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Investment vs. Lifestyle: Why People Really Buy in Hawaii
Many buyers call me saying they want to invest in a property here. What they usually mean is they’re looking for a short-term vacation rental — something that can generate income when they’re not using it. They’ll often say, “I don’t just want it to cover expenses, I want it to cash flow.”
To help with that, I’m always happy to put together a proforma on any property. That includes all the expenses, projected revenue, property management fees, taxes, and more. Once buyers see the net income number, they sometimes realize the property may not cash flow, especially if they’re financing it with a loan. That’s just the reality.
At that point, many say, “Well, I could do better investing in the Stock Market or somewhere else.” And yes — that’s absolutely true. But here’s the thing: you’re not buying in Hawaii just for the investment. You’re buying for the lifestyle.
The Lifestyle Factor
It’s 84°, the surf is up, and the sky is beautiful. That’s the lifestyle you’re buying into.
- I play pickleball outdoors two or three times a week — year-round.
- I golf at some of the most spectacular courses in the country.
- I head to the beach on an Aloha Friday afternoon to grab a poke bowl and watch the waves.
- We boogie board, surf, or simply relax on some of the world’s best beaches.
You can’t do any of that with the S&P 500. You might get a higher return there, but it won’t give you priceless memories with family and friends in paradise.
The Big Question
So ask yourself: do you really need a property that maximizes returns — or do you want something that helps cover costs while fueling your dream lifestyle?
And here’s the bigger question: what’s holding you back from starting your Hawaiian lifestyle right now?
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Why Real Estate in Hawaii Is a Long-Term Appreciation Play
At The Hawaii Team, we work with many buyers and investors from the mainland who are excited about purchasing property here in Hawaii. Often, they bring their past real estate investment experience with them and expect the same results in the islands. But here’s the truth: real estate investing in Hawaii is different.
Cash Flow vs. Appreciation
In real estate, there are generally two investment strategies:
- Cash Flow – Earning income each month from rent that exceeds expenses.
- Long-Term Appreciation – Buying property in a strong market that consistently increases in value over time.
Hawaii is firmly in the second category. While you can absolutely offset expenses with short-term or long-term rentals, you should not expect your property to generate significant cash flow. The real play in Hawaii is long-term appreciation.
What Buyers Often Discover
Here’s a common scenario: mainland buyers find a property they love, ask for rental numbers, crunch the math, and realize the monthly income may only cover expenses—or just break even. That’s when we remind them: you’re not buying this property for cash flow. You’re buying it for the Hawaiian lifestyle and the long-term gains that come with it.
Hawaii’s History of Appreciation
Hawaii has one of the strongest appreciation records in the country. Consider these stats:
- Over the last 10 years, Hawaii real estate averaged around 7% appreciation annually.
- Over the last 35 years, the islands averaged about 6% appreciation per year.
- The only dip occurred during the 2008–2009 crash, when the entire U.S. market declined.
In recent years, appreciation has been even higher—some properties rose more than 30% in just a single year.
Real-World Example
One of our clients purchased a $3 million condo in January 2022. Just five months later, a nearly identical condo in the same complex sold for $3.8 million—an $800,000 increase in value. Today, similar units in that complex are listed above $4.1 million. In just over a year, our client gained close to $1 million in equity.
Lifestyle and Legacy
Of course, real estate is about more than numbers. When you buy in Hawaii, you’re investing in a lifestyle: breathtaking beaches, unforgettable sunsets, and a chance to make lasting memories with friends and family. That’s something you’ll never get from the S&P 500 or any other paper investment.
The Takeaway
If you’re considering Hawaii real estate, remember this key point: you’re not investing for monthly cash flow—you’re investing for long-term appreciation and lifestyle. Historically, Hawaii has been one of the strongest real estate markets in the U.S. for building long-term wealth, and it continues to be today.
Have questions about buying, selling, or investing in Hawaii? Contact The Hawaii Team and let’s talk about your goals.
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Exploring the Hybrid Model of Home Ownership in Hawaii
Let’s talk about the different types of home ownership available in Hawaii. Today, I want to expand on one option in particular—the hybrid model—and why it may be the right fit for many buyers.
Three Types of Home Ownership
When it comes to buying property in Hawaii, there are generally three approaches:
- Second Home Only: You purchase a home and use it solely as your personal getaway. When you’re not here, it simply sits vacant until your next visit.
- Short-Term Vacation Rental (STVR): You buy a property and rent it out on a short-term basis—less than 30 days at a time—to generate income.
- The Hybrid Model: You purchase a second home and rent it out for one to three months at a time.
Why Consider the Hybrid Model?
The hybrid option exists because short-term vacation rentals come with significant restrictions. STVRs are only allowed in designated coastal zones. If the home you want falls outside those zones, you can’t legally operate it as a short-term rental. This limits your choices if your goal is to generate income.
The hybrid model opens the doors to more locations—whether it’s Waimea, Waikoloa Village, or up the mountain in Holualoa. Since the legal definition of a short-term rental is 30 days or less, anything 31 days or longer is not considered a short-term rental. That means you don’t need to be in a designated zone, and you don’t need a STVR permit.
Growing Popularity Post-Pandemic
Here’s what’s new: before the pandemic, there wasn’t much demand for one- to three-month rentals. Most visitors stayed for shorter vacations. But post-pandemic, travel patterns have changed. Many people now want to spend extended time in Hawaii, working remotely or enjoying a longer stay.
Property managers across the island are embracing this shift. Several have begun building a portfolio of homes specifically marketed as one- to three-month rentals. This model provides steady rental opportunities while giving buyers more freedom in choosing where to purchase.
Is the Hybrid Model Right for You?
If you want the flexibility of owning a second home in Hawaii but also want to generate income, the hybrid model may be the solution. It gives you access to a wider range of properties without the restrictions of short-term vacation rental zones—while still meeting the growing demand for longer stays.
Interested in learning more? Contact The Hawaii Team today to explore whether this model could work for your Hawaii homeownership goals.
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Should You Rent Out Your Hawaii Property?
One of the biggest questions buyers ask when purchasing a property in Hawaii is: Should I rent it out? For many, the dream is to own a second home in paradise while also earning income when they’re not here. But the answer isn’t always straightforward—especially when it comes to short-term vacation rentals.
The Demand for Short-Term Vacation Rentals
Nearly every buyer we work with—about 97%—initially wants a short-term vacation rental. The idea is simple: spend two to four weeks enjoying the property, then rent it out the rest of the year to offset costs. The challenge? Demand far outweighs supply.
Currently, our office whiteboard has a long list of buyers searching for short-term vacation rentals, but inventory just isn’t available. This makes securing one a long waiting game.
Using Your Property Solely as a Second Home
If you don’t need to rent your property on a short-term basis, your options open up significantly. Without the restriction of needing a short-term rental permit, you can choose from a much wider range of homes and condos across the islands. For many buyers, simply enjoying the property as a personal retreat is a fulfilling choice.
The Hybrid Approach: 30-Day Plus Rentals
For those who still want to generate income, there’s another option: 30-day plus rentals. Many communities, complexes, and HOAs in Hawaii allow you to rent your property for a minimum of 30 days or longer. This is different from a short-term rental, which is defined as anything under 30 days.
The benefits? You don’t need a short-term vacation rental permit, and you avoid the county restrictions tied to short-term rentals. You simply rent the property out with a 30-day minimum stay and, of course, pay your taxes. More and more visitors are staying for extended periods, making this a practical and attractive solution.
Finding the Right Balance
If you’re waiting for a short-term rental opportunity, but don’t want your home sitting empty, a 30-day plus rental can be a smart middle ground. It allows you to enjoy your property as a second home while still earning rental income without the added complexity of short-term rental regulations.
Want to learn more about your options? Contact us at The Hawaii Team and let’s talk about finding the right property and rental strategy for your goals.
From May 2025 video
Why Real Estate Appreciation on Hawaii’s Big Island Stands Out
If you’re dreaming of investing in paradise, the Big Island of Hawai‘i might be calling your name — and not just for its views. Unlike many parts of the mainland where real estate appreciates slowly over time, the Big Island is one of those rare markets where appreciation can happen quickly and significantly.
Think of places like Santa Barbara, La Jolla, or Atherton — markets where homes not only hold their value but can skyrocket in price in just a few short years. The Big Island is right there with them. In many areas, it’s not unusual to see double-digit appreciation in a single year.
Real Numbers, Real Appreciation
Each month, Dan Polimino of KW Big Island and The Hawaii Team shares updated stats provided by First Hawaii Title. These reports offer a snapshot of what’s happening across the island — and the numbers for 2025 are impressive.
Here are a few takeaways from the latest data:
- Island-wide median sales price (residential): $600,000
- Sold listings: Down slightly, but not significantly (only a 2% year-over-year dip in single-family home sales)
- Total sales volume: Just $2 million off from the same period in 2024 — nearly flat
Spotlight on South Kohala: A Hotbed for Appreciation
For those interested in short-term vacation rentals or second homes, South Kohala is the area to watch. Home to resort communities like Waikoloa Beach, Mauna Lani, and Mauna Kea, this region is showing particularly strong growth:
- Single-family homes:
2024 average price — $1.042 million
2025 average price — $1.2 million
That’s a 15% increase in just one year. - Condos:
2024 average price — $1.065 million
2025 average price — $1.135 million
That’s a solid 7% jump.
These numbers show that the west side of the Big Island — especially in resort communities — is where appreciation is really happening.
Investment Strategy: Cash Flow and Appreciation
Many investors focus solely on cash flow from short-term rentals — and while that’s important, Dan emphasizes that appreciation plays a key role in the equation, especially in a market like Hawai‘i.
In addition to rental income, a home that gains 7–15% in value in just one year is a serious wealth-building asset.
“Some people say, ‘Dan, I don’t count appreciation into the equation.’ That’s not me. I absolutely count it,” says Dan.
Want the Full Report?
If you’re interested in buying a short-term vacation rental or second home on the Big Island — or just want to see the full monthly data — Dan and The Hawaii Team are happy to share.
📞 Call or text Dan directly: 808-913-0899
🌐 Visit: thehawaiiteam.com
By Dan Polimino – KW Big Island & The Hawaii Team
If you’re thinking about buying a vacation property in Hawaii and turning it into a short-term rental, the most important question you can ask is: Will it cash flow?
As a self-proclaimed data geek, I believe numbers tell the real story—and I use them to help buyers make informed decisions. Here’s how we do that at The Hawaii Team.
One-Stop Shop for Buying & Managing Vacation Rentals
We’re more than just real estate agents. We help you:
- Find the perfect vacation property
- Get from contract to close
- Manage it professionally through Big Island Stays
But the real magic happens before you make an offer. Every smart investor wants to know what kind of return they can expect—and we build that into our process.
Pro Formas: Know Before You Buy
Before you commit to a property, I’ll prepare a detailed pro forma outlining:
- Operating expenses
- Rental income potential
- Net income projections
This helps you understand what your return on investment might look like, before you spend a dime.
Tools That Power Smart Decisions
We also use third-party tools like AirDNA, which provides real-time data on:
- Occupancy rates
- Average daily rates (ADR)
- Revenue projections for similar properties nearby
For example, a 2-bed, 2-bath unit in Waikoloa Beach showed:
- Projected revenue: $122,000
- Occupancy rate: 80%
- Average daily rate: $422
- Net income: $52,000
Plus, AirDNA reports are accepted by many mortgage lenders—which can help you qualify based on rental income alone.
Conservative vs. Optimistic Projections
While tools like AirDNA provide valuable data, I also run conservative estimates based on:
- Lower nightly rates ($390 vs $422)
- Lower occupancy (62% vs 80%)
In one example:
- Gross revenue: $88,000
- Total operating costs: ~$66,000
- Net income: $22,000
AirDNA may show higher returns, but I prefer to under-promise and over-deliver. The truth likely lies somewhere in between.
The Bottom Line
Whether you’re planning to pay in cash or finance your purchase, knowing the real numbers upfront helps you buy with confidence and peace of mind.
We’re here to guide you through every step of the process—from selecting the right unit to managing it seamlessly. And yes, you can call me directly.
📞 Dan Polimino: (808) 987-3306
🌐 thehawaiiteam.com
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When people think about buying a short-term vacation rental here on the Big Island of Hawaii, they always want to know one thing:
“Dan, will it cash flow?”
But how will you know—and will you have the right real estate professional to guide you?
Over the years, I’ve said this many times: rarely do short-term vacation rentals cash flow here on the island. That’s mostly due to the high purchase prices and high HOA fees. You simply can’t generate enough rental income to offset those costs—especially if you’re financing the purchase.
Statistics show that about 60% of buyers in 2024 are using a loan, so if you’re planning to do the same, just know ahead of time:
You likely won’t cash flow.
You’ll be in the red.
How far in the red depends on your down payment. To save you time and frustration, most condos in the Waikoloa Beach area—our lower price range—are about $1 million. You’d need to put 50–60% down just to make it cash flow.
I’m not kidding. That’s what it takes.
If you’re thinking, “Well, I’ll just do 25%, 35%, or even 40% down,” it still won’t cash flow.
You can’t charge a high enough nightly rate or get enough occupancy to break even—let alone turn a profit.
That said, you can have an incredible second home to enjoy the Hawaiian lifestyle.
How We Help
When you’re thinking about making this investment, you need a real estate professional who specializes in short-term rentals.
That’s what we do.
One of our key services is building a detailed pro forma for any unit you’re considering. We break it down like this:
- Cost to own: utilities, HOA, taxes, insurance
- Cost to rent: cleaning, management, booking fees, etc.
- Rental revenue: realistic, not inflated
We combine the ownership and rental expenses, subtract that from projected revenue, and show you the net result—whether that’s a positive return or a loss.
If you’re using all cash, you might see about a 3% return—just from rental revenue. That doesn’t include appreciation.
Now, some people don’t count appreciation in the pro forma—they view it as “gravy.” Others see it as real and want to factor it in. If that’s you, and you expect about 6% appreciation, then your total return could be 9%.
You don’t have to look at it that way, but we want to give you all the data so you can make an informed decision.
So again, if you want a real estate team that understands this market and can build pro formas to guide your decisions, reach out to us at The Hawaii Team.
Check us out at thehawaiiteam.com.
video from July 2024
By Dan Polimino, KW Big Island | The Hawai‘i Team
One of the most common questions I get is:
“Dan, what are the best islands in Hawai‘i to buy a short-term vacation rental?”
Let’s break it down.
First, What to Avoid Right Now
Let’s start with where I’d recommend not buying at the moment: Maui.
As much as I love every part of Hawai‘i, the situation on Maui is currently complicated. Local leaders—including the mayor, the governor, and the County Council—are all pushing hard to create more housing for survivors of the Lahaina fire. While that’s an understandable and noble goal, their approach includes an aggressive effort to eliminate short-term vacation rentals on the island entirely.
In my opinion, this effort is likely to face serious legal challenges, and I believe property rights will ultimately prevail. But for now, it creates a lot of uncertainty—not ideal if you’re trying to invest wisely.
Next up is O‘ahu, specifically Honolulu. Mayor Blangiardi has been leading a similar crusade against short-term rentals. Although an earlier effort failed in court, the pressure hasn’t let up. If you’re looking for an island with less regulatory drama, I’d steer clear of Honolulu too.
So, Where Should You Look?
That brings us to the two most promising islands for short-term vacation rentals right now:
Kaua‘i and the Big Island (Hawai‘i Island).
Wet Side vs. Dry Side
In both cases, climate matters. You’ll generally want to invest on the dry side of the island where sunshine is more consistent—this tends to appeal more to vacation renters.
- Kaua‘i: The Poʻipū side is dry and popular with tourists. The Princeville side is beautiful but tends to be wetter.
- Big Island: The Kona coast is the dry side and ideal for short-term rentals. The Hilo side, while lush and stunning, is also much wetter and rainier.
Know the Resort Zones
On the Big Island’s west coast, there are six major resort zones between Kohanaiki and Mauna Lani. Each has its own rules about rentals:
- No short-term rentals: Kohanaiki, Kūki‘o
- Short-term rentals allowed: Hualālai, Four Seasons, Waikōloa Beach, Mauna Lani, Mauna Kea
Don’t worry about memorizing it all—we’ve got you covered. Our team knows these areas inside and out and can guide you strategically based on your goals.
What About Pricing?
Kaua‘i and the Big Island are surprisingly comparable in price when it comes to short-term rental properties. Your decision will likely come down to personal preference—scenery, vibe, travel convenience, and investment style.
We’re Here to Help
If you’re serious about buying a short-term vacation rental in Hawai‘i, now’s the time to explore Kaua‘i and the Big Island. We’d be honored to guide you through the process.
📍 Contact The Hawai‘i Team:
🌐 thehawaiiteam.com
📞 808-913-0899
Also, don’t forget to subscribe to our YouTube channel for weekly updates and tips on buying, selling, and investing in paradise.
Looking forward to helping you make your Hawaiian property dreams a reality!
Exploring the Hybrid Rental Model in Hawai‘i
By Dan Polimino, Keller Williams Big Island | The Hawai‘i Team
Here are the three common ownership models people explore here in Hawaii:
1. Traditional Second Home
You buy a home simply to use as a second residence. When you’re not on the island, the property stays vacant. Simple, straightforward—but not income-producing.
2. Short-Term Vacation Rental (STVR)
This is the most popular model buyers ask about. You purchase a property with the goal of generating rental income by renting it to vacationers for short stays.
However, short-term rentals come with major limitations—
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You can only operate them within designated vacation rental zones
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These zones are mostly located along the coast
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If the property falls outside those areas, you can’t legally rent it short-term
That brings us to…
3. The Hybrid Model: One to Three Month Rentals
The hybrid approach is growing in popularity—and for good reason.
You purchase a second home but rent it out for one to three months at a time. Why does this matter?
Because the legal definition of a short-term vacation rental in Hawai‘i is 30 days or less. Once you hit day 31, it’s no longer considered a short-term rental. That means:
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You don’t need to be in a vacation rental zone
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You don’t need a permit
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You still generate income
This opens up the entire island to potential buyers—not just the limited vacation rental zones. You can now consider homes in places like:
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Up the mountain
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Waimea
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Waikoloa Village
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Holualoa
These are beautiful areas with wonderful communities, but they were previously off-limits for STVRs.
The Market Is Catching On
I have spoken with several property managers here on the Big Island. They’re actively building portfolios around this hybrid model—taking on homes specifically for 1- to 3-month rentals.
Before the pandemic, there wasn’t much demand for longer stays. Now, it’s a different story. People are coming to Hawai‘i for extended getaways, working remotely, or enjoying longer seasonal visits.
Why the Hybrid Model Works
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More flexibility in location
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No red tape with permits or zoning
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A growing market of renters looking for longer stays
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Less wear and tear on your property than with constant turnovers
Ready to Explore the Hybrid Option?
If this approach sounds like a better fit for your goals, let’s talk.
📞 Call us: 808-913-0899
🌐 Visit: TheHawaiiTeam.com
Aloha!