 vacation rentals are the future. I have a 21 year background in real estate and 15 years in vacation rental investments. So I am super excited to be here hosting this show. This has been my life for the last 15 years. I love watching the developments of what's going on in Hawaii and how they're moving forward with different restrictions, regulations, a lot of investment capital coming to the island. So I'm very excited to bring on our guest tonight who is Lailand Bento. She has been in real estate in the big island for eight and a half years and she is born and raised in Hawaii with a deep background in government. So she really understands the restrictions and regulations probably a lot more than most people. So without further ado, let me go ahead and introduce Lailand to you. Thanks for being here, Lailand. Thank you so much, Erica for having me on the show. I'm excited to touch on such a you know main topic in selling real estate here in Hawaii and so I'm ready to just dive in and just see how different and how our state's different and how people can invest in vacation rentals here. Yeah, so you know I am so passionate about vacation rentals but I think it's really cool about your background. I want to talk a little bit about that because I don't meet too many real estate agents that have such a big background in government and so if you could tell me a little bit about that because I think that really helps you do what you do so well and I'd love to learn more about what you were doing in your government position before this and kind of what led you into getting into real estate after that. I work for a former Hawaii governor. It was governor Linda Lingo and I worked in her office here on the big island. My grandfather was a state senator for over 30 years and so I grew up in politics understanding government laws that are being passed which are just crucial because it does affect our everybody lives that people don't really understand so it's important to vote but also just working for a former governor and then being able to after that I went into hotel sales and then always wanted to get into real estate. My grandfather was big into real estate and finally just jumped in eight and a half years ago and having that government background knowing how to you know navigate through the different departments has truly saved so many of my clients from buying you know properties that either a law was going to be passed where they were going to buy a vacation rental in the area and then you know it would have changed right in the middle of that law was to pass and so their investment just would have just gone down in value and so knowing all of the different government departments and what laws are being passed what's affecting our government is crucial in selling real estate in this state I feel. Yeah no it is especially with all the changes that they're they're putting into place since I've told you right so you've been you decided to get into real estate but why vacation rentals is it because it was just such a popular investment there that you just fell into it or did you have like a passion for it tell me a little bit more about why that niche. This niche and selling on the outer island so the outer islands are not the island of Oahu which is the main island real estate on the other outer islands as we call them Kaua'i Maui Hawaii which is this island you have your buyers are mostly investors so you just sort of fall into the vacation rental market besides the local community whereas the island of Oahu which is why they are passing that 90 day and a judge just did an injunction their county council tried to pass you know not having vacation rentals stretch it out to 90 days but the outer islands is different they're a little bit more lenient because most of our buyers are not the local community unfortunately they are investors buying their either an investment home or vacation home so you do immediately fall into that when you do sell in the outer islands real estate. So let me get your opinion around all these regulations that we were just mentioning because they did kind of you mentioned they were just getting passed like why do you feel that they passed them do you think that and there's really no wrong answer to this but do you feel like that it's a government overreach to tell people what they can and can't do with their property or do you legitimately feel like that the vacation rentals that were happening there were legitimately a problem for the community what's the reason why you think this went through. It was a combination actually of the hotel industry the hotel unions lobbying right because the hotels were losing money they have all of these fees and so people decided to got a little bit smart and you know they could instead of I live by hotel where our local rate is 1100 a night plus all of those other fees instead of you know going on vacation and then my entire family can stay in a home for a fraction of that cost so it was you know when Airbnb and you know VAR bill started really taking over people started getting smart and they would save a lot of money these families traveling to Hawaii which airfare is already astronomical to get here right and so they decided you know we have a kitchen we can actually all stay together there's a pool instead of paying all of those hotel fees and so the hotel industry really came down to politicians and then there were vacation rentals in I would say maybe local subdivisions where you did have you know the entire subdivision there were all working class families and then you would have every once in a while I would say a family you know barbecuing maybe you know hanging out so early in the morning when you have the surrounding neighborhood right that has to work the next day and so it was a combination of the hotel industry with you know some disgruntled full-time residents and so it really pushed the politicians to kind of take a step back and look at it but then on the flip side I did see you know selling real estate um maybe a grandmother who has maybe like a separate what we call ohana maybe a guest quarters or mother-in-law's quarters that was just trying to make her ends meet and she would just vacation rent it and that would help her pay her mortgage so I did see that side of it um and I think our island did the best our county with really grandfathering in these you know old vacation rentals and really working with the community to try to find a balance instead of I think the other islands are a little bit more strict they just you know honed in and said no only this many and no more vacation rentals or only these areas of the island can be vacation renting and nothing else they all have to stop and so our county council I think did a great job of just trying to you know work with everyone of finding a balance instead of just you know not working with the vacation rental owners which is nice I think yeah yeah because short rentals I mean like a lot of people make ends meet by renting out an extra bedroom or renting out their guest house and when you take that away I mean it really does hurt a lot of people so I'm glad to hear that you guys handle that differently than you know on the other island but so let me ask you this then um when you got into real estate was it just about because you said you kind of fell into vacation rentals because most of it of the clients are investors um how are you handling these investors that are coming into your market now that have these like high cash flow demands because it's a different market today than it was five years ago or eight years ago prices are different um and I would imagine rental rates haven't quite gone up as much as prices as in fact we know they haven't um so that means that the returns have kind of diminished but we'll have investors with these expectations so what are you doing when you get these people that just like demand you know these crazy returns are you just like telling them no I can't help you no I you know when I first got into real estate I had a broker and he explained to me it's not selling real estate to people it's educating them about buying real estate and so it's really I find educating them of you know if they want to buy in a certain area I don't fly out saying no I just kind of help them with their expectations you know and it usually works out because they may have wanted to live you know they see a really cheap vacation rental then you have to explain you know there's no cost school nearby or just the different areas and then um so that's really helped just educating them of what their expectations are their cap rate may not be double digits like they're used to you know the HOA fees might be a little bit higher but say for example they don't have a mortgage so just kind of putting them in that formula of what they're looking at what are their expectations and then just seeing how they can make a profit um you know vacation renting and I do find people that strictly run it at like a business and you would probably agree with this they do make money as a profit and then you have you know people that just want to buy a second home and just have their you know expenses paid for and so you do have the sometimes intense you know just I'm just an investor I want that return and they're going to get it and then you have the family you know that maybe they're paying for their kids in college they wanted a second home to go to as a vacation rental so it's just just different types of buyers that we do get here and so you just kind of have to see what their expectations are where they should buy um for example you know the resort areas you're going to be able to get a higher return right the HOAs are higher but then you what the your renters actually get more amenities right with white sand beaches restaurants snorkeling and so it is a higher price point but in the long run that's where they're going to see their return is actually in those areas um is what kind of teach them instead of being maybe really in a rural area you can only pretty much going to you know vacation rental rates are going to be much lower just because they're going to have to rent a car maybe right or drive a while to just see any type of activity or the volcano or something well one thing that kind of strikes me like just hearing you talk about this is that we really are talking about two different types of investors there's the lifestyle investors who want that lifestyle benefit of being able to use it and then we are you know our numbers investors are cashflow investors people like me people like I don't know if you're into investing but you know I'll go anywhere and invest as long as the numbers are good but then the lifestyle investors I feel like those are the ones that will be drawn a lot to your market because of the incredible lifestyle benefits of being able to vacation there um but then they're using it all the time you know and so when they start using it all the time it's like how do you got to get them out of there so that it can be paid for it like how do you break it to people that like look I know this is your dream to own here um and a lot of people listening might be in that situation and we kind of have to like bring them back down to reality is like yeah you stay here but like you know if you say too much you're going to get out of your pocket for this like how do you approach it I just from the beginning just set their expectations of what are they looking for because you are correct you have those two types of buyers right or sometimes they are really investors and then they turn to the lifestyle buyer right because now they're parents and we always joke about it it's like when people buy in Hawaii all of a sudden they have these long-lost relatives that want to come and visit them or visit where you know their property especially if it's a vacation rental and so I'll start I've sold people that strictly want to do vacation renting and then I would you know take him or jar to school and I see them running you know exercising and then I I'm thinking don't you have vacation renters and said oh no we we cancelled it for this month we're staying and so it's things you know stories like that that you do see the people just you know when they start visiting here they want to visit even more right and so when you do go to sell though I always explain to investors that are buying because a lot of the times we have those lifestyle owners right vacation rental owners and then you have the real real estate investor right and then you have to explain to them because they look at the numbers and they're like these should be much more and so you really have to explain to them okay well they're staying here six months of the year or you know it's only rented out you know you have to look at the number of nights and the rates that they're charging and then you know I have a couple of friends that do own property management companies they just do a forecast for them right so that they can see okay right now it's making this amount but it can potentially make this amount too yeah yeah property management you just said it's always about to jump in that is kind of the key component to making this work I was just at the verma conference the vacation rental managers association conference in Las Vegas and all the property managers from all over the world come together here and talk about you know how they can generate more bookings more revenue what is the landscape like for finding good property managers over on the big island I mean is there a good amount of them are they hard to find especially for vacation rental because there's a whole artistic aspect I would say that goes into marketing a vacation rental versus a long-term rental exactly there's much more you're more involved right with vacation renting you have to make sure it's cleaned and you know walkthroughs is the plumbing okay you know is there a water leak and it's compared to a long-term rental where maybe they're walking through every six months I would say when I first gone to real estate there wasn't too much of a competition you had these mom and pop kind of shops and so they were just price gouging these some of these owners and I would look at their numbers and I had I remember having a elderly man and he thought he you know scored making I think $68 that month and I looked at what he the revenue he was making and then they were taking and that time 55% was our marketing property management fee so they were just taking most of what he was making and then as I started looking into it you know over the years we have more competition right which is good because that you know then their fees had to come down because at that time they were charging anywhere I would say between 25 55% especially in the resort areas and they weren't you know showing up with a flower land in my time right for the renters they're just sending an email this is the lockbox code and you would never really see them and so I was I was thinking oh I wonder what they're charging for that's kind of you know a high fee but over the years there's more companies moving in which force them to lower their fees right and be it had now it's much more competitive so you can have maybe 10% or 8% right and then it goes up and what I'm also seeing are a lot of the property management companies which I think is smart they have you know they'll ask the owner what do you want us to do because some owners want to be more involved right than others and so they're the higher the percentage it means they're you know delivering through baskets right and they're you know delivering champagne you know upon arrival to they're paying the taxes for the owners so just scales up right the percentage will go up depending on how much involvement the sellers want them to be which is nice instead of years ago it was just a cookie cutter rate right this is what you're going to pay us and the sellers didn't really have a choice or these homeowners and so now it's nice to see more competition and then you know different plans that they do offer the homeowners now yeah I think competition is so healthy for any market whenever you don't have enough competition that that's what happens and that's wild 50 percent I mean just that alone on top of your operating expenses and your utilities I can't imagine people returning a profit back then I'm glad to hear that's really evolved since then now is it a requirement to have a property manager run your property for vacation rental or can you do it by yourself if you don't want to hire one I see people do it themselves but you're supposed to have an on island representative when you do apply for your permit and so these are supposed to have a representative on island and that's just in case you know some there's a complaint and the county has it's actually a contact person right that they can call to you know go to the property so that there's at least some accountability because years ago there was no one on island and so there was no one you know if there was something going on or vacation renters are partying overnight then there was no one you know more a homeowner could call the county and say okay who's their contact that we could call to you know to yeah follow the rules basically so that is nice that the county did that so there at least there's a contact person on every vacation rental so let's talk a little bit about you know because these days buying a vacation rental it's not good enough anymore to just buy a property put nice furniture in it and stick it on airbnb like this is one of the big topics at verma this year was it really has to stand out i mean there's so much competition in the market now um it's just got to stand out like what are people really wanting when they come to hawaii from a vacation rental like how do you create that unique experience where they're going to stay at your place and it's unforgettable and they're going to come back again and they're happy to pay the rate well i've seen actually some homeowners it like you were just saying they put in you know i think it's maintain the unit right or the property so if it looks nice right and has nice furniture it's not all raggedy and busted up i'm also seeing them have these welcome baskets right so all these added touches that you could get at a hotel but you're getting that in a vacation rental really stands out and i think also how responsive um the property manager is or the homeowner you know where they're able to you know quickly get an answer of something the internet goes down or something right i feel like it's really servicing the renter being responsive giving them a good quality product is what they're looking for i do see a lot of vacation rentals which this is smart because we are in hawaii right they have surfboard snorkeling gear so they supply them with all these things for the families to use instead of a family having to go out and buy all of those items right just to go to the beach i do have another client and this was smart because i always thought about this in covid they had moved or they either sold a lot of the rental cars or they moved them to another island right and they held them at the stadium in oahu so rental cars were so hard to come by so what he started doing was just buying cars and then he supplies that you know because this island is so large with his vacation rental so that his families that visit they don't have to go and try to find you know oh it's the iron man world triathlon there's no vacation rental uh no cars right and so he he saw that that was a need you know depending on what was event was happening on the island so he just started buying cars and he supplies it now with his properties which his renters absolutely love because they don't have to you know it's one extra thing they have to find on the island so he just includes it yeah no that's brilliant that's actually one of the best ideas i've heard and i'm sure he has people like with no problem to pay the rate that he's charging because like one and that's really really smart um what about like uh millennials right millennials love instagram and everything's all about like what it looks like posting on their instagram have you seen anybody doing any like really over the top themes inside their home to where it's like gone instagram viral or have we not hit that point yet i don't think we've really hit that point yet here but i find the vacation rentals that make quite a bit of money are the ones that of course have everything supplied in the home the service i mean they really you know upkeep their homes compared to a home hasn't been really looked at for a while and it's just you know constant turnover then those rates are not as high and then i do i don't know if you come across this but i'm coming across quite a bit of rentals that are you know their rates are a couple years old so they haven't really caught up with increasing them um so i don't know if that's a combination of just the property management company not really being involved in saying you know i think we can increase these rates here um i mean it sounds like they're not using dynamic pricing software because well most smart owners and managers are going to use that dynamic pricing software which is going to keep the rates in alignment with you know people traveling to the island certain points events you know it goes it's just like airline tickets right i've noticed like a lot of like maybe single owners that aren't hiring a manager or mom and pop managers just don't leverage that kind of tech but too in that that comment about raising rates i mean with the way prices have gone up and the way inflation is going i mean you have to start raising your rates like you can't just not raise your rates you're not going to make money um you might be really booked out but then the cost of providing those supplies to those renters have gone up um labor expenses have gone up so if uh people aren't doing that i mean i would say they probably need a new manager because that that's got to be adjusted every year based on what's in the market right i'm seeing what's interesting in a trend in the vacation rental industry right now is this like tiny house movement these really like small unique stays i don't know i know probably not anywhere near the water but what about like inland where maybe there's more land um and ways to do this like are you seeing anybody doing these like tiny houses or tree house experiences or anything like that i i do they were either with our zoning though i always have to explain to people so tiny homes with our county it falls under the department of motor vehicle um you know hoy doesn't have trailer parks or anything in our state so it's something new that our government i feel hasn't caught up with with passing you know these laws and zoning of those tiny homes i do see tiny homes in the volcano area and around the island where people are vacation renting but it would have to you know to do that it would have to have the proper zoning with our county and state the homeowner would probably live on that property so it would be considered a hosted rental um and then it would also have to usually where i'm seeing little tiny homes and their vacation renting the owner lives there and the subdivision uh cc and rs right they allow vacation renting also and so those are just different things i tell people when we're looking at the different neighborhoods of what they can do um most of the time they'll now since they passed that law a couple of years ago your can't just start building tiny homes and vacation renting anymore unless they were pretty much either grandfathered in or the owner actually lives on the property full time so that and i think our government's kind of behind on that they're still trying to navigate that of the tiny homes concept but i am seeing more tiny homes more bamboo homes which are really cool um and there is one i saw in the volcano area was like a modern tree house and they vacation rented and it's book solid yeah i went to go look it up and say okay can we rent it but it's book solid it's it's incredible how that owner had that concept i've seen that happening all over is like these smaller unique stays are just booked solid because the millennials just love that unique experience that's why i was asking um if you could do that anywhere because if you can that's a major opportunity right now in an underserved market right island so i think there's a lot of revenue opportunities there what about land and building vacation rentals like is that something people can still do or i would imagine like really nobody's got land left to sell we have quite a bit of land to sell i think it's 10 of this entire island is owned to be developed that's it so most of it they would not be able to build so that's why i'll always keep the inventory low on the island unless the same county starts changing our zoning um but to build that kind of a concept you would have to build it in a resort zoned area and i live in a resort zoning area so you would have to either buy land and then change the zoning which could take quite a bit of time and money in our state to do um then that's only because most of the property here is zoned there's two types of zoning it's county and state and so the state will always override the county right so maybe the county will allow it but then the state zoning won't and so it has to match up um to be able to do that but mostly um in resort zones if it's already resort zoning you can definitely go ahead and start building and vacation renting oh interesting so if someone wants to do that it's going to be resort zoned um are they taxed differently in the resort area they are we're taxed a higher um they just changed it if it's two the home is worth two million and i mean you know they i think almost doubled the property taxes but Hawaii's property taxes are still low um compared to the rest of the country because our property taxes don't fund into our department of education system that comes out of the state general fund which a lot of people look at the property tax rate and it's much lower and that's just because the state fund you know state funds a public education system not the property taxes the property taxes go to the counties so it's a little bit different that's good that it's not as high as say California which people get excited to see yeah do you get a lot in California um buying properties there right now we we do and since COVID it's fascinating the different countries that now buy in in Hawaii to a lot of the states we're seeing a lot of east coast states Texas I've had people buy from Alabama and you know normally it would be Washington California right Oregon Arizona buying in Hawaii and so you're seeing more people from Florida it's one of the top 10 that states that they're migrating you know across the country which is interesting yeah i think our our beaches are just getting um really crowded here yeah so they're trying something new um well we have about a minute left and i really want to take that opportunity for you to share a little bit about how people can get in touch with you if someone's interested in working with you what the approach is like okay you know what the next steps would be if they want to you know be working with someone at your knowledge level and what kind of client you do take on because i understand you know i'm sure you don't just take every client it's too much for you i co-own the real estate company with my mom um she's a listing agent on this new development that's going to happen which the first phase is going to be workforce housing right a combination of different types of housing which our island i think is about 15,000 homes short with our current residents so we have a lot more homes to build just to service the residents here but um i do help all walks of life i am born and raised here and so you grow up with all walks of life and so i go ahead and sell two vacation renters first time home buyers single moms you know in business men um to again touch with me they could either give me a call on my cell phone it's 808 9361800 or my email is my first name LylonLAILAN at high dev group so h-i-d-e-v-g-r-o-u-p dot com Lylon at high dev group dot com and the name of my company is Hawaii development group is our real estate company perfect well thank you so much for your time today it was great chatting with you i learned a lot um and for anyone listening definitely reach out to her if you have any questions about investing in the hawaii market she knows her stuff and we really hope to see you on the next show where we have some more interesting topics to dive into on vacation rentals thank you aloha thank you so much 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 linked in and donate to us at think tech hawaii dot com mahalo