Have you always dreamed of investing in the breathtaking Aloha State?
The good news is Hawaii flips carry an impressive 19.9% gross ROI and a $107,690 gross profit.
And for the right real estate investor, there is no bad news—just careful decision-making, research, and a trustworthy team of real estate pros by your side.
In this article, we’ll explore the unique Hawaii fix-and-flip market, from identifying the right property to successfully financing, renovating, and selling (or holding) your investment.
Start your application with Park Place Finance.Overview of the current Hawaiian real estate market
The Hawaii real estate market is unlike any other in the U.S.
As an island, Hawaii has limited land and a strong demand for housing from local residents and international buyers who want investments or vacation homes.
Home prices
According to Redfin, the median home sale price in Hawaii is currently $752,500.
Median home prices are among the highest in the U.S., with averages in Oahu and Maui potentially seeing even higher figures.
Fix-and-flip opportunities
Fix-and-flip investments in Hawaii primarily include single-family homes, condos, and townhouses.
Tourist-heavy areas are prime spots for long-term and short-term rental properties if you choose to fix and hold your investment property rather than sell.
How to identify the right property in Hawaii
The key to identifying the right property is first to have a deep understanding of your goals, budget, needs, and desires as a fix-and-flip investor.
Knowing exactly what you can afford to flip and what type of demographic you’re targeting will help you narrow down the next steps.
1. Choosing location
Hawaii’s unique market means investors only have a few key options for locations, including:
- Tourist hotspots: Demand from vacationers and investors looking for rental properties drives prices higher in locations with major attractions or beaches
- High-demand residential areas: Neighborhoods with good schools, convenient amenities, and strong community ties are attractive to long-term residents
However, investors also benefit from choosing an island that best aligns with their goals.
Hawaii has six main islands, each with its own attractions and atmosphere.
2. Identifying property type
The most popular property types suitable for fix-and-flip investments in Hawaii include:
- Single-family homes: Ideal for families looking to move into residential areas, and can offer high returns if purchased at the right price
- Condos and townhouses: Excellent investments in tourist-heavy areas—especially if they include amenities like pools and proximity to beaches
- Distressed properties: For investors who want to purchase a property below market value and make significant, value-adding repairs
To help you zero in on your ideal property type, determine the level of work you want to put into the property and the type of buyer you aim to attract.
3. Evaluating potential
Determining a property’s potential for success requires the following steps:
- Researching recent sales trends in the area to determine whether the property can be sold at a profit after accounting for all costs
- Estimating all renovation costs
- Estimating the property’s after-repair value (ARV), which should be notably higher than the purchase price plus renovation costs to ensure a good ROI
Local real estate experts, including an experienced real estate agent, can help you find properties and estimate ARVs based on comparable sales data.
Financing options for your fix-and-flip project
The path to success for many fix-and-flip investors involves a reputable hard money lender who can provide fast, flexible financing tailored to the unique nature of your projects.
Hard money fix-and-flip loans are asset-based and do not rely solely on the borrower’s finances.
Fix-and-flip loans are a source of short-term financing that covers purchase and renovation costs and aligns with the quick timeline characteristic of fix-and-flip projects.
Hard money lenders like Park Place Finance specialize in real estate investments and deeply understand fix-and-flips and the investor’s needs in these scenarios.
How to successfully flip and sell your property
Once you’ve narrowed down the location, property type, and source of financing, what’s next?
Find reliable contractors
Contractors can make or break your project, so it’s best to proceed cautiously.
To find reliable contractors, follow these tips:
- Get recommendations from local real estate agents or other investors
- Make sure the contractors are licensed and insured
- Establish clear lines of communication regarding your timelines, expectations, and budget
Consider the Hawaii market
What is appealing to Hawaiians?
You may find that their style and design choices are much different than projects you’ve worked on in other parts of the country.
Consider the following:
- Adding or updating patios, decks, or outdoor kitchens
- Using sustainable materials and solar energy solutions
- Incorporating traditional Hawaiian architecture and interior design elements
Get insights from local experts on what’s trendy in the neighborhoods you’re eyeing—or just explore for yourself.
Successful project management
A realistic timeline is very important for fix-and-flip projects.
Take into account Hawaii’s specific challenges, such as material shipping delays, and be prepared to adjust plans as needed due to unforeseen circumstances.
Keep track of your budget and progress with regular updates and check-ins.
Marketing your property
Once your project is completed, you’ll have to market it to attract buyers.
Invest in high-quality photography, professional staging, and virtual tours to reach locals and out-of-state or international buyers.
Potential challenges and pitfalls
Every market has its own unique challenges. For Hawaii, the market can experience ups and downs associated with increased or decreased tourist activity due to various factors.
The other potential challenge is unexpected costs.
To avoid these challenges and pitfalls, always have a contingency budget of at least 10-20% of the total renovation costs, and stay informed about market trends and fluctuations.
Of course, diversifying your portfolio with a mix of property and investment types is the best way to balance risks.
Apply for a fix-and-flip loan with Park Place Finance
Whether this is your first flip or a seasoned flipper, the Park Place Finance team is ready to help with your next fix-and-flip project.
We are your trusted hard money lender, with nationwide lending services and over $1 billion in loans funded since 2006.
To get started, fill out our quick online form or call (866) 407-1599 to speak with a dedicated account executive now.