Vacation Rental Poor on Maui is Real, Here's How to Avoid it

What's up Hooligans, welcome from Maui. The prodigal son has returned on his way back to his native Minnesota at some point. Dude, you were just in Japan though. You did a strike mission. You were eight hours away, but here you are now back in my house downstairs. Dude, and what? We already surfed. That's one thing I wanted you to show is that picture we took of the fleet and then also the board you surfed on today. Um, big, yeah, right into it. Jet lagged and all still out surfing for a couple hours this morning and it was beautiful. Just you and I out there for most of the time until the last few minutes. Well, dude, I was all by myself from like six till you paddled out and you know, I made the judgment call. Like I said, I was like, man, kid just flew for like 23 hours. Is he really going to want me to wake him up at 5 AM when I get up or even like six when I left the house at one 30 waiting for you, but then I was like, all right, you're not up yet. I'll go back to sleep. Yeah. You know, I only can surf at one 30 in the morning. If there's a full moon up here, that was what kind of got in that plan. But yeah, man, nice to be surfing up in the home zones this early in the season. I was reflecting on how it really does feel different when I'm surfing in town and I put plenty of holes in me in town, but town feels more playful. It's very, very still it's beautiful silhouettes when I'm walking down the headed out towards, you know, my beloved shark pit. I have a silhouette, just down a little point that comes out. Got these palm trees in it. It's kind of purple, dark, and then a watchable dude. Lanai is green right now. I was tripping on that. When I'm up here in the home zones, it feels wild. I don't want to be out there in the dark because I think it's still feeding time. And I'm sure it's still feeding time in town, but it feels playful. Feels like they don't come into town until working hours anyway. So that's it. I didn't wake you up. I sent you the text message. I was super stoked when I seen you walking on the beach there. And then it was just me and you for a little while. Then a crew paddled out a little bit later, nine, nine 30 zone. So what a life that there's two people in the break in the morning. And I'm talking to the surfer friends that I was hanging out with in Japan from Bali, from Taiwan, from Australia, New Zealand, they're talking about hundreds of people in the water at the same time, I'm like, there's literally no one out there this morning. I got pictures of you and yourself and the wave and that's it. Well, that's where blaze when he comes home, right? The oldest boy that lives on a wall. He's like, dad, you cannot find a place to surf by yourself. He goes, it don't matter how small, whatever. Always a pack on it. He loves when he can come home. Those guys don't wake up early. Like I do. There's definitely a different vibe. I love where I'm surfing because I was reflecting to myself. It's probably some of the most expensive real estate on the West side. Can we agree right? That beach that I surf at and I'm like, wow, these are all like predominantly empty and there's so much wealth park there and I yet reflect on my life. And I'm like, I think I'm the one that's winning and living the rich life. I don't have a ton of riches, but man, this life that I live, it's just, if it's for you, it's like the best thing in the world as crazy that sometimes on that same stretch of beach, I served with probably the best surfer in the world, potentially. A really cool vibe of stuff that you paddled out there. We'll show that picture maybe a little bit on this week. I want to give a shout out to one of our sponsors there. Sip and forage. If you're in downtown Portland, you're around the university of Portland, go check out Sip and Forage. It's a killer food truck. He sponsored the board that you were writing today. I wanted to show that. We'll show that a little bit later. Show the D2R fleet as well. Um, the lifted truck was probably not the best idea for a realtor vehicle, but you know, here in Maui, it is different. Most times I'm meeting people and they want to be in their own car because they're going to go do something afterwards, just works a little bit different than maybe other places. It fits the bill. So in the world of just controversial talking subjects, right. I was thinking to myself today, I surf with a crew at shark pit and they're really a nice group of dudes are from Argentina, they're older, maybe a little bit younger than I am. There's some that are like my age, but they're construction dudes. I think one of them is the main boss, but they're really respectful. They paddled out to the pit and then they always go down to acid drops. But I was talking with one of them because there does seem to be so many people from Argentina here. And it seems like a lot of them are bakers, right? So my understanding, Momona, which is one of our favorite bakeries in Kahului, it was just smart enough to go, Hey, that's an old bank, but you know what? I can do a bakery in there. They just kill it. Right. And I love Pau bakery over here. I hit Pau bakery over here all the time. I finally sampled the empanadas. I was like, Oh my God. And somehow people find them, even though if you go to their website, they say they're located in Holly Eva. My experience with Argentinians as well as a lot of them live in their vans. And there was a period of time here when my own neighborhood, I would get pissed because I'd get some trippy van parked in front of my house. And if people don't know, like the biggest faux pas you can do it's happening to me right now is you don't park in front of somebody else's house in Hawaii. You just don't like if there's an uncle in his garage, he's going to sound. You just don't park there. So I was grateful because I need to work through silly things like thinking I own the place in front of my house. I've had them park there because there was somebody that was renting a room and then they were going and using the washer and dryer when I reflect on them. I'm like, they're willing to do the humble beginnings and live in a van because they want to get a start. And then it seems like some of them successfully startup businesses. And why that's interesting to me is because I constantly hear how some of my local people feel like their kids can't get a good start here. They can't do things. And then I'm watching transplants show up and blow up. It just seems like maybe it's a intention thing. It's a drive thing as well. Sometimes, you know, this constant diatribe about how, well, we can't afford to buy a house. Yeah. Well, a lot of people don't get to start out with a house. I'm still renting. I look back and sometimes I have regret because I see where equity would have happened if I would have bought when I first showed up and then sold at the very heights of the COVID market. But at the same time, I'm doing what works for my budget and allowed me to get a start over here. And quite frankly, my landlord's just been so cool and has kept the rent at such an affordable level that it never really made sense for me to make that big stuff. It is not a good thing to be house poor. And what does house poor mean? It means where the intention to own a house became so great that you don't live much of a life outside of the house. You don't go out to eat. You don't buy extra things. You don't go on a vacation because everything is going to the mortgage. Let's expand on that a little bit, Johnny. You don't want to be second house poor either or vacation rental. Hey, we've seen that happen. Fun place to be. So if you're buying a vacation rental and you need the rental income to float. Yeah, it's not a good idea. It's not a good idea. Especially with the turbulence in our market, with the fire, with COVID, with Airbnb, with vacation rental restrictions, all the things, it's just not a good idea. If you can make it float without all the income coming in, then maybe it might work for you. Otherwise, probably not a good idea. Looking back so many, even our buyers, right? We just, we show information. We live in a moment. Sometimes I have a little bit of thoughts where it's like, okay, I sold this house back in the past. My mom, for example, right? Bought her house for like six and a quarter and all the terrorists. And now those are going for like the high to mid five sometimes. And yet that's just how investments work. That's just how the housing market works as well. And this is where I brought up in the past that sometimes it's good to step away from the equity portion and remind yourself that, well, at some point I'm living here, it's affordable for me. Or I own this place and it's affordable for me. If I have the right type of loan, meaning not an interest only, I'm going to pay this thing off. And then it's going to be a true asset for me or for my family as well. So remember there's two ways you get equity by owning real estate. One market fluctuations. Those are the ones that are the most extreme depending on timing. Sometimes you can just whack it out of the park, like within a couple of years, like we saw with COVID. And then there's the tried and true method of either having somebody else pay the mortgage for you through investment or you yourself doing it over time. Not for everybody. I'm also a little adverse for myself stepping into my own expertise space, just because my personal experience with Arizona real estate is I got smoked. I thought I did everything right. And the timing of life happens, but I still have that as a constant reminder. And sometimes the little voice in my head says, we're good at helping other people become wealthy. Not so good for ourselves. This is where God comes in, I guess, for me. And yet by saying that I am looking forward to this new thing of building on mom's lot and making that my home. I've had to do some research because one of the mechanisms of my mom giving me the lot is you don't get something called the one-time step-up basis. Let's talk about that for a little bit. The one-time step-up basis for an heir is let's say your parents bequeath you a home as when they pass away. And now that's yours. Well, they bought it for 200. Now it's worth a million five. The one-time step-up basis for an heir. If it's given to you as an inheritance is now that step-up basis goes up to a million five. You're not paying these capital gains taxes from 200 to a million five. Because my mom's going to give it to me now so I can build on it. I won't get that one-time step-up basis. If I sell, when I go back to the tax records, I think it's like 245, 250. I have no intention of selling it though. The benefit from my Ohana, my legacy, my plan is I give it to my kids. Guess what they get? Now they get the one-time step-up basis when I pass. If I do need to get money out of it, because I do feel like it's going to be a highly functioning piece of real estate. It's not just going to be for me and the wife. I want it to make some income. I want to have Ohanas. I've got private dreams of benefiting my community through it as well. If I need to get money out of it, I could always take out debt, right? Suck it out through a home equity or, or, or refinance cash out refinance. Who knows? But anyway, that's a good topic there for people to understand the one-time step-up basis. So super important. I'm not going to enjoy that benefit, but for me, I don't need the benefit. My fear was, and I had to do the research is, is that the minute she gives it, I have to pay the IRS capital gains taxes. I discovered that's not the case. Helpful to have a sister as an attorney. Tell me about what your plans are though, as you go back to rekindling your roots back at home. Yeah. So I'm here for a couple of weeks, hanging out and then back to Minnesota for the winter time. Spend some time with mom and dad. Maybe get them into a house at some point, but got them into a rental for the winter season. Restoke some friendships and relationships back there. Spend some quality time with mom and dad. Celebrate the holidays. I can't tell you the last time I had Thanksgiving with my family, especially my sister and then Christmas, man, Christmas spend seven, eight years. So yeah, I've just missed out on a lot of things. Looking forward to some of that coming up here in the near future, even though it's probably going to be negative 20 degrees at some point that's Fahrenheit for you. They're wondering, I don't know what the math is on Celsius. Oh my goodness. Pretty close to the same. Once it gets Celsius in the negatives, it's probably be cold. Thank you for El Nino this year. I've heard that it won't be too bad of a winter, but we're from Minnesota. We're used to it. People are always surprised when it gets cold, but that's just what it does. That's where we're from. I'm planning on doing a strike mission. I've seen the RVs with no wheels that you just push out onto the ice. And then you just do this crazy ice fishing out of this killer living room. Let's go do that for a little bit, dude. I'm coming. We got to go check that out. Yeah. I've never done ice fishing, so that could be a fun experience. And we're bringing everyone along for the ride in our life. This is just what we do. It's who we are now. Three days a week, hanging out here on the moment. I was who the hand recording talking story with you. You got some fan mail this week, even Johnny. I know you don't have it on you, but we're going to show off that fan mail, maybe on a Friday's episode. That would be cool. Yeah. One of the pineapple recipients sat down and busted out a rug from her very own hands. Crazy. Shout out to Anthony. I don't know why that guy's my personal Santa Claus, but we'll show him what we're going to eat at Tiffany's when that happened, dude, it's just kind of crazy, man. I do want to give a shout out to Hansi, my brother that I used to work with back in the Swan Court. My understanding is he watches this in his underwears. I heard that from the coconut wireless. Had lunch with my brother-in-law. Now he's not going to watch it anymore. You just embarrassed him, bro. Exposed. No, he'll send me a picture, dude. He was that kind of guy. We'll put it on the show. Dude. You were speaking of Lahaina town. Yeah, we drove through. Yeah. I missed the turn. We went down Lahaina Lunar Road, then we circled back, we saw mom's lot, cruiser long shark that was on shore, but what were your thoughts when we're going through Lahaina? It was cool to see some things again. That was the first time I've been on front street since the fire. Three plus years later to see some of the lots and see the foundation of where the wharf was and different buildings. You're like, Oh wow. The ramifications of what happened felt so much more real. And then the second thought was we literally have done nothing since fire. Like there's some gravel, there's a railing, there's some new lights. There's some new mobile homes, but they were able to do with infrastructure and all that. I was just thinking about that. They did something and the focus has been so much on residential. And I'm like, but man, we need an economy. We don't have an economy. What does that tend to be supplemented by? Well, you just said it earlier. Yeah. Hey, local families are worried that their children can't make it here. And yet the opportunities to do business in Lahaina, which has been an economic driver for Maui for so long, because tourists are here. They're willing to spend money. They want to spend money. There's nothing for them to spend money on in Lahaina. No restaurants, no shops, no anything. And nothing being built. I'm going to start a campaign to bring back McDonald's. If you would just do that for me. And I think like the people that live in Waikuli and all, I don't know, but maybe local people don't want McDonald's, but we have local food at McDonald's. You can get Portuguese sausage, rice, eggs, have the hotcakes on the side. There's a certain nostalgia to McDonald's for me. It reminds me of my granny coming from Molokai where there has never been a McDonald's. There was KFC one time, but I used to remember coming and you're like, Oh my God, I'm eating the food that I watch on TV. This is incredible. We could just do that. And it seems like I see the dust cover around. So maybe to their credit, they're doing something. It seems like after three years, you could start something. And the part of that too, is all the tax revenue that would come from business happening. Seems like it would be beneficial to the community, but it's a standstill and we've heard mixed messages. Some said permits were in waiting. Some said permits weren't happening. Either way, it's a bit disheartening to see little progress on front street. It's, it is, I hear we're going to start spending some federal money that has to be spent towards infrastructure. I think they threw like 600 milli at me. Correct me in the comments, please. But you know, so I understand something's going to start moving there. We have talked about how, you know, a lot of us would dream to have underground utilities. Then we talked about the economics of that a million for, you know, a mile compared to 11 million part of me is like, can we just do concrete poles instead of the wood ones that seem to catch on fire, but anyway, just the thoughts of an old man here all over the road, Argentinians talk about front street, Danny's moving home. What were you telling me about? Like there was some surf in Lake Superior and then I asked you how, how cold the water was. What was your answer? And it's like 40 in the summer, maybe up to 50 if you're lucky. Well, that is a hearty, hearty crew. I don't, it'd have to be super firing for me. And then I'd probably pile up more shorts and just freeze. But here's the reality. If you're a surfer in Hawaii, it's probably one of the easiest places to be a surfer in the world. The water's warm. There's a break everywhere. It's awesome. If you're from Minnesota, there's probably three days out of the year where Lake Superior has waves that you can surf. It is a lake. It's not the ocean you're driving up. Doesn't matter if it's cold, whatever. Living in Hong Kong, these guys are going two hours on a train to the surf spot. Another hour from the station to the surf spot and an hour back to the train station, two hours. You're four, five, six hours round trip just to surf maybe three waves. Here's a controversial topic. I was having a shark bit the other day because on the weekend, this past weekend, it got packed for Maui standards. I was like 15 dudes. Oh my God, it's packed out here. But what was trippy for me is I've been out there for a long time, right? That's my spot. I'm going to say this. A lot of the times I am the only native Hawaiian out there and we invented the sport within the state, country, whatever you want to call us, that the sport was invented in and I got all these dudes that I've never really seen before and everybody's like, Oh, it's the more shore guys, but they're like paddling past me going to the peak, I was talking with other people and they're like, ah, I remember my friend fruit bean. He mentioned to me, he's like, John, when I first came here, it was only Hawaiian surf and he goes, you could not even paddle way down the line from the guy where he would never catch up to you. Could not paddle over the way if you did that, they would come and sound you and almost beat the crap out of you. So part of me was like, wow, what happened? When did that change? But the reality is, is a lot of Hawaiians, we just don't surf anymore. Maybe that's different on the North shore, Wahoo, all that. But I'm kind of tripping. A lot of times I really am the only native Hawaiian out there. I have these crazy speeches that I could give in my head that I'm snapping at people and trying to what's called regulate. But the thing about me is whenever I try to be an angry surfer, then I just suck surfing afterwards because I realized I've caused all the attention to be on me and now people are watching me. And quite frankly, just never felt good, man. It's like you explode with anger. It's much like if you snap at your family member or something and afterwards you're like, man, I thought that felt crappy. Well, here's the reality is you guys introduced this cool sport to the world and the world has caught on and now they love it surfing super popular in India is growing. You know what I heard recently at this conference? Surfing is becoming super popular in the Middle East. Surfing has become such a popular sport because it was introduced just like Maui and Aloha and these things as the world is introduced to them as social media tells about it, more people get involved, more people check it out. It's getting popular. Let's remember the Hawaiians. You guys not asking for any special treatment, but if ONCS is there, maybe shot them into a wave or two. I get plenty. I'm just always greedy. That's the thing about the sport. It really is one of the world's most selfish sports in my head feel that I own like this beach of nature. That's like moving along for a few seconds. That's how silly it really kind of is. But anyway, that's the bad resource. There's only so many waves that come through. There's only so much time in the day. It's not unlimited wave pool action. Don't waste your waves. That's it. That's how I always feel in the water. I'm like, ah, I'm a mediocre surfer. I see you brothers out here next to me. I don't want to get in your way. So you guys go ahead. I'll just sit and watch. I love that, bro. I love that. Feel free to go in and grab a camera and just chill out and start shooting, Danny. That's where you'll get all the boys. That's usually what I do. Grab the drone, send it around. So that's why I'm popular in Hong Kong. Cause I usually paddle in and then get the drone and they're like, Oh, it's so cool. Oh, we need photographers, man. Shout out to do my photos to you, bro. That guy's been doing it for a long, long time. Love it. With that, let's go. Let's do it. Like we said, we're here three days a week. Part of the show. We drop in to the hot list. Tell you what's going on on Maui real estate. That was the impetus to kind of start this show to begin with. Just tell you what's active pending. So what that means for you or those of you that are interested in following the market, some of you will click off here and be done. And some of you will hang out and check it out. Yeah. Parkside. Whoa, big yard. That's what they're showing me. There is a downstairs. It is 103 hundred and 54 days in we've dropped 60,000. What has been the movement in here? Danny, have we gone sub four, like high fours? What are some of the recent upstairs unit? There was a couple of three bedrooms. Well, back that we're in pretty rough shape that went for 75, but most recently in the three building, that was one of the bigger yards in the complex closed at five 70, this is actually feeling pretty good value at five 39 decent condition. Nice floors remodeled. What does it tell you with a list price of five 39, we're still drifting lower, right? Not drastically, but I still feel like we, I haven't seen the rear view mirror tell me that. Okay. John, we passed that point. I think mentioning whole lay a terrace as well as another one, nowhere near the crashing that I saw in the great recession in Arizona. I sold a lot of $10,000 condos. That's no lie. That's crazy. Town Kukama street. Here we are in Kahului who are Maui Lani, where they started to do some, some facades there, um, 141 days where we. We reorg orienting ourselves as realtors as to how long something really does take to sell on Maui. I feel as well, right? Cause COVID just messed everything up, set expectations about prices, rental rates, everything. How quickly the velocity of real estate moved here. So I have to give some, you know, mention about that. Million five, 2.1, nine, five built 2000 attractive home. I don't know. I still don't see that price there. Cause I'm reflecting on what I could buy it on a hair kind of with a view and all of that. We shall see. I just helped their, their marketing plan though, because I said something means it'll sell immediately. You're welcome. K shores, dude, five 10 or a studio started at five 30. Looks like it's along the side where kind of play shores meets up with Papa. Kia. I think that's where we're kind of at. Exactly. So for the parking lot. Yeah. So sometimes that, that gives you a bit of a view corridor, but in the world of human beings, not exactly the desirable if I could, and some reason these holder value for maintenance fees. Yeah, they do. It really is the epitome of what a condo tell truly, truly is. You pull up there and you're like, okay, I'm at a, at a resort. Looks a bit dated compared to something that's newer, but no, they're, they're wholly owned condos. Okay. Flats at Kamalani, Danny, three bedroom, two bath, six 89, really trying to hold on, um, 380 days in nine 44 for fees. Can't remember like lawsuit was pal, but then there was still a lag on being able to get the good financing. If I remember correctly, just hanging out. Okay. I was going to say, am I in haiku feels haiku ish. We are opportunity here, and this is time and time again, I buy a piece of dirt, couple acres in haiku. I put on an Ohana on there and sometimes they just sell it right away, depending on the market. But this is the, the opportunity is because I'm going to assume, you know, you can build your main house of any size. I feel maybe not 13, 14 square feet. I have to look into it, see if this is zoned ag, but there does seem to be an opportunity to build a larger home potentially on there and have this be at the Ohana also includes a prepared home site for a future second dwelling. Boom. Yep. And the current new laws is, is that if it is ag, I can build a 80 Ohana that's 1300 square feet with no different, like no limit on room size holiday, Danny. 15. There you go. Even better. Six 67, right out the gates, Danny key. Hey holiday. I can smell the sauna from here, right? Sure. Can. Okay. What say you, man? That too bad that one bath is always just the kind of best for sure. Okay. Solid spent some issues with the recent storms along here. Cause the road keeps getting beat up. Yep. Some food for thought into the future. Does it still make sense with storms and all of that? That's a big question mark. The two one is definitely a question mark, some good things, some things to overcome. There you go. Just having an understanding. Oh, Polly. Polly. My kids used to go up here to stargaze stargaze and they always took their girlfriends with them. Hmm. I wonder why seven days in and so upcountry moves. Um, especially if it's attractive, this was attractive. Some somebody with those killer views, location, 2.17 acres. Again, looking at a potential ADU play here where you can build the main house of any particular size. If it is ag land, you better bring a parka and you better hope that you put some the kind fireplace is cold. She's look at that. Look at how vibey that is. Got your Quonset hut or wherever that thing is. It looked like they turned it in some sort of yurt structure. Some hippie just like lived here for years and just going to be a sorry, 1995, maybe not. So if someone else took over, Oh, what do we got here? 1.4 no drop to nine, nine, eight. I'll be take nine 30. Boom. That is a crazy value for a two bedroom, two bath at the masters where yes, some are still selling in the one eights. I'm going to imagine this one didn't have the best potential view, but still had a view. Somebody stole it. Wow. Remodeled kitchen. That's a deal. Someone got a deal. That's off. Yep. Just get rid of the carpet. You'll be good. Cam sands. Wow. Danny, these one bedroom, two baths, no longer touching that million dollar Mark. I can't pay full price. Even if it is your lower price, will you take five 40? I will. I'm going to slap a loan on it. That's cool. I just want to get rid of it. So boom. Took just about 60 days to close that deal. Why Leah and Lua Danny. Wow. By the picture there with the twilight. 1,000,004. I'll be taking 1,000,002, nine, five or one bedroom, two bath does seem to be updated, highly updated, actually. Wow. Is that how the money moves quick? It sure did. It caught you though. So we'll see what happens. Napoli, how villages two bedroom, one bath. Six 15. No, I'll write the offer of five 35 and sees what happens. How about we slap an FHA loan on there for the win? Yes. First time home buyer. Not always, but a lot of times. Why FHA loan? Three and a half percent down. Baby pay a little bit of PMI for a little bit. Bingo, bangle, pickle, mango, man. Stuff is moving. Still moving, making it work. That is the hot list for pump day edition. I don't even know what day it is. I keep wanting to say Monday, but it is Wednesday. Indeed. We'll be back tomorrow deal, but week Friday special episode on the island. We might do some fun and creative things while I'm here. Do you have any special requests for us? To visit or explore anything? Drop it in the comments below. There you go. Yes. These are Hunter S. Thompson glasses. Who is you're like, who's Hunter S. Thompson? I have no idea. I know it sells your youth. Hello, everybody. Oh, yo.