This is one of the most frequently asked questions we get. Typically, the answer is no, if by “vacation rental” you mean having nightly or weekly rentals. On Oahu, most rentals are limited to a minimum rental period of 30 days. The exceptions to this are homes that are either: (1) in resort-zoned areas, or near these and grandfathered in as short-term rentals, e.g., parts of Waikiki, Ko’olina, Makaha & Kuilima (Turtle Bay); or (2) in possession of a valid Non-Conforming Use Certificate (NUC), as either a TVU or B&B. Please note that new NUCs are not available.

Legal vacation rentals must be registered and have strict requirements for advertising that must be followed. And rentals not falling into the exceptions above may not advertise nightly or weekly rates. Please note that for any rental of less than 6 months in duration, additional taxes apply. On Oahu, rentals under 6 months are subject to not only GET (at 4.5%), which applies to rentals long and short, but additional Transient Accommodation Tax (TAT). The regular rate for TAT is 10.25% and Oahu has add-on "OTAT" for another 3%. These taxes make renting for less than 6 months a much less attractive option than one might initially think.

A CPR is a Condominium Property Regime. A CPR consists of two or more individual condominium ("condo") units. A condo can be a single residential or commercial unit, in a single-level or multi-level building or group of buildings. A condo can also be a detached single-family home. When you see a detached single family home with a Tax Map Key that ends in anything except 4 zeros, you will know it is a condo and part of a CPR.

A CPR is often used to divide a large parcel, for purposes of conveying separate ownership to different parts of the parcel, without going through legal subdivision of the property. Not all parcels are eligible to become a CPR, due to size, zoning and other constraints. CPRs are used especially in cases where subdivision is cost prohibitive or impossible, due to size of lot or access issues.

Every CPR is subject to a Declaration, Bylaws & Condominium Map recorded with the County. These documents will set forth, among other things, which areas on the property are for the exclusive use of a particular condo, and which parts of the property are shared. A condo association is formed by these documents and should have routine meetings of members. There are often monthly or annual fees associated with a CPR, depending upon whether there are any common expenses.

The A-Team is the exclusive representative of the COMPASS Military Division on Oahu. The COMPASS Military Division services the distinctively different and ever changing real estate needs of the Veterans and Active Military members via a national network of highly skilled and specially selected agents. In addition, our Military Division team members possess the Military Relocation Professional (MRP) designation, which provides specialized training for working with servicemembers and veterans, and their families, to find the housing solutions that best suit their needs, and to take full advantage of available benefits and support.

Military Division team members each have more than 10 years servicing this distinct population and have experience with dozens of VA loan transactions, as well. Team Lead, Yvonne Ahearn is also a retired military spouse and Hawaii Regional Director of the COMPASS Military Division.

Most homes in Hawaii are fee simple, though there are a few areas which have many leasehold properties. You will most commonly find leasehold properties among Honolulu condos and when looking at agricultural land. But a few single-family homes are also leasehold.

Fee simple means you own both the land and the improvements (houses, barns, fences, sheds, etc.) on the land.

Leasehold means you have ownership rights in the improvements for the duration of the lease, and perhaps, longer if you personally constructed the improvements, but you do not own the underlying land. At the end of the lease, you forfeit the land and sometimes (e.g., with a condo), all ownership rights to the improvements, as well, if the lease is not extended. Leasehold purchase are often cash, unless the time remaining on the lease is acceptable to the lender. Usually 20+ years. Remember, if it seems too good to be true, it probably is.

Dual agency is where one real estate brokerage represents both the buyer and the seller in a transaction. This can be with either two different agents at the same company, or the same agent, working for both the buyer and the seller. Dual agency is important to understand as it impacts a realtors' duties to our clients. When a broker represents a client, the client is owed the fiduciary duties of loyalty, confidentiality, care, accounting, and full disclosure.

Dual agency presents a conflict of interest because the seller and buyer in a transaction have competing interests. With dual agency, full disclosure and confidentiality cannot co-exist. The client retains the right to confidentiality but loses the right to full disclosure. Dual agency is legal in Hawaii but must be disclosed to the parties and agreed in writing.

There are other conflicts of interest which may arise in real estate that are sometimes lumped in with, but not technically, actual dual agency. These will include when a brokerage represents multiple buyers offering on the same property and when a brokerage represents different sellers of similar homes in a similar area, where they are competing for the same buyers. Basically, a conflict occurs whenever an agent has competing interests or loyalties which conflict with the interests of a client. All conflicts of interest should be disclosed and agreed to in writing by a client.

When looking to purchase a home on Oahu, buyers will often see properties incorrectly advertised as having an “Ohana Unit” or “ADU.” More often than not, the property will not truly have a legal Ohana Unit or an ADU but will merely have a portion of the property segmented off, sometimes with its own full kitchen, for potential rental. These can be creatively referred to as “NOHanas,” i.e., NO-OHANA.” It is very important to understand the differences between the types of rentals a property may have, and the rules applying to each. Here is a summary:

Ohana Units

An Ohana Unit is a legally permitted accessory dwelling unit (“dwelling” meaning it may have an enclosed sleeping area, bathroom, and legal kitchen), on a single-family zoned parcel, which is attached to a main dwelling (unless grandfathered as detached), and which is in an Ohana-zoned area of Oahu (meeting zoning, wastewater & roadway standards). An Ohana can be rented but is not intended to be rented to the general public, only to family members (persons related by blood, marriage, or adoption) of the owners living in the main dwelling. Ohanas may not be converted to a Condominium Property Regime (“CPR”) or sold separately from the main dwelling unit. New Ohana permits are still possible in some areas of Oahu but not in others because there is not adequate wastewater capacity for new units.

ADU

An ADU is a legally permitted “accessory dwelling unit”, which can be attached or detached from a main dwelling, so long as it has no connecting interior elements, and which meets other basic requirements, including no restrictive covenants on the property. New ADUs have minimum lot size and maximum building size restrictions, and ADUs must meet off-street parking and waste-water requirements. An ADU can be rented out to the general public for periods of 6 months or more. An owner or manager of the ADU unit must also live on the premises. ADUs are allowed to have separate utilities from the main dwelling and, like Ohanas, may not be CPR-ed or sold separately from the main dwelling.

NOHanas - Other Rentals, With & Without Kitchens

Renting out separate parts of your single-family zoned property, without an ADU or Ohana permit, is not necessarily illegal. It is generally accepted as permissible to rent out a room or area in a single-family home or accessory building to anyone, a roommate or guest, so long as the rental is for a minimum of 30 days in duration (or other greater period as current zoning law or AOAO rules state).

It is, however, against the law to have more than one full kitchen on a single-family zoned property, if it is not a permitted Ohana or ADU (or a grandfathered legal-nonconforming dwelling). Wet bars, with refrigerator and sink, may be added to a structure using the building permit process, but adding a cooking element (including a microwave or hot plate), making it a full kitchen, is not legal even with a wet-bar permit. Many rentals on Oahu do not meet the requirements for a separate kitchen and would be considered illegal because of the full kitchen or an unpermitted wet bar.

It is important to understand the difference between legal Ohanas, ADUs and other types of rentals (“NOHanas”), when selling a home, because a seller would never want to misrepresent what is being sold. Also, there is more value in a legally permitted secondary dwelling than in a rental area that is separated with an illegality. Buyers should certainly know what they are buying and if the kitchen (or wet bar) is permitted or not, and how they may use and to who they may legally rent their property. Illegal kitchens (and other illegal improvements) are subject to removal by the DPP and associated fines if they are reported by a tenant or neighbor.

The cost of Hawaii condo hurricane and property insurance has risen dramatically, in some cases, up to 1000%, according to Insurance Business Magazine. These market conditions have been attributed to Hawaii’s small insurance market (only 3 master policy carriers), rising building material costs, global reinsurance markets, and Hawaii’s unique risk profile, highlighted during the recent Maui wildfires.

Due to the cost increases, it is estimated that near 400 condominium buildings on Oahu no longer have 100% replacement value hurricane insurance, with many at around 20-30%. The prevalence of underinsured condos has created challenges for lenders and potential buyers, because many lenders will not loan on these buildings.

Condominium associations are in some cases, leaving buildings underinsured and in others, raising AOAO fees to provide full insurance. This is impacting both the number of sales and pricing of Oahu condominiums.

On August 7, Governor Josh Green, M.D., signed an emergency proclamation to help stabilize Hawai‘i’s condominium insurance market, providing additional options for condo associations to purchase insurance. A Joint Task Force will monitor the market, implement short-term solutions, and recommend changes, reflecting a commitment to safeguarding the interests of Hawai‘i’s communities in the face of global insurance challenges.

We are solutions-driven Oahu experts. Each of us can help you sell your home with less hassle, for a higher price, and with less time on market. Often working in pairs, to ensure full & consistent coverage, we provide exceptional service to include extensive pre-listing preparation and state of the art marketing, to help your home shine above the rest. Our services may include clean-out and renovation coordination, and staging services.

We provide a personal touch and in-person showings. This helps to ensure buyers understand your home and that you understand your buyers, minimizing issues with the sale.

Importantly, we also provide seasoned real estate guidance and spot-on referrals for all complex real estate issues, including disclosures, title, permitting, easements, encroachments, and more, to ensure a smooth and successful transaction.

All the A-Team Oahu realtors have lived on Oahu for over 15 years and sold real estate for more than 10-15 years, for combined breadth of over 75 years.

BOTTOM LINE: We know real estate and we know Oahu.

Disclosure laws require that a seller disclose material facts that they know about their home, which materially affect the value of the home to a reasonable person. Examples would include flooding, settling, damage to the structure or improvements, unpermitted areas, and many other items. The disclosure form also includes items that affect the area, such as unusual noise, smells, and hazards. The seller is not required to do research, but must disclose items within their knowledge or control.

What if someone passed away in the home? We believe this should be disclosed, as it can be important to some buyers, and the failure to disclose could cause future problems.

The A-Team Oahu works closely with sellers to help minimize or prevent issues which could hurt the sale or cause future issues, to ensure that the process is a win-win for all. There are certain words in real estate that merit repetition. Everyone knows “Location, Location, Location” …. At the A Team Oahu, we also emphasize … “Disclose, Disclose, Disclose.”

Compass Concierge provides qualifying home sellers with an interest free loan for home improvements and other items necessary to sell a home for the highest price. Covered costs can include new flooring, paint, appliances, landscaping, staging, storage, cleaning, etc.

The application is quick and easy and will not affect credit. The loan is repaid through escrow at closing. Contact your A Team Oahu broker with questions about how Compass Concierge can help you sell your home.

The easiest ways to maximize the value of your home are:

(1) Properly prepare your home for listing. We can help you get your home prepared for sale using Compass Concierge, an interest free loan from Compass, repaid only at closing. This loan can be used for repairs, improvements, landscaping, staging, storage, cleaning, and almost anything else you need to get your home ready to sell at the highest price possible.

(2) Use great, professional photography and marketing. Photos are technically the first showing of your home and will drive people to make an appointment to see it in person. You need to portray your home at its best to get buyers in.

(3) Properly price your home. Your home should be priced to be attractive to as many buyers as possible, to create competition, at or just under the market value. Especially, in a changing market, overpricing can lead to a lower price than if the home had been priced correctly initially. Call an A-Team agent to learn more about Compass Concierge, great marketing, and selling for the best price possible.

It is important to comply with the law when doing any renovation. However, permits are generally not required for certain items, such as painting, cabinets, counters, and flooring. Other exceptions apply. Permits generally ARE required for all other improvements and alterations, including repairs above $5000, or repairs involving electric, over $500, or plumbing, over $1,000, in a year. And permits are always required for additions, such a new bathroom, a wet bar, and any other alteration, enlargement or demolition of your home from the approved building plans.

While you may still sell your house with “unpermitted” areas, it is important to know that the value of unpermitted additions may not be included in the valuation of your home by an appraiser. This has the potential to impact your sale or give you less in price than your house would be worth had you permitted your addition. In addition, with unpermitted improvements, you will always run the risk that the DPP will require an after-the-fact permit or require you to remove the unpermitted improvement. This can also be costly. This risk is passed on to anyone purchasing the home from you.

HARPTA is not a “tax” as some people mistakenly state, but it is a “withholding” of potential taxes from the proceeds of a sale. HARPTA does not apply to Hawaii residents.

However, many out-of-state Sellers are surprised to find out that money for HARPTA will be withheld from their sale proceeds. This can be a substantial sum because, though it is intended to cover capital gains taxes owed to the State, the withholding is based on the sale price (at a rate of 7.25%) and not the actual gain. This means that some or all HARPTA monies may be refunded to a Seller at some point after the sale closes, if the amount collected exceeds the actual capital gain taxes owed.

Some out of state Sellers are not subject to HARPTA because they qualify for an exception. And example, is where there is no gain, and it can be documented. There are others. Please consult with your tax advisor for more information.

The 1031 Exchange (or “1031X”) process, named after Section 1031 of the Internal Revenue Code, allows real estate investors to defer paying capital gains taxes on the sale of a property if the proceeds are reinvested in a similar property. In some cases, capital gains can be later eliminated. Here's a simplified overview of the process:

Qualified Intermediary: The 1031X process begins with the decision to sell an investment property and the identification of a Qualified Intermediary (QI) to facilitate the exchange. The QI holds the funds from the sale of the relinquished property and helps to ensure that the exchange meets the IRS guidelines.

Sale of Relinquished Property: The relinquished property must have been held for investment or used in a trade or business, and the intention to complete a 1031X must be stated, with a QI, before the sale is closed. Upon closing, the sale funds will be held by the QI.

Identification Period: The investor then has 45 calendar days after the sale of the relinquished property to identify potential replacement properties. The identification must be made in writing and submitted to the QI.

Like-Kind Properties: The replacement property must be of a "like-kind" to the relinquished property sold, which is broadly defined. It also must be of an equal or greater value, to avoid paying taxes on the difference, called the “Boot.”

Purchase of Replacement Property: The investor then has 180 calendar days from the sale of the relinquished property to complete the purchase of one or more of the replacement properties previously identified.

Tax Deferral: If these steps and other IRS requirements are properly followed, an investor can defer paying capital gains taxes on the sale of the relinquished property. The taxes will be deferred until a future taxable event occurs, such as the sale of the replacement property without another 1031X. It is important to note that, in some cases, capital gains taxes can be completely eliminated, depending upon later characterization of the replacement property. This can be another substantial benefit of doing a 1031X.

It's important for investors to work closely with experienced real estate brokers, tax advisors, legal counsel, and qualified intermediaries to ensure compliance with IRS regulations and to maximize the benefits of a 1031 Exchange. The A-Team Oahu have successfully helped multiple investors continue to grow and diversify their investment portfolios using 1031 Exchanges. Please reach out if you are thinking of making a move with your investment property.

Owning a home has many advantages. When renting, you are essentially paying someone else’s mortgage versus paying your own. While you do pay interest when you finance a home purchase, a percentage of each mortgage payment is a payment of equity to yourself, and that payment gets larger over time.

In addition to the equity you gain, there can also be appreciation gains, over time, on the home. On Oahu, appreciation has averaged at around 4-5% a year for the past 30 years. Tax savings are also important, mortgage interest is currently deductible within certain limits. Consult with your A-Team Oahu broker and an accountant to find the best buying solution in your situation.

No. Depending upon various factors, including the type and price of the home, type of loan (VA, FHA, USDA, etc.,) and your credit score, you may be eligible for loans with 0-20% down. We can connect you with a lender who can provide you with the best option. In many cases, you can also avoid PMI (private mortgage insurance), based on loan type, or when using a purchase-money second mortgage. Even if you have funds available for a large down payment, you may want to explore these options, to better leverage your cash. Contact the A-Team Oahu to help find a solution right for you.

Many people can. Options include using funds from an equity line from the current home as a down payment on the new home, or a cash-out refinance. In either case, a buyer may also consider keeping the current home as a rental, if finances allow, or selling after the purchase of the new home. Now that the market has cooled a bit, well-crafted offers, contingent upon the sale of the current home, are also becoming more attractive to sellers. Our A Team Oahu brokers can work with you and recommend a great lender to consider all available options, including keeping your current home.

VA Loans may be assumed by both veterans and non-veterans. However, if a non-veteran assumes a VA loan, the veteran will have to give up the portion of his or her eligibility used on the loan until that loan is paid off. Many veterans would not be willing to do this type of transaction.

If you are a veteran looking to purchase a home, though, you may be able to transfer unused eligibility to cover an existing VA loan and assume that loan at a potentially much lower rate than the market interest rate. It’s worth looking into if you’re a veteran, or even if not, because the savings can be immense.

If a Seller is willing, there are several ways a Seller help a Buyer finance a home purchase.

One way is through an Agreement of Sale. This is usually where a Buyer takes possession of the property and makes payments to the Seller, but the Sellers’ mortgage remains on the property to be paid off over time using funds from the buyer. With an Agreement of Sale, legal title to the property remains with the Seller and the Buyer receives equitable title. Permission from the Seller’s lender should usually be sought, but it is often denied. The Seller remains responsible for the mortgage.

Another type of Seller financing is through a Purchase Money Mortgage. This is where the Seller acts like a lender and personally finances some or all of the purchase. If it’s a second mortgage, consent will usually be needed from the Buyer’s first lender. Title passes to the Buyer at closing and the Seller has the right to foreclose if the Buyer defaults.

Both approaches can get a bit complicated and have certain associated risks to each party. Call your A-Team Oahu agent for more details on either of these approaches.

Yes, there is no limit on how many times you may use your entitlement.

In Hawaii, the conforming loan limit is $1,149,825. You can have multiple VA loans up to this limit, with no down payment on any of them. You can also exceed this loan limit, if you have any eligibility left.

For example, you bought a home in FLA in 2010, as your primary residence, and used $350K of your eligibility there. You bought a home in San Diego in 2015, again, as your primary residence,and used $650K of your eligibility there. You have $149,825 of your eligibility left in Hawaii. So then, let’s say you want to purchase a condo for $450K on Oahu to live in now. You can use $149,825 of your eligibility with no down payment. For the remaining balance of purchase price, you will have to come in with 25% down payment (~$75K).

And there’s another great benefit in using your VA loan. If you have your full eligibility available, you can purchase a home for any amount, even OVER the conforming amount, with NO DOWN PAYMENT at all, so long as you qualify for the payment on the loan.

J-1 refers to the section of the standard Hawaii Association of Realtors’ PurchaseContract that governs a Buyer’s due diligence period for purchasing a home. The duration of the J-1 period is negotiable, but typically from 7-15 days.

During J-1, a Buyer can inspect the entire home, including its roof, foundation, appliances, and anything else about the structure of the home. This is also an opportunity to inspect the grounds, the local area, meet the neighbors, and to test for mold, asbestos, lead, or anything else in the home. A Buyer uses this period to explore everything and anything about the property and to ask questions, as well.

If a Buyer does not like the results of their due diligence on the Property, they may cancel the transaction before the end of the J-1 period. It is important to note that while there can be some overlap, the Seller’s Disclosures, Termite Inspection Report, Condo Documents or CCRs, Title Report, Rental Documents (if any) and Survey are all separate contingencies in the Purchase Contract which may have different timelines.

Termites are a very common pest in Hawaii and most homes in Hawaii will have termites at one time or another. Termites will eat the wood in your home and, over time, can severely damage or destroy a home. Drywood termites are less serious than ground termites because they do not destroy a home as quickly, but homeowners should routinely inspect their homes and treat both kinds of termites, as part of good home maintenance.

If termites are discovered during a home purchase, the seller will usually be obligated to treat the property for termites. Treatment may consist of spot treatment with pesticide, tent fumigation, or heat treatment by a licensed termite operator.

Escrow is a service engaged by the buyer and seller in a transaction, to administer certain parts of the purchase contract, particularly the procurement of title insurance, the ordering, signing and recording, of the deed and other legal documents, and the tracking, collection of, and disbursements of deposited funds.

Escrow is not a party to the purchase contract and is a neutral third party. A contract for escrow services is independent from the purchase contract.

Technically, escrow service is not essential to the sale of property and the buyer and seller could opt out of using an escrow service, though this is uncommon, and in my opinion, not wise. Some states, other than Hawaii, use attorneys instead of escrow officers. However, in Hawaii, it is most common for buyers and sellers to use escrow services.

HARPTA is not a “tax” as some people mistakenly state, but it is a “withholding” of potential taxes from the proceeds of a sale. HARPTA does not apply to Hawaii residents.

However, many out-of-state Sellers are surprised to find out that money for HARPTA will be withheld from their sale proceeds. This can be a substantial sum because, though it is intended to cover capital gains taxes owed to the State, the withholding is based on the sale price (at a rate of 7.25%) and not the actual gain. This means that some or all HARPTA monies may be refunded to a Seller at some point after the sale closes, if the amount collected exceeds the actual capital gain taxes owed.

Some out of state Sellers are not subject to HARPTA because they qualify for an exception. And example, is where there is no gain, and it can be documented. There are others. Please consult with your tax advisor for more information.

Different from some other states, the standard HAR Purchase Contract does not make a home sale contingent upon the home appraising for or above the Sale Price. The contract is, however, typically still contingent upon the buyer qualifying for the loan.

The difference is important because if a buyer still qualifies for the loan by having enough cash to make up the difference required by the lender for the appraisal shortfall, or because there was already enough cash down agreed in the Purchase Contract, the buyer cannot cancel the Purchase Contract or renegotiate the sale price due to a low appraisal.

An exception is with a VA purchase. The VA Addendum does make the sale contingenct upon appraisal, however, the Veteran does have the privilege and choice to remove this contingency and proceed with the sale.

Often, in periods where there is low home inventory and buyers are competing for homes by offering above the sale price, buyers will use an “appraisal clause” in their offers. This clause usually states that the buyer will contribute up to a certain amount of extra cash to make up an appraisal shortfall. Beyond that, cash provided is negotiable and could also result in a purchase price reduction or sale cancellation, if the buyer does not qualify. How these clauses are worded and used is very case-specific, depending upon the circumstances.