Buying your dream second home as a vacation rental on Kauai.


I specialize in helping buyers from the mainland buy homes, second homes and vacation rentals on Kauai. For many, vacation renting their purchase makes the most financial sense to help them attain their dream of ownership on Kauai. Buying a dream second home or vacation home on Kauai and renting it out when you're not here to generate income is a great plan -- owners can generate significant revenue by listing their homes or condos on VRBO or similar, or with a property management company.

By renting your home or condo, you can help subsidize the purchase of your dream home on Kauai.

(To understand more about the "where" you can legally vacation rent your property on Kauai, Please read my blog post "What you need to know about vacation rentals and Visitor Designated Areas")

Many hopeful buyers think that by vacation renting their condo or home, it will cash flow positive and entirely pay for the purchase of the home. This rarely happens unless you can put more than 30% down and / or if you opt for self-managing your vacation rental and saving the 20-30% management fee.*

I share this because it is important to understand this from the very beginning of your search for your dream home. You can then be both emotionally and financially prepared knowing that the rental income primarily subsidizes your purchase.

* Performance of your rental property cash flow depends on variables such as:

  • % down payment

  • mortgage and insurance

  • HOAs

  • Utilities

  • Maintenance and repairs

  • Occupancy

  • Nightly rate

  • and, if applicable, management fee

If you have the time, energy, and desire you can potentially self manage the rental portion of your vacation rental to help improve the overall cash flow by saving the 20-30% management fee. However, many find that having a management company saves them time, energy and hassle and appreciate the value of their work and the management fee.

If you do decide to use a management company, be sure to interview several companies and ask them about their services such as:

  • average occupancy rate for units and specifically condos in the same resort if they have

  • response times to issues (do they have someone nearby if emergency?)

  • cost and what does it provide

  • what are extra expenses that aren't part of the % fee

  • what reporting do they provide and how do they disburse $$? do they pay taxes for you?

  • any testimonials from owners (take these with a grain of salt of course because they'll probably only provide good ones!)

and DO check /find a few of their listings on VRBO and read reviews on units/issues/service

I have created a "Rental and Income Expense" spreadsheet that can help you determine what you cash flow would like based on the variables. (If you would like a copy of this spreadsheet which allows you to see cash flow based on these variables, please email me nancy at residekauai.com or call me . 8 oh 8 - 346 7173)

If you have any other questions or would like help finding and purchasing your dream home or condo on Kauai, please contact me!

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