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Island Property—Is it a Good Investment?

Volume XXI, Issue 10

Interior of a property for sale on Maui, Hawaii

While I was vacationing in Maui, I had the opportunity of visiting two properties for sale. My daughter is campaigning for making an investment on the island—a property that we can enjoy, but also generate revenue while we’re not using it.

It’s the same investment scenario a lot of our clients seek when considering an investment in France. “The shoe is now on the other foot.”

The rental laws in Maui are just as restrictive as they are in France, maybe even more so. In France, a short-term rental is considered less than 30 days. In Maui, the short-term rental laws define it as any home or condo accommodation with rental periods of less than 180 days! Airbnb recommends that…(source):

“If you’re interested in a Maui Vacation Home and/or hosting your home as a Maui Airbnb while you’re away, then you should focus your home search to Resort Zoned areas of Maui County. Any vacation rental on Maui outside of Resort Zones will be required to apply for one of two permit types:

Short-Term Rental Home Permit: Operating under an STRH permit would allow you to operate an Airbnb in Maui without requiring the owner to live on the same homesite of the rental.

As of January 7, 2022 Maui County has issued a 2-year moratorium on any new short-term rental home permits. This moratorium does not include applications for Bed and Breakfast permits, nor does it prohibit the operation of previously approved Vacation Rental Homes on Maui.

Bed & Breakfast Permit: This permit type allows you to operate your Airbnb or VRBO in Maui so long as the home and owner are deemed eligible under the Maui Vacation Rental rules. The most notable difference between the Maui B&B permit and the STRH permit is that B&B operators are required to be Maui residents and must live on the same home site as the vacation rental unit.”

Maui County has legislation to regulate vacation rentals of single-family homes and agriculturally zoned properties. The application/licensing process is lengthy and the county does not approve all applications. If there are multiple short-term rental homes in a neighborhood, new applications are subject to a formal review and public hearing by the Maui Planning Commission. (Sound familiar?)

The short-term rental rules include a five-year ownership requirement to be eligible to apply for a short-term rental permit. Hmm…that means we cannot apply until we have owned the home for five years. The short-term rental permits do not transfer with the sale of the property, either. New owners must wait five years and then apply for a new permit! Accessory dwellings, also known as “ohanas” or cottages, may not be rented on a short-term basis.

I won’t go into more detail as there are lots of sites that do explain it fully, but one thing is for sure—there are ways around the laws, as most people are likely to find, to make their investments worthwhile. One must be clever to make it work, just like in France(!)…and if willing to take the risks.

The agent we worked with, Sally Aldrin, with Coldwell Banker Island Properties, is a friend of my daughter’s. She showed us the properties and provided me with information on the market from the Realtors Association of Maui, Inc. (download the PDF).

According to this report, the median sales price of single family homes increased 0.4 percent to $1,162,500, but decreased 7.9 percent to $657,500 for condominiums year to date (as of January 2023). But over time, has gradually increased. According to Redfin, in January 2023, Maui County home prices were up 4.3 percent compared to last year, selling for a median price of $913,000K. On average, homes in Maui County sell after 65 days on the market compared to 68 days last year. There were 112 homes sold in January this year, down from 237 last year. Just like in France, the reports can vary, but basically, home sales are down, likely due to the increase in borrowing rates.

Graph showing the median sales price by month on Maui, Hawaii

I spoke with Brian Dunhill, of Dunhill Financial, about our possible project. His March newsletter talks all about lending rates and what the predictions are for the future. We would be looking at rates of about 6.45% to 7.08%:

“On Tuesday, March 07, 2023, the current average interest rate for the benchmark 30-year fixed mortgage is 7.08%, up 7 basis points over the last seven days. If you’re looking to refinance your current loan, today’s national average 30-year refinance interest rate is 7.06%, decreasing 7 basis points since the same time last week. Meanwhile, the national 15-year fixed refinance interest rate is 6.33%, falling 3 basis points since the same time last week.”

Rates in the U.S. are a lot higher than rates in France. According to ceicdata.com, “The France Bank Lending Rate was reported at 3.13% in December 2022. This records an increase from the previous number of 3.027% for November 2022.” But, getting a mortgage in France is much more of a challenge, especially for self-employed Americans over the age of 60 (like me)!

Chart showing the long-term interest rates for France

Brian suggested waiting a bit till the rates come down, as possibly so will the price of property on the island. It was a funny conversation, as he was giving me the same advice I might give our clients wanting to invest in France!

The bottom line (for me) is if there is enough appreciation in the future to make the investment worthwhile, especially when considering the carrying costs (mortgage, taxes, utilities, etc.) and if rental revenue can be generated without too much risk. If the rental revenues cover the carrying costs, then we’d be “home free”—at least breaking even while ultimately building equity.

Visiting the properties was lots of fun!

One was a three-bedroom, two-bath house: “Poised in a prime location in Haiku, on the North Shore of Maui. This beautifully remodeled three-bedroom two bath home sits on almost an acre of peaceful paradise. Behind the private gate, mature landscape surrounds the perfectly laid out residence and two brand-new farm storage buildings. Sit back and take in the wonderful views from the spacious front porch while sipping on coconuts from your property. Enjoy the flowering trees and colorful low maintenance landscaping. The primary has a separate entrance, and the home provides a sizable carport. This property includes plans for a custom barn designed by renowned architect Linda Lange. The two-story barn will have stunning ocean views from the second-story balcony once built. Convenient location close to Haiku town, beautiful waterfalls, world-class surf and windsurfing at Ho’okipa beach. Enjoy the luxury of tranquility in the country while being only 20 minutes from Kahului airport and 10 minutes from Paia. This property supports the ideal Maui lifestyle with easy access to everything.”

Maui property #1

Maui property #1

Maui property #1

Maui property #1

Maui property #1

Maui property #1

Maui property #1

Maui property #1

Maui property #1

Maui property #1

Visit this site for more information and photos.

The second property we visited was a four-bedroom/3.5 bathroom house: “Welcome to your quintessential plantation-style home conveniently located in the heart of Makawao Town. Built in 1947 and completely remodeled in 2017, enjoy the old Hawaii-style charm with the updated conveniences of new appliances, new luxury vinyl plank flooring, blinds, and a freshly painted interior. This home offers a rare investment property opportunity to live in the main house and to rent out the attached studio. Three “lanai’s” (porches) with Trex decking provide private outdoor living space, and the zero maintenance Syn Lawn front yard is fenced-in and surrounded by a hibiscus privacy hedge. A covered carport and two separate driveways provide ample parking. An additional locked storage room and a separate laundry room are attached to the carport. 34 Ai Street is ideally located just moments from boutique shops, cafes, restaurants, art galleries, schools, and the Eddie Tam recreation fields in Makawao.

Maui property #2

Maui property #2

Maui property #2

Maui property #2

Maui property #2

Maui property #2

Maui property #2

Visit this site for more information and photos.

Note: for more information about rental regulations in Maui, visit the Maui County website.

Regardless of whether you make an investment in U.S. real estate or French real estate, I still firmly believe it’s one of the best investments you can make. It’s real. You can touch and feel it. You can use and enjoy it. And you have more control over the value than the standard stockholders do. Our clients have certainly enjoyed their French home ownership, and I suspect that we’ll enjoy ours in Maui, too…should that be what we decide to do!

A bientôt,

Adrian Leeds on Maui in HawaiiAdrian Leeds
Adrian Leeds Group®

P.S. We host or speak at a number of events each year. To see what we’re up to next, please see or Events page on our website.



  1. J Guynn on March 9, 2023 at 2:37 pm

    I enjoy the education you put forth in your newsletters re France and thank you for sharing, but I have to say that I’m strongly against promotion of purchasing rental property on Maui. Having spent the past 25+ years there on vacation, it is the island charm that brings us there. As with every tourist destination, visitors truly believe that by owning a part of it, it will always remain that way. Wrong, it only causes the locals to adjust to the increasing demand of newbies with money. They are priced out of the market. Please educate yourselves by talking and listening to the locals before promoting this to the world. Maui is currently having to construct affordable housing on the vacant land that we love to look at or moving out of the state. During Covid you could see & hear their concern about overcrowding bc the visitors weren’t there. Stay in a hotel and let that be your stewardship to the land & Mauians please.

  2. Choosie Soosie on March 9, 2023 at 4:42 pm

    After twenty years of visiting Maui twice a year on vacation, in 2000 I bought a house for my retirement. I sold it 12 years later and never looked back. I now own an apartment in Paris where I live half-time.

    First, Maui is a difficult place to live. You have said that it is difficult to make friends with French people in France, which I never found never to be true. I have many more friends (all French) in France than in California, where I have lived most of my life. Other than my former Maui neighbors (who are friends for life), there were few opportunities to make friends in Maui. Most of them were just like me — folks from the mainland who thought they would retire there. Since there is not much going on on Maui, there is not much to bring people together.

    Second, owning a home there is extremely demanding and expensive. I had a pool guy, a gardener, a handyman, and a variety of regular service providers. It’s the tropics. Things break, they break down, and if it is a thing that breaks, you might wait six months for a part to be delivered, and another two months for the repair person to show up. It is a constant effort. And if the price of fuel goes up, the cost of everything on Maui goes up, since everything there comes from someplace else. When you live on Maui you learn when the container ships arrive and how long the products take to get to the store and be put on the shelf. Then you stock up until the next one arrives.

    Third, the real estate market is highly volatile. I bought in 2000 and sold in 2012. I would have sold in 2008 but the market disappeared during the economic crisis. I was able to weather the storm, but about 30% of the owners in my neighborhood could not. I was surrounded by homes in foreclosure, and owners in bankruptcy. These foreclosed houses were usually short-term rentals – when the tourists stopped coming, the loss of income took its toll. The market did not just cool, it disappeared entirely. A lot of people lost everything they had. When I finally could sell, the real estate agent made more than I did, but I was lucky — most of the people selling then lost huge amounts of money.

    This is not the only time that real estate crashed in Maui, just the most recent. For most people it lasted over 6 years.

    The current prices in Maui are in a post-covid bubble. Remember: Maui has no industry or business base at all. The only business is tourism. Climate change has already raised temperatures about 3 degrees. Our former neighbors are considering leaving because it is now too hot. It won’t be too long before the tourists think so too. One former neighbor lost all of his landscaping in a recent storm when every single plant and tree was washing downhill to another’s neighbor’s pool. It may be too much for both of them to start over. Real estate appreciation is not a given as it is in Paris.

    Or the cost of jet fuel will go up, and with it the cost of a Hawaii vacation. When the tourists stop coming, the islands are in economic crisis.

    Fourth, realize that other than being beautiful, there is nothing to keep most people on Maui. It is like a really handsome boyfriend who is dumb as a post. Eventually you will want to do more than sit on the beach. After you have visited every tourist site ten times, you will find there is nothing left to do.

    Fifth, Maui is on track to be developed almost shore to shore. Take a look at Maui’s development plans, if you can find them. I attended a meeting where a local property owner informed the planning director that over 40,000 housing permits had already been provisionally approved in our area — a fact the director of planning did not know. Along with those 40,000 homes will come highways, traffic lights and big box stores. Will Maui still be Maui when the population doubles?

    Sixth, renting to vacationers is not welcomed by neighbors. My property was bordered by seven others, of which 5 were illegal sort term rentals. Tourists renting vacation homes in Maui are paying a lot of money and they want to party. Owners renting to them are making a lot of money and they do not want to disappoint their customers. Visitors want to enjoy themselves, and they make unending noise. Children arriving from the mainland enjoy the pool and the yard at 4 AM. Adults party until 3 AM. Owners do not want to control their tenants who might not come back, or trash them on social media.

    My home became unlivable thanks to the illegal vacationers. I sold at the moment the illegal rentals were shut down. The current owners of my house are in constant battle with the vacationers at the now legal vacation rentals next door. In my case, the owners violating the law were clever in renting their properties, but they couldn’t control their noisy guests at a distance. I eventually had to be cleverer and make it my full-time job to get them shut down.

    If you love Maui and want to live in your home there, it may be a good choice, but don’t count on appreciation. If you are buying a home based on its short-term rental value, it’s a mistake. Maui real estate agents will tell you want you want to hear; it’s big business and feeds the illusion that it’s easy and the market always goes up. (I notice, for example, that your chart begins in 2010. Go back to 1990 and see what that looks like.) They also minimize the work and costs that go into maintaining a home there, much less the huge costs and risks of running even a legal vacation rental.

    • Adrian Leeds Group on April 4, 2023 at 6:56 am

      Great comments. Thank you for sharing.

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