Waikiki Real Estate

View of Waikiki Beach area hotels. Halekulani ...

Waikiki condos for sale, which consists primarily of condominiums with a fewer number of single-family homes, saw signs of recovery and increased strength in the month of September. An October 6, 2010 article from KITV News noted that “The median prices for single-family homes sold on Oahu in September dipped while the median price for condominiums climbed, according to statistics released by the Honolulu Board of Realtors. The median price for single-family homes fell from $640,000 in August to $622,450 in September. That is still a 2.9 percent increase over the price in September 2009. The median price for condominiums climbed from $305,000 in August to $335,000 in September. That is 8.2 percent higher than the same time last year. The number of units sold last month climbed for both condos and homes. There were 274 single-family homes sold in September compared to 229 in August and 253 in September 2009. Condominium sales inched up five units to 298 last month compared to August. However, that is down compared to September 2009, when 354 were sold. The statistics do not factor in new home sales.”

An October 6, 2010 article from Hawaii News Now noted that properties are spending less time on the market, possibly due to low mortgage rates. This means that Waikiki homes for sale and condos for sale are passing through the market more quickly than in months past. The report by Howard Dicus stated that “Without much change in sales volume or price, Honolulu home sales are happening in an average 32 days, compared to 54 days at the same time a year ago. Realtors on Oahu closed on 274 home sales in September for a median price of $622,450, down slightly from August but up from the median of $605,000 a year ago at the same time, the Honolulu Board of Realtors reported Wednesday. They closed on 298 condo sales for a median price of $335,000, compared to 354 sales at $309,500 a year earlier…More than 400 new listings for Oahu homes came on the market in September, but there are more than 300 pending sales already this month, suggesting the market is still fast-moving. A key factor in the market is unusually low mortgage rates. As of Wednesday, First Hawaiian Bank was quoting 4.16% APR for a 30-year fixed-rate mortgage with 1.5 points paid up front, while Bank of Hawaii quoted 4.01% with 1.625 points.”

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Indirect Hawaii Real Estate Investments

Old John T. Waterhouse, Jr., home, Wyllie St.,...
Image by Joel Abroad via Flickr

If you don’t want the inconvenience of directly supervising your real estate investments, you can still enjoy the profits from real estate with a Real Estate Investment Trust (REIT).

Honolulu Real Estate Investment Trusts are designed to give small investors the opportunity to participate in professionally-managed real estate ventures with limited personal liability. The typical direct real estate investor has to provide a personal guarantee to obtain financing, and one bad decision can have devastating financial consequences. REITs are publicly traded, and risk is limited to the amount invested. Furthermore, shares in a REIT are more liquid than a house or building. You can sell your shares at market value any time. And because REITs are required to pay out profits to investors, they are an excellent source of retirement income.

There are several different types of REITs. Each has its own advantages.

Residential REITs invest in residential real estate—usually apartment complexes. The biggest risk is an oversaturated market. You can enjoy rental profits without being bothered by tenant problems or threatened with financial liability if a tenant falls down the stairs.

Retail REITs build and operate shopping centers and malls. They typically have projects in multiple states, so risks of localized economic downturns are minimized.

Office and industrial REITs invest in commercial real estate. Long-term leases make this an extremely stable alternative, especially in periods of economic decline.

Health care REITS build, buy, or lease hospitals, medical offices, nursing homes, assisted living facilities. This is one area that is relatively unaffected by economic downturns. However, this sector is highly dependent upon government health care programs, so health insurance reforms may have an impact on these investments.

Self-storage REITs are another investment category that is somewhat recession proof. The majority of tenants are corporate or business clients.

Hotel and resort REITs are among the most responsive to economic fluctuations in the immediate location of the investments. Both market saturation and current economic climate can affect profits in this area.

Mortgage REITs do not directly own or manage properties. Instead, they finance mortgages secured by real estate.

Hybrid REITS have a portfolio that includes both mortgages and direct ownership of real property.

REITs offer an excellent way for the small investor to take advantage of the stability and profitability of real estate. One can get started with just a few thousand dollars, and returns average about 8% per year. REITs can be an excellent way to diversify an investment portfolio, as their performance doesn’t always follow stock and bond trends.

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