Relocating to Hawaii during a Permanent Change of Station (PCS) is both exciting and challenging. The idea of living in paradise is appealing, but navigating Hawaii’s real estate market requires careful planning. Property values are high, demand is strong, and the local market operates differently from those on the mainland.
If you’re considering buying a home in Hawaii, it’s important to approach the process with the right strategy. Having been stationed at Schofield Barracks, I’ve seen firsthand the opportunities Hawaii real estate can offer—if you know how to buy wisely. This guide will help you understand the market, the risks, and the benefits of purchasing a home in Hawaii with a VA loan.
Understanding the Hawaii Real Estate Market
Hawaii’s real estate market is unique, and there are two major misconceptions service members often have when considering a home purchase:
- Buying a home in Hawaii is always a guaranteed investment
- Hawaii is too expensive to buy into
Both of these assumptions can be costly mistakes if not approached correctly.
Real estate appreciation is not guaranteed. Many homeowners saw substantial gains from 2019 to 2020, but property values fluctuate. If you buy at the wrong time without a long-term plan, you could face financial losses.
Hawaii’s high costs don’t mean buying isn’t possible. While real estate is expensive, the cost of not buying could be even higher. With the right approach, homeownership can be a valuable long-term investment—especially if you factor in rental income potential.
The Case for Buying a Home in Hawaii
Here’s a real example: We purchased a home in Haleiwa in 2014 for $650,000 and sold it in 2021 for $1,140,000. We also own a multi-family home in Waialua, where rental income covers our mortgage and utilities, allowing us to live near the ocean at no cost.
This lifestyle is possible, but only if you buy with a strategy. If you purchase a move-in-ready home in a declining market, you may struggle to break even when it’s time to sell. However, if you buy a fixer-upper in a good neighborhood, you can increase the value and build equity over time.
Key Considerations for Buying a Home in Hawaii
If you’re thinking about buying a home when you PCS to Hawaii, here are three critical factors to keep in mind:
Have an Exit Strategy
- If you need to sell during a market downturn, you may not make a profit. Plan ahead by evaluating rental options and understanding the financial impact.
Buy Wisely
- Look for homes in good neighborhoods that need minor renovations rather than fully updated properties. This gives you instant equity and increases resale value.
Consider Rental Potential
- A home with a separate rental unit (like an ohana unit or a studio over the garage) can generate income and help offset mortgage costs.
The Reality of Renting Out Your Property
Many service members assume they can rent out their home if they PCS without selling. While this is true, most rental properties in Hawaii operate at a loss unless they have additional rental units.
Without separate rental space, you could lose between $500 and $1,500 per month after factoring in property management fees and Hawaii taxes.
Legal and Tax Considerations for Homeowners
Hawaii has two unique laws that significantly impact property owners:
Short-term vacation rentals are illegal on most of Oahu.
