Kona Kohala Blog

For first time home buyers and for those looking for a retirement home that's not going to take up their time, condos may be the answer.  The bulk of our condos for sale in North Kona and South Kohala are under $300,000 with many under $200,000.  The limiting factor for those interested in these less expensive properties is often the monthly maintenance fees.  These fees are quite high compared to most mainland complexes.  The main reason for this is the insurance costs.  Hawaii is in the same risk category as Florida; this is hardly fair since the number of hurricanes to hit Hawaii is minuscule compared to Florida but still a concern to large insurance companies.

The bulk of the monthly maintenance fees in Hawaii is the cost of replacement insurance on the condo complex which is covered by the associations master policy.  The good news for owners is that they are only have to carry insurance on their furnishings and other contents and liability if the condo is being used as a rental property.  For most of those who own a condo as an investment and a rental, both the contents insurance and the liability insurance can be added to their primary home policy for the cost of a rider.

Maintenance fees are known as the second mortgage that never goes away and is of concern especially for those wishing condo life in retirement with a fixed income.  Since lenders count the maintenance fee as a debit on a loan application, a large fee can reduce the amount of money that can be borrowed for the purchase of the condo.  As an example, there are some condos in North Kona, especially in the Kailua Kona area that have fee close to $1,000/month.  When you add that to the monthly payment on a mortgage you can see that it can get very expensive very fast.

So when looking for a more reasonable condo for retirement keeping that maintenance fee down becomes more important since it's a part of your overall monthly bills.  Fortunately there are also excellent condos with maintenance fees in the low to mid $300's per month making them much more affordable.

If you're considering a condo as an investment property, check with your financial advisor or tax consultant to find out what expenses can be tax deductions.  We're seeing so many people planning two to three years ahead right now for their retirement.  Some are buying rental properties that can generate income between now and the time they actually retire.  There are some good tax benefits in doing so.

Others are buying condos now but planning on selling them when they retire.  One of my clients called it his "hedge against inflation"; he is buying at what he considers to be near or at the bottom of the market and will use his appreciation when he sells to buy the home he'll live in when he retires.

If you'd like to see how this can work for you, contact me at 808-896-0661 or email Robert@FerrariPacificRealty.com.  I'll prepare an Investor Worksheet for you that you can take to your financial advisor.  He or she can use this worksheet's numbers and apply them to your particular situation and decide whether or not it's a good idea for you.