From the warm, sandy beaches of Waikiki to the lava-flowing volcanos on the island of Hawaii (Big Island), we compare real estate prices in The Aloha State of Hawaii.

Hawaii’s property appreciation is one of the main reasons the Aloha state brings in many real estate investors, overseas and local. There is no shortage of tourists looking to rent a property, and long-term rental yields are some of the best in the U.S. For U.S. expats and Foreign Nationals looking to invest in Hawaii, buying an investment property on one of the major islands is generally a safe and very rewarding investment. Is it time to invest in your dream Hawaiian vacation home?

Last week, we compared real estate prices on the East Coast and their profitability. This week, we venture into The Aloha State and bring you property prices and average rental income between four popular investment areas in Hawaii – Oahu, Maui, Big Island, and Kauai.

Owning a piece of paradise is a dream for most people that visit Hawaii on holiday. Many real estate investors utilize their property in Hawaii as short-term vacation rentals. Although some locations on the islands may be restrictions on the minimum stay a property investor is allowed to advertise, there is surely never a lack of demand. Whether it’s February, July, or October, Hawaii sees vacationers at any season. It’s the perfect temperature, ample sunshine, and some of the best beaches in the world that play an important part in investors being able to rent out all year round. It’s the ultimate “home away from home.” Prefer a more stable long-term tenant? Not a problem. The rental prices in Hawaii are some of the highest in the nation giving fantastic yields with long-term, stable tenancies. 

Oahu

According to data from the Honolulu Board of Realtors, Oahu median sales prices have constantly increased yearly since 1985. Oahu has an active and competitive real estate market with its low inventory, combined with its high demand, making it an ideal opportunity to consider investing in Oahu property. From here on, prices and demand are likely to only go one way – up!

Location: Waikele, Oahu
Avg Purchase PriceUSD 1,065,640 (2000 sqft)USD 649,500 (830 sqft)
Avg Rental IncomeUSD 4,580USD 3,640
Price Per SqftUSD 530USD 900
Location: Waikiki, Oahu
Avg Purchase PriceUSD 2,640,000 (2000 sqft)USD 432,500 (830 sqft)
Avg Rental IncomeUSD 15,280USD 4,755
Price Per SqftUSD 1,318USD 840

Maui

Among the 8 major islands in the Aloha State, Maui is perhaps the most famous place to visit. Due to its popularity for surfing, amazing restaurants, popular white-sand beaches, and wonderful landscapes, sightseers from around the globe just can’t get enough of Maui. According to the Hawaii Tourism Authority, millions of tourists worldwide travel to Maui every year, with a record number of 3,071,596 vacationers in 2019. These are not just the only people Maui attracts; Real estate investors find Maui’s rental yield, purchase price, and property appreciation extremely alluring.

Location: Kihei, Maui
Avg Purchase PriceUSD 2,532,040 (2000 sqft)USD 772,000 (830 sqft)
Avg Rental IncomeUSD 12,425USD 6,995
Price Per SqftUSD 1,266USD 980
Location:  Wailea, Maui
Avg Purchase PriceUSD 4,540,000 (2000 sqft)USD 847,250 (830 sqft)
Avg Rental IncomeUSD 22,440USD 7,030
Price Per SqftUSD 2,270USD 3,450

Kauai 

Based on WSJ, this Hawaiian island has become a major destination for primary and secondary homeowners during the coronavirus pandemic. Ranked 6th in the list of places to buy a seaside property, Kauai’s real estate demand is steady and sure. Because of Kauai’s laws, only one out of every odd property can be utilized as a vacation rental creating properties that can be used as a vacation rental significantly more valuable and highly sought after. Properties that can be classified as vacation rentals can be categorized as one of two categories:

1.      They are situated in A VDA (Visitor Destination Area) like Princeville and Poipu

2.      They have a TVR (excursion permit). The region of Kauai isn’t giving out vacation licenses, so a property either has one or it doesn’t.

Location:  Kauai
Avg Purchase PriceUSD 1,060,800 (2000 sqft)USD 444,750 (830 sqft)
Avg Rental IncomeUSD 9,525USD 3,410
Price Per SqftUSD 530USD 580
Location:  Princeville, Kauai
Avg Purchase PriceUSD 1,765,980 (2000 sqft)USD 873,250 (830 sqft)
Avg Rental IncomeUSD 10,560USD 4,558
Price Per SqftUSD 880USD 690

The Island of Hawaii (Big Island)

Hilo

Positioned as a property investment opportunity zone, the Hilo area is home to lavish wilderness, dazzling waterfalls, and vast green farmlands that continue into Kohala mountains. A fantastic scene of calderas, magma streams, and endemic Ohia trees can be viewed from the Hawaii Volcanoes National Park. Hilo’s location makes it ideal for investors to purchase an investment home and receive passive income.

Location:  Hilo, The Big Island  
Avg Purchase PriceUSD 611,550 (2000 sqft)USD 453,250 (830 sqft)
Avg Rental IncomeUSD 4,000USD 3,650
Price Per SqftUSD 305USD 630

Kailua-Kona

Kailua-Kona Known for its reasonable real estate prices and amazing value appreciation, the Big Island of Hawaii is most certainly drawing investors from around the globe. Big Island is known for its elite luxury resorts attracting a lot of High-Net-Worth vacationers. Like Hilo, it is also ranked as an opportunity zone for real estate, making it a very profitable and tax-efficient investment.

Location: Kailua-Kona, The Big Island
Avg Purchase PriceUSD 1,119,210 (2000 sqft)USD 698,000 (830 sqft)
Avg Rental IncomeUSD 5,016USD 3,957
Price Per SqftUSD 560USD 640

Whether it is to have a pure investment property or a second home to relax and get away from, Hawaii is an opportunity investment that many dream about, but few achieve. When you invest in Hawaii real estate, you get peace of mind knowing that it is one of the most stable real estate markets in the U.S. Sit back, relax, have a Mai Tai, and enjoy investing and earning passive income while the property appreciations roll in like the wave. Ready to find your place in paradise?

As a company, America Mortgages’ ONLY focus is providing market-rate mortgages financing for U.S. Expats and Foreign Nationals. 100% of our clients are clients just like you. Get in touch with us at America Mortgages to understand more about how a mortgage can get you that dream home in Hawaii. [email protected].

The ‘Debt-To-Income (DTI) Ratio’ determines your qualifying ability.

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The debt-to-income (DTI) ratio equals your total fixed monthly debts divided by your total monthly gross income.

DTI is essential for mortgage lenders to determine the applicant’s financial capacity of paying off the borrowed money in time. Several studies suggest that borrowers with a high DTI ratio are likely to struggle more in making the monthly installments. In this case, the breakeven point is 43, which means this is the highest ratio that a lender will still approve for a mortgage. However, some lenders may consider up to 50% DTI too.

All mortgage lenders check the front-end and back-end ratios to determine the DTI. The front-end ratio covers the house-related debts, including home loans, homeowners’ insurance, property taxes, and other expenses. On the other hand, the back-end ratio mostly includes the bills and debts on your credit cards.

The ideal front-end and back-end ratios should be lower than 28% and 36%, respectively. However, a loan approval does not solely depend on this ratio. Mortgage lenders will also take your credit score, percentage of down payment, assets, and a few other things into consideration. If these figures turn out well, you can get a loan with a slightly higher DTI.

Regular household expenses will not be considered as debts. Some other big expenses that will be exempted are healthcare costs, child support, and insurance premiums.

America Mortgages

mortgage for overseas property

One source, multiple options

America Mortgages is a Super Broker with an emphasis on the U.S. mortgage market. We specialize in Residential, Commercial, Construction, and Bridge financing for Non-U.S. Citizen, U.S. Expats, Family Offices, and Institutions. With the ability to lend in all 50 U.S. States (for most programs) and Internationally, America Mortgages is the “go-to” source for global Real Estate financing.

America Mortgages has direct relationships with U.S. banks, Asia regional banks, private mortgage lenders, and global funds to directly offer market-rate loan programs to the borrower in Asia or abroad.

The Power of YES! Over 11 languages/dialects spoken, cultural understanding, regional representation, and the ability to open an application and close the mortgage in most locations without leaving your home country.

Our U.S. mortgage programs include:

Our international mortgage programs include:

  • Large scale, global bridge financing – US$3M minimum and up in most countries
  • Residential mortgage loans in various countries with a minimum loan amount of US$100k

For more information, please contact [email protected].

Property Taxes – How is this calculated, and why is it important?

Property Taxes | Mortgage Specialist

A tax imposed on a real estate property by the government is called property tax. The local government supervises the regulation and collection of such taxes within its jurisdictions.

● Some of the taxable properties are:
● Land (with or without constructions)
● Buildings
● Vehicles, RVs, and boats (in some states)

The local government sets up the property taxes based on either the market or appraised value of the properties. The assessed value is always lower than the current market price.

The property tax rates fluctuate as per the change in property value over time. The location of the property also impacts it. You pay more taxes if your property is situated in a prime location or a prestigious neighborhood.

Many taxing authorities use a “millage rate” instead of a percentage of the property’s value to determine the taxes. One “mill” equals one-thousandth of a dollar. For instance, if the property tax rate on residential homes in your area is 20 mills, you will pay $20 for every $1,000 in the assessed price. If your home’s assessed value is $350,000, you will pay $7,000 in taxes. In the case of a percentage system, it will be $17,500 at a 5% tax rate on residential properties.

Most property taxes have to be paid on an annual basis. However, if you feel the tax bill of your land or home is unreasonably higher, you can appeal to the local taxing authority for a reassessment.

Property taxes are a significant fund collection source for the local governments in the United States. They use this money to develop various public services and infrastructures.

American research professor at the National University of Singapore buys an apartment in New York.

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The Client

Our client is a clinical research director at a top university in Singapore for the past 12 years, and his kids are all studying in the U.S. Being abroad for an extended period of time, he no longer had any credit history in the U.S. or FICO score.

How We Helped

He no longer had any credit history in the U.S. or FICO score. Although he tried with several local and international banks, he was unable to get a loan due to the lack of credit. As we see similar situations often, we knew what loan program would work best for our client. He was able to get a great loan and begin to reestablish his U.S. credit again. Something vital to him when he retires back in New York.

Loan Details

NationalityProperty ValueLoan AmountLTVRate
U.S. Citizen$3,400,000$1,870,00055%5.125%
TermStateProperty TypePurposeLoan Type
5/1 ARMNew York City, New YorkApartmentPurchaseResidential

Canadian investment fund purchases hotel in Texas.

Mortgage Lenders Overseas

The Client

Our client was referred to by a developer in Houston, Texas who we worked with previously. The client is a Canadian real estate investment company looking to purchase a hotel as well as in Houston, Texas. Due to the covid-19 impact on the hotel industry, the borrower was able to secure a very competitive price on a non-flagged hotel property in the U.S.

How We Helped

Due to Covid-19, almost all lenders are on pause with hospitality finance requests, due to the inherent risk of the hotel industry and travel being shut down/limited around the world.

Our client was able to utilize a Bridge Loan to secure the purchase of the property. Once the Covid situation improves and travel opens back up, the borrower will refinance with a traditional longer term commercial loan. With the discounted purchase price, the more costly bridge loan for a few years made sense. (Also see Can a Canadian Buy a House in the USA?)

Loan Details

NationalityProperty ValueLoan AmountLTVRate
Canada-based
Investment Company		$3,100,000$1,550,00050%8.99%
TermStateProperty TypePurposeLoan Type
2 years with
possible extensions		Houston, TexasHotel –
Non-Flagged		PurchaseBridge

What Is Bridge Financing, And How Does It Benefit Investors?

Bridge Financing

For those who are new to investing in real estate, the common question is, what is bridge financing? A better question is, what is bridge financing, and how does it benefit commercial Real Estate investors?

For investors that are well versed in bridge financing, you understand the importance of having access to reliable and reputable bridge lenders. Bridge financing is short-term financing, sometimes referred to as private money, smart money, or hard money. Private individuals and not banks typically make bridge loans, so the interest rates on bridge loans are higher than bank loans. International bridge lending allows non-U.S. citizen / Foreign Nationals to invest in the U.S. or other global Real Estate projects by quickly and efficiently providing the needed capital.

Many commercial real estate investors who were able to purchase distressed commercial properties in recent years made out very well. To act on multiple opportunities simultaneously, many real estate investors have turned to bridge financing.

BRIDGE FINANCING BENEFITS INVESTORS IN 3 IMPORTANT WAYS:

– Bridge financing allows investors to make their money go further. For example, if two properties come together at the same time, an investor can purchase both properties using a bridge loan on each purchase.

– Bridge financing removes partners or family members from a deal. Investing with family members or business partners can be tricky. Bridge loans can remove other partners from the equation, allowing an investor more freedom and flexibility with a newly acquired asset.

– Bridge loans fund faster than bank loans. If an opportunity is good, it won’t last long. Bridge loans have fewer requirements than bank loans and thus close quicker. Bridge financing allows investors can grab a fleeting opportunity before another investor snatches it up.

INTERNATIONAL BRIDGE FINANCING FOR GLOBAL / INTERNATIONAL REAL ESTATE PROJECTS?

America Mortgages’ extensive network offers numerous options for Bridge Financing regardless of your citizenship. Whether for a hotel project in Spain, land in Thailand, or a dairy farm in India, America Mortgages is your solution for reliable capital sourcing.

OUR CAPITAL NETWORK AND EXPERIENCE FOR INTERNATIONAL BRIDGE LENDING EXPANDS BORDERS.

With over 70 combined years of experience in the mortgage and investment banking industry, and with access to funds worldwide, America Mortgages will consider most international bridge funding requests. Currently, we offer bridge lending on international and foreign borrowers with a minimum loan amount of US$3mm with no maximum with a maximum of 50% LTV/LTC.

Get in touch with us today to learn more about the structures and options of bridge financing solutions at [email protected].

U.S. Expat in Singapore refinances home in Virginia to lower monthly payment.

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The Client

Our client is a lawyer for a U.S. internet company in their Singapore office. They saw our flyer at the American Club and reached out to learn more.

How We Helped

The only thing we had to say is that we offer the same programs as you would find in the U.S., and that there’s a good chance we could even find something lower.

The fact that he could meet us in person already convinced him to use our services.

Loan Details

NationalityProperty ValueLoan AmountLTVRate
U.S. Citizen$512,000$399,36078%2.35%
TermStateProperty TypePurposeLoan Type
15 year fixedRichmond, VirginiaSingle-Family HomeRefinanceResidential

Homeowners Insurance – Why is this important in the Loan Process.

mortgage for overseas property

Homeowners insurance is the insurance policy that ensures the protection of a home and its belongings from specific damages. You can take the insurance for a certain period and pay the provider’s fixed monthly premium.

Standard home insurance is likely to cover your property from the damage caused by perils like storm, wind, hail, fire, theft, and more. Each coverage requires careful research and your living area’s climate condition to decide what to keep and what not.

There is no legal obligation for a homeowner to get homeowners insurance. However, the lender may demand you to have a standard policy, at least during the mortgage period. It is also common to have a policy since it will help you recoup some financial losses after an accident. It would help if you also remembered to review the policy periodically and add and deduct the necessary clauses required for the protection of your house.