomes more than 850K visitors monthly!
2. The property tax rate is low!
Property taxes can give headaches to homeowners from time to time, but don’t worry too much about paying high rates in Honolulu! Overall, the county has one of the lowest taxes rates in the nation, being this 0.35% of assessed value.
3. Low crime rate
While one should always be aware of their surroundings when visiting a city, one will feel safe when exploring Honolulu! Of course, crime happens, but the crime rates here are lower than in many other cities as it’s not that common. With this being said, it’s always a good option to get a security system for your home!
What to Expect When Purchasing a Property in Honolulu?
Now that we know the pros of investing in Honolulu, let’s take a quick look at some of the cons. It’s always better to look at the two sides of each coin in order to properly set your expectations!
1. Finding affordable properties is difficult
Investors with a limited budget will have a difficult time finding affordable houses in Honolulu as they are quite expensive. The average housing price in Honolulu is $805K with a 1-year change value of 5.5% according to Zillow Index.
2. High cost of living
In addition to an expensive real estate market, the cost of living is also another downside in Honolulu. Sadly, the cost of living in this city is 95% higher than the national average.
airbnb property investment Honolulu
Source: Payscale
Best Neighborhoods for Airbnb in Honolulu
Let’s take a closer look at the important Airbnb key metrics to discover which is the most profitable neighborhood in Honolulu. Filtered for a 1-bedroom apartment, here is a brief overview of some of the most recommended and profitable neighborhoods:
1. Waikiki
- Annual Revenue: $71,092
- Occupancy Rate: 94%
- Average Daily Rate: $174
2. Ala Moana
- Annual Revenue: $91,016
- Occupancy Rate: 86%
- Average Daily Rate: $247
3. Kaimuki
- Annual Revenue: $64,096
- Occupancy Rate: 85%
- Average Daily Rate: $192
Is Property Investment Profitable in Honolulu, HI?
Using an Airbnb income calculator, it was discovered that a 2-bedroom apartment in Honolulu can generate an annual revenue of $74,479 with a steady occupancy rate of 75% and a nightly rate of $227.
airbnb property investment Honolulu
Beachfront homes & Townhouses for Sale in Honolulu, Hawaii
Buying a beach house property will not only let you have access to a delightful vacation spot, but it can also bring an excellent return on investment and become a reliable income stream! It may be difficult to find the best properties that have the potential to produce high yields and capital growth, and this article will certainly help you through!
Here are some of the profitable properties in Honolulu, along with the calculated gross rental yield, cash-on-cash return, and annual revenue.
410 Atkinson Dr Unit 745, Honolulu, HI 96814
1. Studio-type Property for Sale Honolulu
- 0.4 miles to President George Washington Middle School
- Asking Price: $153,000
| GROSS RENTAL YIELD | 26.28% |
| ANNUAL REVENUE | $40,201 |
| CASH ON CASH RETURN | 53.06% |
2240 Kuhio Ave Apt 1005, Honolulu, HI 96815
2. 1-Bedroom Type Property for Sale Honolulu
- 0.7 miles Kaimuki High School
- Asking Price: $175,000
| GROSS RENTAL YIELD | 27.22% |
| ANNUAL REVENUE | $47,631 |
| CASH ON CASH RETURN | 55.89% |
2140 10th Ave Apt 501A, Honolulu, HI 96816
3. 2-Bedroom Type Property for Sale Honolulu
- 0.1 miles to Palolo Elementary School
- Asking Price: $295,000
| GROSS RENTAL YIELD | 25.07% |
| ANNUAL REVENUE | $73,950 |
| CASH ON CASH RETURN | 49.44% |
1251 Heulu St Apt 606, Honolulu, HI 96822
4. 3-Bedroom Type Property for Sale Honolulu
- 0.2 miles President Theodore Roosevelt High School
- Asking Price: $240,000
| GROSS RENTAL YIELD | 28.11% |
| ANNUAL REVENUE | $67,470 |
| CASH ON CASH RETURN | 58.57% |
94-125 Pahu St Apt 37, Waipahu, HI 96797
5. 4-Bedroom Type Property for Sale Honolulu
- 0.5 miles to Waipahu Intermediate School
- Asking Price: $385,000
| GROSS RENTAL YIELD | 28.03% |
| ANNUAL REVENUE | $107,908 |
| CASH ON CASH RETURN | 58.32% |
Conclusion
Undoubtedly, Honolulu is an iconic vacation destination that draws millions of visitors throughout the year, hence, it can generate a nice cash flow for property investors as long as the right neighborhood is targeted and potential revenue is calculated using an Airbnb rental arbitrage calculator. However, it’s not a suited market for investors who have a tight budget since finding cheap properties is certainly difficult.
