 Inside Hawaii Real Estate, I'm Will Tanaka. And I'm Leonie Lam. And we are honored to be your hosts for today's show Inside Hawaii Real Estate. Will is a full-time Hawaii Real Estate professional and a licensed attorney. And Leonie is a Hawaii Real Estate broker, a 20-year veteran in the industry and a board member of the Honolulu Board of Realtors. And our combined experience has led us to the show. So what time is it? It is showtime, baby. So just in the last few days, there were a couple of real estate topics that came up in the news that we wanted to discuss together and with you. So there's been three hot topics in Hawaii Real Estate right now. Number one, a new condo tower development in Moili-Eli in town. And number two, Oahu short-term rental law. And number three, perspectives on buying in Hawaii. All right, so in the new home development arena, there's a new condo development that's in the works, right? That's right. It's called Kui Lei Place. So over the weekend, news outlets reported out that the very, very well-known and well-respected local Kamayana developer, the Kobayashi Group, is planning to build a brand new residential condo tower complex called Kui Lei Place. And it's gonna have over 1,000 condo units in Moili-Eli. Moili-Eli, where in Moili-Eli? It's actually gonna be on Kapilani Boulevard. It's gonna be on the block that's in between sort of Iolani school and then Kaimiki High School on the other side. So right now there's a bunch of low-rises there and it's gonna be like 3.2 acres, I think, a large condo development right there. They're proposing a 400-foot tower so much higher than the existing towers that are there now. And they're looking at building 1,005 units to be exact. And 60% of those units are considered or going to be for affordable housing. And so that means that households or people that are gonna purchase that, they're gonna have to meet income limits. So they're not gonna be able to purchase unless they meet those limits. And then they have to live in the unit or owner-occupy it as they call it. The rest of the units, like 40% of it, they're gonna be market-priced and then there's gonna be a mix of one, two, and three-bedroom units, no studios. Oh, no studios, okay, one, two, and three bedrooms. Okay, that's interesting. And there's been a lot of talks about affordable housing in Hawaii. And when we're talking about affordable, what does that really mean? Yeah, so for this particular project, the prices are not final, but what they are saying or the developer is proposing is their prices are for a one-bedroom, you're looking at about 371,800. So about 372,000 for a one-bedroom. And then they said for three bedrooms, you're looking at about 813,000 or so. So these ranges are the so-called affordable and it's gonna be available and affordable to people, probably in the moderate to moderately high-income levels. Okay, so 372 for a one-bedroom, about 800,000 for a three-bedroom. And whether that's considered affordable will really depend upon the buyer situation, right? Because if you look at the median sales price for single-family homes, it's 1.1 million. I remember earlier this year, I sold a one-bedroom condo for about 350,000, but the condo, the building itself was built in the 1960s. And also got a first-time home buyer into a small, tiny two-bedroom apartment for less than 300,000. But if you consider the age of the building, it built in the 1960s, maybe it was fair value. So 370,000 for a one-bedroom in town at Cooley Place, it may be considered affordable for some. Yeah, and you know, so for 372,000-dollar condo, what would the mortgage payments look like for something like that? Okay, so for 372, let's break this down. 20% down, that would be 75,000 for a down payment. The monthly payment would be around 2,200 a month with the current interest rates. But that also means that they need to save up some money. Right, because they're gonna have to save for the down payment. And so they're looking at maybe like a $2,200 a month mortgage payment plus the maintenance fees and utilities. And when you're talking about affordable three-bedroom and the price point is around $800,000, then what would a home buyer be looking at paying? Yeah, then you could expect to double to about 4,500 a month and you'll also have to add a monthly maintenance fee so they could kind of take it over the 5,000 a month threshold, right, and other expenses. Got it, got it. So then why would, I mean, why wouldn't someone just continue to rent versus buying, right? Would that be cheaper for them? You know, that's always the question, especially for first-time home buyers or people, you know, maybe living with their parents or just move back. I mean, it really depends on everyone's personal situation. I mean, take my own parents, for example. You know, after they sold their condo in Japan, when I was six to bring our family to the US, they never rented a home again. So they've always rented for the last 40 years. And, you know, at that time, maybe it was a financial situation, it afforded them flexibility, predictable monthly income. You know, we didn't have HOAs and if something went wrong, I remember the landlord coming to our house and, you know, fixing stuff at our house. Got it, got it. So I guess in the long term, there's just something about home ownership, right? I mean, there's both tangible and intangibles. There's the building equity in the home, which essentially for most people, it builds their wealth, right? I mean, that's kind of the basis for building their wealth. I think that there's tax deductions. You could rent out part of the property, which is what I did with my home years ago when I first purchased. We rented out a portion to help offset our mortgage. And so I guess there's just overall sense of pride, home ownership, a sense of stability, possibly creating a legacy for future generations, right? And so I guess, you know, that's part of the benefits. No, absolutely, yeah. And, you know, I mean, but we're not gonna expect our kids to just wait till we, you know, move on. I mean, they're gonna have to purchase their own home. We might help them, you know, depending on our situation. But anyways, you know, great points on home ownership. And you know, we talked about affordable units for clearly placed for people also with moderate incomes. So I mean, I'm kind of curious, what are the price ranges for market prices? And when I say market price, I mean, you know, we're talking about condos that it's unrestricted, investors, second-home owners could purchase. What are the prices for those? So you're asking about the prices for the ones that are not deemed affordable, the other 40% of this particular project, right? That's right. Yeah, expected. Prices are not set yet, but what they threw out was 401 bedroom, it could be about 705,000. And then, you know, for the three bedrooms, it's gonna be over a million. Over a million, okay, wow, okay. Well, I believe that the state board just endorsed clearly placed to move forward. Yeah, that's right. I think it's gonna be, it's still gonna be a long process, it looks like. They're gonna need to get building permits. They're gonna need to be approved by the city council and ensure a myriad of other items before this project really gets going, but it's looking good. And basically, I think it's gonna be a very good project for this area. This area hasn't seen any new development in quite a long time. I think it's gonna be like a revitalization in some aspects, hopefully it'll become a more walkable community and somewhere that will be desirable to be right in town. So I think that's gonna be a huge benefit. And part of it's gonna be affordable and part of it's gonna be market. And I know that more information will be coming out soon. And if all goes as planned, according to the developer, hopefully, we'll see sales begin even as early as later this year or probably early in 2023. That's coming up? Yeah, it's coming up. So we'll stay tuned for more information. I just wanted to, we just wanted to stay updated on that. So another really hot topic that we wanted to kind of cover that's been on the news like just this past weekend is the Honolulu short-term rental law. What's the latest going on with that? Okay, well, let's first talk about what is a short-term rental? So a short-term rental is when you rent a property for one night up to 30 days. So they're also known as vacation rentals. I consider it as an alternative to a hotel. So renting out a property for 29 days or less is considered short-term. Are you talking about like Airbnb's or like VRBO's? Exactly, Airbnb's, VRBO's and also some short-term rental units could operate like a hotel. For example, you know, the Ritz-Carlton Waikiki part of it is actually owned by the Ritz, the hotel itself. But part of it, another tower, it's owned by actual investors and some homeowners, but it's a specific condo unit that they own and they use an outside property manager or have it managed by the hotel operation. So the property is a legal short-term rental property like the Ritz, for example, then you're allowed to rent it for a few days or even a few weeks. Okay, so you're saying for 29 days or less, that is considered short-term. That's right. Okay, and then rentals 30 days or longer, that's considered long-term. That's right, exactly. Yeah, like a six-month rental, a one-year lease, long-term rentals. And the hot button issue that occurred earlier this year was that the city and county of Honolulu are mayor, which covers the entire island of Oahu passing ordinance called the Bill 41, which increased the minimum short-term rental period from 30 days to 90 days. So in other words, anything less than 90 days is considered short-term and is illegal. Okay, so that was instead of the 30 days or it's gonna be extended to 90 days. To 90 days, right. Okay, so yeah, I would say probably over the last five to six years, the city and county has really been cracking down on illegal Airbnb and other short-term rentals, right, with fines and stuff like that. Oh yeah, right. And I believe the homeowners and the community in Kailua really took the lead probably about seven or eight years ago when Airbnb started popping up on Oahu and there was an abundance of Airbnb's. And whether it's like they operate like a hotel where people could just Airbnb it for a few days or bed and breakfast, they were very prevalent and the community got together and really started to take notice and call for action from the city. Got it. So I notice now when you go into an Airbnb or a VRBO website and you do an online search for Hawaii or Honolulu specifically or Oahu rather, you'll see that probably 90%, would you say are concentrated in Waikiki? Like that's where you're gonna find them at this point. Yeah, the overwhelming majority. I mean, 90%, I think that's pretty accurate. So you could just go on the VRBO or Airbnb. And if it's outside of the Waikiki area, then it's a short-term rental ad. It's gonna say minimum 30 days. Got it. And so, outside of Waikiki where it's resort zone, which essentially means hotel zone basically, right? Can you do Airbnb or do they have Airbnb outside of Waikiki? Yeah, so it's a very limited circumstance. So you're gonna be either in a resort zone or nearby where that's particular building is as an exception. And then the other exception is back in, way back in the 90s when they started limiting short-term rentals to less than 30 days. There were homeowners who were doing Airbnb's 30 years before Airbnb's existed. And they had an opportunity to be grandfathered in. So they applied for what's called a non-conforming use certificate, NUCs. And so homes with those NUCs could still Airbnb it and do short-term rentals. On Oahu there's less than probably 800 homes and condos in the entire island. So it's very few. Yeah, very limited. So you were mentioning earlier about bill 41, the short-term and that how it was gonna go from 30 to 90. And so that was moving forward with that. But then just over the weekend, it was announced that this law, the 90 days, it was gonna go into effect like on Sunday this week, but then a judge put a stop to it and so it's still back to 30 days again. Okay, that's right. So the mayor passed the 90 day short-term rental law back in April of this year. It was supposed to start this Sunday, October 23rd, but a federal judge recently granted a preliminary injunction or in the city and county of Honolulu to not increase the short-term rental period from 30 to 90 days. Okay, so right now then we're back at 30. Exactly, back at 90, I'm sorry, back at 30, yes. We're back at 30. Back at 30. Back at 30. And can you explain to me, the layman, like what is a preliminary injunction? Okay, so preliminary injunction is a fancy word for a temporary order. So it's not a final decision by the court, it's just preliminary, it's just temporary. So when the complaint, the lawsuit was brought up back in this past summer, with the information that the judge had to this point, he decided that there's some constitutional legal issues that could harm the homeowners who would no longer be able to rent it out between 30 to 89 days. So as of right now, the short-term rental period is still anything less than 30 days, and we'll just have to kind of wait and see what happens next. Do you think there's gonna be more to come or do you think that it's gonna remain at 30, like what do you think? Ooh, so okay, so with this issue, so the people who actually follow the lawsuit, these are very limited. So it's not completely, it's not like everyone's suing the city and county, it's these specific people who are renting it for a minimum 30 days at a time. So they want what happened back in the 80s where they just want a special exception to continue to do that. And then for anyone new, then the 90 day rental, short-term rental law would apply. So it's a very specific group of people who actually follow that lawsuit. I get it, I get it. So what does it mean for us? Like why is it such a hot topic? Do you think? Well, you know, it's a hot topic because just in the last few months, I had a friend who had a temporary work assignment for just one month and just staying in a hotel with the resort fees and parking fees, it would have been cost prohibitive for him to get a hotel. I know traveling nurses need a place to stay for shorter periods of time. And oftentimes it could be a couple of months, three months and it would be oftentimes less than 30 days. And I heard of someone else, a new grandparents, right? Who's here to take care of their new grandchild, the place, you know, their kid's place is too small. So they need to stay for a couple of months. But again, hotels are too expensive. So I think there is a need for these short-term rentals that are shorter than 90 days, but longer than the 30 days. I get it. That's an interesting perspective. And you know, I guess it was because some of the homeowners were investors of these short-term rentals that they were running. I guess they were operating it in not a legal way or maybe they were abusing the system and running illegal Airbnb type of operations, right? And then I guess maybe with Hawaii not having enough homes, having housing shortage and all that, the investors were profiting and they weren't really helping with the housing shortage situation because it was attractive for them to invest in these properties where they were able to do these Airbnb's and everything, especially in residential areas, right? Exactly. And I mean, like you mentioned, it's gonna drive up the prices. You're able to do Airbnb's and, you know, I mean, who wants to have neighbors who are trans against who's changing, you know, every few days, right? Then might as well just stay in Waikiki, for example. So I mean, you want a certain feel and stability to the neighborhood. But again, you know, you also wanna, there's some level of protectionism for the prices for the local families. So there's always gonna be a balancing factor and hopefully, you know, we'll reach a resolution and probably sometime next year on that. Yeah. Well, I call you highlighted the two sides to it, right? Because there's the short-term housing need for, you know, actual people that need to have like the shorter than 30 days. And so I understand that side of it and then I also understand the other side of it. So it makes sense. Yeah. So let's segue on to the third topic that we wanted to talk about, which was purchasing real estate in Hawaii, right? If I wanted to purchase a home or investment in Hawaii, what is the home buying process like? Well, that's a loaded question, Leone. I mean, we've both personally been through the home buying process throughout the years. And of course we help, you know, people buy and sell. And, you know, that's one thing to get to know is that Hawaii is a very buyer-friendly state. What do you mean by buyer-friendly? What does that mean? Buyer-friendly, okay. So typically when you enter into a contract, you're locked in, right? You lease a car, you're locked in for three years with no way out unless you pay off the entire lease, right? And when you enter, so when you enter into a Hawaii real estate contract, the buyer puts in their earnest money deposit, but as the buyer, you should know that you're not as locked in. So maybe when I say buyer-friendly, maybe it's more like consumer protection. Maybe that's a better word, consumer protection. Well, right, because you're saying the buyer has rights and the opportunity to really understand everything about what they're purchasing being their home. And then they can get all of that before they even complete the purchase, even though they're purchasing under a contract. Is that what you're saying? Yeah, that's right. So it's like buying an Apple phone, right? I think you still have like a 14-day warranty or money back and you could still get a refund and, you know, make sure that it's the right phone for you. So you wanna make sure that the home you're buying, I mean, it's gonna be, you know, infinitely more expensive. So you wanna make sure that before you get really locked in, that you do your due diligence. And as long as you cancel within the contract deadline, so the buyer can cancel the contract and get your deposit back. So for someone that wants to purchase real estate in Hawaii, I mean, besides the purchase price, which is gonna be stated and negotiated and all of that, what would the buyer's typical costs look like? I mean, how long does the entire process take? Okay, so let's just, for ease of reference, a million dollar property, you know, you're buying a property for a million dollars. So buyer's costs will be typically 1% to 2%. So that includes the lender's fees, appraisal fees, the inspections, escrow and title fees. And, you know, some people ask, well, how about the realtor's commission? So in Hawaii, and just generally the seller pays, both the seller's commission, seller's agent's commission and the buyer's realtor's commission. So the buyer's not responsible for paying the realtor's commissions. And, you know, so you're house hunting, going to open houses, you're ready to submit an offer and then there could be some negotiation back and forth and you get a fully executed contract. I mean, that's, you know, that's an exciting time if when an offer gets accepted. Yeah, so that's when the buyers do diligence and inspection period begins. That's right. Okay, and so escrow is open, the buyer puts in their initial earnest money deposit because they're saying, hey, I'm going to buy this house. So they put down a deposit. And then one of the first things that the buyer would want to do is to get a general home inspection. There's also many other inspections that we would recommend, depending on the age and the price point and the type of home it is condo versus single family home, right? Absolutely. So general home inspection, it's even a contract that's highly or strongly recommended that all buyers get a general home inspector. And on top of that, I mean, depends on what the home inspection report says, but there's also sewer scoping that's when you get like a plumbing company to get a little camera and then scope the entire length from the house all the way to the public sewer line. And even with older homes, you just want to make sure that there's no break, there's no damages, because some of these homes, they were built in the 50s and 60s and maybe these pipes were not made to last that long. We also have roof inspectors, solar PV panel inspectors, AC electrical structural engineers for ocean properties, there's soils engineers, pool inspections. I mean, it's kind of unlimited. Well, I shouldn't say unlimited, but there's a lot. So that's a lot of inspections, right? And so the cost of these due diligence, sort of inspections, the buyer would be responsible for paying for all of these, right? That's right. And also if I was a buyer and I wanted all of it because I want to make sure that this house is gonna last or everything is good with it, how long would all of that take? Oh, great question. Okay, so generally the inspection period, and we call it the J1 inspection period, is between about 10 to 15 days, more common 10 to 12 days. So this means that the buyer for any reason could cancel the contract during this 10 to 15 day period and get their money back. And once you get the inspection report, you could try to get more inspection like a sewer scope, for example. And the realtor, the buyer's realtor will go over three options with you. So number one, you could request for repairs and credits from the seller. Number two, you could accept the property as is. So it's damaged, there are some repairs, the roof is old, but you could accept it as is. Or number three, you could cancel the escrow and get your money back. And yeah. Yeah, so in addition to the inspections and like being able to cancel during that period, there are two other ways to cancel the contract. Is it the review of title report? And then also the review of sellers will appropriate disclosure statement. Oh yeah, those are two important stuff. So those are three ways to inspection, review of title report. So there's disclosure statement. And generally, those usually about seven to 10 days, that's the contingency deadline from the receipt of those documents. So you wanna make sure that the escrow company is that the parties that we too are on top of it and delivers a title report to you as soon as it's ready. And sellers disclosure, it's a really important document that must be thoroughly reviewed. And usually you have about seven to 10 days after you receive it. And you could always ask the seller more specific questions. He just says, hey, water leak and then fixed. What's that really mean? Oh, okay, there was a leak during the 49th of rain and they fixed it by putting a French drain. Okay, now the buyers were more comfortable with proceeding. So yeah, there's a lot that goes into just the beginning portion of buying a home in Hawaii. Yeah, so what is the timeframe look like? So I mean, we kind of talked about like if you wanna purchase a property and then all these, you know, obvious the due diligence or all these inspections that you wanna have done on the property so you can make sure about what you're buying but what does the timeframe look like? So the timeframe is usually from beginning to end once escrow opens, typically 45 days. About 45 days from beginning to end. And that's 45 days if you're financing, right? If you're financing, if it's cash, 30 days typical, I've seen people close it as soon as a couple of weeks up to 30 days. So it does depend on that on the situation. I understand, wow, that's a lot to cover. That was a lot of hot topics today. So thank you so much everyone for tuning in to Inside Hawaii Real Estate and we will see you next time. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, Twitter and LinkedIn and donate to us at thinktechhawaii.com. Mahalo.