Owning a Vacation Rental Condo on Maui
Article by Kean Salzer
It's tempting. Buying a Maui condo as an investment or maybe your retirement home and renting it out as a vacation rental seems like a great idea. But there are many things to consider going-in so you don't end up with a boondoggle instead of a home run. First of all, a one bedroom oceanfront or ocean-view condo on Maui is going to cost you around half a million, and assuming you have a hundred thousand to put down, that leaves you with a mortgage payment of around $2500 a month. But that's not all you'll be paying out.
Every condo is in a building association - usually called an A.O.A.O - basically an owner's association set up to keep the building legal and tax abiding. This organization meets regularly and sets a maintenance fee to pay for things like landscaping, pool repair, barbecue repair, roof repair, septic repair...you begin to see the picture. Plus, these volunteer organizations can be a nightmare if the wrong people are in power. So, on top of your mortgage you can figure around four hundred dollars a month for maintenance fees, and that's if you're lucky. You also have property tax and insurance. By the time you add up all your monthly obligations you can be staring at a fixed cost of $3200 or more per month.
Now, before you buy your condo, you have to find out if your association has voted to allow condos in the building to be rented as vacation rentals - not all of them do. And you have to find out if the local authorities recognize your building as one that is a legal vacation rental. Maui County is cracking down on illegal vacation rentals and you could get in a bind if you don't do your homework before making an initial offer.
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