 Welcome to Inside Hawaii Real Estate, a show dedicated to providing up-to-date information news to Hawaii home buyers, sellers, and investors. I'm Will Tanaka with my co-host, business partner, and wife, Leonie Lam, a realtor with over 20 years' experience in various leadership roles in the Hawaii real estate industry. Thanks, Will. Will is a lawyer and the former head of a Hawaii title and astral company, and we work together full-time in real estate as a team to bring you the latest in Hawaii real estate. And today, we are covering what you should know before purchasing a new project development in Hawaii. And we have an absolute expert in Hawaii's new condo project development. Our esteemed guest today is Kai Brown. She is a broker with Compass Real Estate and the director of sales for Kulei Place. She's been on the developer sales team for three major new construction projects in Hawaii. And over the last 10 years, she's helped clients both buy and sell at most all of Honolulu's new condos. And that includes Sky Alamoana, Collection, Ulana, Central, Parkan Kei Yamoku, and Keiho Place. At Keiho Place, she was on the sales team, but she also has since closed when the project closed about five years ago. She's since closed about 15 transactions helping both buyers and sellers with that building. And thank you so much for joining Inside Hawaii Real Estate, Kai. We are so happy to have you with us. Thank you, Leonie and Will. That was a mouthful that you just said. Thank you. Welcome, Kai. You need some water. Catch your breath. Kai, your expertise in new project development in Hawaii is so evident. And we just want to know how did you become so passionate about new construction? How did your own personal journey begin? And how did in new developments, how did you get started? So I was very fortunate to be on the sales team for a new project about in back in 2014, about 10 years ago. And that's when I really first discovered it. I mean, you know, of course, it's a part of Honolulu Real Estate, but to really get kind of behind the curtain and learn about how it worked. And I actually have an engineering degree. So I think being behind the curtain, seeing the workings going behind the scenes, that's what really, it actually was a really good blend of two sets of skills, real estate and engineering. So that's really when it started. Oh, that sounds so awesome, Kai. So you know when it comes to your personal success in the realm of purchasing and selling new projects in Hawaii. And don't be humble. We want to hear about your achievements. So please share. Oh, I'd be happy to share. I actually in that first sales team experience, I actually had the opportunity to purchase a unit. So it was pre-construction. I bought a unit, I bought a one bedroom, I bought it for $460,000, signed a contract in 2014. To be honest, I had no idea what I was doing. I was very new. I was still pretty new to the business at that time. It was a long time ago, and I didn't have any money. But I was so excited about taking that first plan. So I got a partner. So I had somebody help me with purchasing it. And then Flash, you know, go forward four years 2018, I sold it for $635,000. So in hindsight, at the time, I was like, Oh, great. But in hindsight, you know, I had a partner. I made about $100,000. Just probably one of the easiest investments that I've ever made to date. Because it was, you know, you waited for the building to be built, right? For three years. I didn't pay mortgage. I didn't pay maintenance fees. I didn't have to replace the dishwasher. I didn't take those tenant calls. And then I rented it for a year. The unit was still under the developer warranty. So I still didn't have to do any tenant calls. And then I sold it. And I like to call it set it and forget it. That's what buying new construction is. I love that set it and forget it. So, you know, there's something there's definitely potential financial advantages with new construction purchasing. And so if I'm investing in a new construction project, what are, do you have any insights or guidance or key factors that we might want to consider if we're considering purchasing into a new development? Yep. Yes, definitely. It's not. I wouldn't tell anybody to just go and buy anything, right? You definitely got to do your due diligence. I think there's definitely some key ingredients that I have found through the years. Number one is reputable developer. That's a big one. You want somebody who's experienced building and developing in Hawaii, especially in a high-rise construction. You definitely, that's definitely the first one. The second one is having a good sense of the value and seeing how it compares to the resale market. And then, so when I bought mine, I actually bought it and I looked to see what else was available on the market at the time. And it was a real value at the time. Actually, at that time, my biggest concern was the interest rates at that time. My interest rates, yeah, okay. Yeah. And so that might seem kind of odd because the rates were actually three to three and a half percent at that time versus the high-interest rate environment that we're in right now. So I actually think the high-interest rate we're in, environment we're in now is actually a benefit to buying new construction. Yeah. And then the last thing is the timing of it, the timing when you buy a new project. You definitely want to buy as soon as possible. The best value is at the start of a project because what you're benefiting from is you want the longest period of time to benefit from that appreciation with no carrying costs. Well, Nali, it kind of all makes sense to me because over the years, I'm watching the news and we're seeing people just queuing up for new construction project opportunities. And you mentioned that you're able to get in early on your own first project purchase. So when exactly is the optimal time to invest in a new project, I guess early, but when is it that the buyer has the best opportunity to have that advantage? You want to get in as soon as possible and definitely pre-construction. That's going to be your best time. And the idea behind that is that the longer you have that unit held and contracted for, then the more benefit you get from that long-term appreciation potential and then with no carrying costs. To give you an example, I know of a developer that actually raised their prices seven times after construction started. So you want to take advantage of that pre-construction time period for sure. Seven times, wow. Let's get into some of the advantages that a new project buyers could enjoy. From your experience, can you share some of the benefits for these new buyers? Yeah, actually it's like I was saying before, I think it's first and foremost, is appreciation potential. There was a study done by HBR and if you take a look at another project, it's called Centro Honolulu. And if you take a look at that project, the three bedrooms actually appreciated by 42% and compared to the Oahu resale market, that only appreciated by 23%. So that's pretty powerful. That's so interesting that the new projects appreciated more than resale units in the same period of time. And just kind of segueing, I was thinking about it and I have aging parents that are in their early 80s and we live in a multi-generational single family home in town and we are juggling work and we're taking care of my parents and we're also, we have five kids combined and so this has left us with not only an incredibly messy house, but also a growing list of deferred maintenance issues within our own home. I mean, just to be real, right now my shower door is broken, my 32 panel PV system is offline, which is really bad. I think we need to paint our house, probably definitely exterior, possibly interior too. And so I have all these deferred maintenance issues and just not enough time to even schedule vendors to come in to help. So I'm thinking about it and I'm like, quite honestly, brand new condo, it sounds like incredibly appealing to me. And I would be concerned though, I mean, is it really feasible to accommodate multi-generational living and a multi-generational lifestyle? Yeah, no. Your experience is so true for so many people in Hawaii and we get clients all the time that wants that, right? They want that multi-generational experience, but when you actually start trying to find it, it's really hard to satisfy two, three generations with one house, right? That's all under one roof. That can be really difficult to satisfy all those needs. So I actually think new construction is perfect for multiple generations. We have, in fact, we have a buyer at Kuilei Place. She's the grandmother. She bought a penthouse unit in our building and then she has two daughters and they both each bought a unit. One of the daughters is married and has kids. So it's a family of five. Let's count that real quick. Five, family of five. And so they, and they bought, if you think about it, they bought a five bedroom house with all separate entrances, all three separate legal kitchens and they bought it for under $2 million in Honolulu. So the potential of it is really amazing to be able to have everybody together, being able to enjoy the amenities together, babysitting, you know, all of those benefits, but without the stress of the deferred maintenance issue that you were talking about. Living the life. Yes. Yes. That's the dream right there. That is the dream. Yeah. Well, I felt like when Leone was talking about deferred maintenance, I know my job this weekend is to fix the shower doors. Yeah, you got your honey deal it. Yeah. I would have reached out to the solar panel guys ASAP. That's right. You know the multi-generational perspective. Well, I think that's like outside the box thinking because when you think about multi-generational, I mean, we're always talking about single family homes. Who thought that you could, you know, buy into a new project and, you know, get new kitchens, new living space and do multi-generational living. I think that's, that is ingenious, I think. I haven't really thought about it. Yeah. And you also have that opportunity too when it's new to like maybe perhaps get all homes on the same floor maybe. Maybe that's too close, but it's an option, you know. And you have the option of like one family needs a three bedroom, but these, the other two need only one bedroom, right? Like that's a little challenging to do after the fact, but that's something that's more possible prior to pre-construction. Well, I say it's always back into a new project, you know, pre-construction, right? Kind of the guidance you were giving earlier. So it all kind of could come together. That's, that is outside of the box thinking, I think. Yeah. It sure is. And even now switching gears, we have many investor clients and they're always, you know, asking, okay, so, you know, why should we look into a new condo or new project development? And, you know, from your perspective, what drives investor interest in new projects in your opinion? Oh, yeah. I think new construction is a fantastic investment. One of the ways that I think it works really well is for anybody who's looking to reposition their real estate assets, right? If you think about it, most of the development that was done in Hawaii took place in the 50s, 60s, 70s. And the different maintenance that Leone's been talking about, you know, the condos have that as well. So there's two, there's two real big issues that are going to be facing a lot of Honolulu condo owners. There's plumbing retrofits. If you have a building that was built prior to 1980 and they haven't done a full plumbing replacement yet, it's coming. It's not a matter, if it's a matter of when, when. And the other one is fire sprinklers. You know, it's something that's a real sensitive issue for a lot of our clients, right? A lot of clients want to know about it. In Honolulu, there's 300 buildings that don't have automatic fire sprinklers yet. And so that's another thing that's been, the legislature has been looking at changing laws, requiring that to be done after the fact. So just those two maintenance issues alone are very costly assessments, anywhere between $30,000 to $50,000 per owner. And then I'm just talking about those two things, you know? So I think people with older investments, new construction is a perfect way to reposition it, you know, whether it's through a 1031 exchange or some other way of doing it into something newer. There's a lot more potential in something newer. Yeah, you know, aging condos are such a huge reality, especially right here in Honolulu real estate, right? And, you know, and that kind of brings me to the fact that there's, there's a risk for investing in anything, whether it's in the stock market, whether it's in our real estate market. And I'm just wondering, what are, are there any potential risks for buyers that they should know about before or when they're considering purchasing into a new development, you know, and a buyer is committing a substantial down payment to secure a unit that they've never seen before. And that might feel scary. So what would your advice be for someone who's anxious or uncertain about buying into a new project development? I think anybody is considering new construction. I think the first thing to keep in mind is that all new construction is highly regulated by the state of Hawaii. So there's a very specific process that all developments have to follow, and it's all to protect buyers. So I think that's one way that the risk is mitigated is through that process. Also, again, you always want to be very selective about the developer that you choose to purchase from. The way to look at it is you're entering in a long three-year relationship with them, right? And so you're saying I'm going to buy this unit and they're saying I'm going to, I'm going to build it the way I say I'm going to build it and I'm going to deliver it to you on time. So that's like, it's like a relationship. So you want to be selective about who that developer is. But the all new construction is required to be registered with the real estate commission. And anything that's changed from that registered document would be considered a material, any material change, if a developer changes something, then it reopens up a 30-day rescission window. So you do have that comfort. Okay, that's actually good to know because then you have the additional due diligence period. So I feel like the developers and everyone is always trying to protect the new buyers. And you know, when it comes to those specific developments, you hear about reserved housing or affordable housing. And I think some buyers could feel deterred by the affordable component within a building. But what's your perspective? Oh, yes, I love that question. So I'm going to go back to that HBR study and I'm going to ask you guys a question. So we were talking about Central and there was two buildings that closed at the same time, Central and Azure. I haven't told you anything else about the building, but Azure has about 400 units in it. And Central has a little bit over 500 units in it. So in the same period of time, which building do you think sold more units? I would say the Central, right? Because it's larger or it had more units. That would be logical. I agree with my wife. You're both in agreement, but you're both wrong. So the Central, I should point out though, Central is 60% affordable, 40% market, right? And Central actually had 20 resales in the same period of time and Azure had 49. So Central had about half, even though it's a bigger building. So just think about that for a second. 60% of Central is designated as affordable, so they can't sell, they can't rent for 10 years. So you actually, in that type of a situation, Quile is also 60% affordable, 40% market. You actually limit your supply in your own building. And if you look at other projects that are similar, you see a similar phenomenon where they actually have less resales, which, what is that going to do? You guys know, through real estate, if you have less, if you have lower supply, what's that going to do? What's that going to do? Create increased demand. Yes, which is going to drive up prices. You guys got it. You got it. I agree. Those are super compelling, real statistics that you're sharing with us. And from an investment standpoint, when you're looking at new construction with the affordable component, what is the typical process for a buyer when they're buying into a new development? What are the major differences when you're buying new construction versus buying a resale unit that's on the market? Yes, actually, new construction is very straightforward. You would come to a sales gallery, you would pick out the floor plan that you want, sign a contract. There's typically some type of deposit due at signing. For Quile, it's 5%. And then everybody has 30 days to do their due diligence, review the public report, review the condo docs, everything they need to do in that time period. And if they cancel within that 30 days, they get their money back, no problem. And again, this is required by Hawaii State Law. Any new developer has to follow those requirements. So it's a very specific process. So if I understand correctly, the initial deposit for a new development is similar to what I would put down for a resale unit, typically around 20%, but I actually have more time, like 30 days compared to a typical J1 home inspection between 10 to 15 days for a resale. If I wanted to proceed or cancel and get my deposit back, is that correct? Yep, that's correct. And you usually have the second deposit due somewhere between 30 to 90 days. So you actually have even more time to get the funds together. Ah, yeah. Wow. Okay. So in terms of the financing schedule, so, you know, separate and apart from the 20% deposit, so that means I won't have to make any further payments until construction of the building is complete or construction starts. How hard does that work? Okay, so once that rescission period has passed, the 30 days, now you've made your additional deposits, now you're basically just waiting for the building to get built. So there's no mortgage, there's no maintenance fees, there's no carrying costs. So you're just waiting for the building to get built, and then you finalize your mortgage at the time of closing. So you don't start paying anything until you actually have keys in your hand. This is America after all. So you can't charge, you can't live there. So it actually can be a real benefit for people, like maybe they're moving from the mainland and they need a little bit of time. We've also had clients that are downsizing, you know, like they're in a single family home, they want to go into that lower maintenance condo. But if they've been living there for 30 years, it takes them a while, right? To move out. So it can actually be a benefit that time to prepare. All right. Okay, so Kai, you're the director of sales at Clearly Place. And can you kind of help us understand why is everyone so excited about the news development right in town? Clearly, please, please share. Yes, yes, we've been so appreciative of all the support that we've gotten from brokers like yourself and all across the island. We're in a prime location, it's right on Capulani Boulevard, walking distance to Yolani School, Kamaki High School, great location. The views are spectacular. We're looking overlooking Diamondhead with like a golf course, green belt, right? So spectacular views and then the amenities. The amenities are just so special. We've got a penthouse dining, two penthouse dining rooms with a karaoke room. We have five club rooms on the ground floor, swimming pool, cabanas, dog parks. I mean, everything you can possibly imagine is there. You know, regarding Clearly Place, we've heard about some significant and pretty advanced innovations in sustainability that is happening or that's going to be part of this building. And it kind of directly correlates to our Aina, to our land and you know, preserving our own natural resources right here in Hawaii. And so at Clearly Place, can you share more about what is going on with the sustainability innovations? Yes. Sustainability is something that's so important for all of us, you know, to do our part. And there's many sustainability initiatives in our project. But I think the one that we think is most innovative is we are actually taking, we're doing a gray water recycling program. So we take the water, there's a system in place that takes the water from laundry, sinks and treats it on site. And then it goes back up in the building and then it's used to flush the toilets or for irrigation. So it's actually the first residential project to do something like that in Hawaii. The technology has been around for decades. But it's the first time that it's being used, utilized in Hawaii. So it's going to see the project 11 million gallons of water a year, which is significant. Yeah. Wow. Incredible. Yeah. And then you know, I've heard about Clearly Place and then there's an added advantage for lower floor unit owners, the way the parking stalls are assigned. Can you kind of go into that a little bit more? Yeah. Yeah. It's one of my favorite features. I'm actually buying an investment unit myself and I'm on the second floor because I love this feature. So any unit that's on floor two through 12, the parking stall assignment is actually on the same floor. So it creates this almost like a townhouse type feel, right? Where on a regular basis, you don't need to use the elevator because you can just walk to your door. But it actually creates a really wonderful win-win for the entire building because it takes about 350, actually a little bit more than 350 units that are not using the elevator every day. So it actually creates a better experience for everybody who lives there. And you know, speaking about parking and all of that, we have a lot of clients that have electrical vehicles. Is there something, are they going to have EV chargers over at Quilly Place too? Yes. We have tier three electric chargers in our garage. There's seven of them. Currently there's only five in Honolulu. So this is a significant amount. And they're super fast chargers. So a Tesla can be charged in about 30 minutes and a leaf would be about 15 minutes. So I try to think of it as like having a garage, I'm sorry, a gas station right in your garage. That's how I think of it because you can just do it right there. Oh, awesome. And just one final question. If someone is interested in purchasing a unit over at Quilly Place, what options are currently available and is it still a good time to buy? Yes, it's a great time to buy right now. We just entered the phase where now homes are available to investors as well as potential buyers that live off outside of FOI. So it's a perfect time. We still have pre-construction pricing right now. And yeah, so it is a great time to purchase there. Well, the ingredients are right there for you. Can I think about it? This might be your opportunity to get in, right? Yes, I would say so. Perfect timing. You shared all of your like secret ingredients. I felt like I was on a cooking show because we talked about set it and forget it. We talked about key ingredients and not I'm hungry, but we just want to thank you so much, Kai, for joining us on Inside Hawaii Real Estate. Thank you so much for sharing and for being a part of our show today. Thank you so much. Aloha.