honobob said:
Don Ho said he would have bought an entire floor if he could.
Darn, if I'd known you were going to consult real-estate gurus like Dons Trump & Ho then I would've come up with a real response based on something other than numbers & personal residences. You know that Trump's lifetime performance, notwithstanding supermodels & hairstyles, sorely lags the S&P500, right?
What's that song that Don Ho sings... oh, yeah, something about bubbles.
Let's not confuse overhyped marketing with reality-- let's just wait & see how the property is doing when people are living there for a couple years. They haven't even found any Hawaiian remains at the excavation site. Yet. My good realtor buddy George Stott was taking many $20K deposits from people who were dying to get into the tower, but neither he nor his family were buying. They're selling their Hawaii properties and 1031'ing into Mainland commercial & residential TICs.
honobob said:
Why are you such a naysayer? Oh, weren't you in the market for a condo? Ummm...........prices are way inflated..next seasons bathing suit fashion in a 1910 retro.....Sell while you can for whatever you can get....See me to avoid that realty commission!
I'm not a naysayer... just a guy who looks at the past few years of property-tax assessments and doubts how much longer this can go on. How'd you feel owning that Hawaii real estate during the "fun" years of 1990-2000? I managed to knock 25% off my assessment in 1994 with only an hour's appeal paperwork.
Spouse and I are value investors, but both of our current Hawaii properties (home & single-family rental) were acquired for ohana purposes. That's why we're in the market for a condo too. Maybe we'll 1031 out of the SFH to that condo someday when the ohana situation clears up, but I don't think our kid-- should she decide to stay in the islands after leaving the nest-- would be as lucky as we were to be able to parlay a CA real estate profit into a Hawaii down payment. Home improvement's a hobby of ours but I think that long-term home prices generally rise with inflation (no real estate premium). If it's not coming from rental cashflow then the extra oomph has to come from bottom-fishing and financial leverage.
You should enjoy the benefits of your Honolulu RE leverage just as someone should enjoy profiting from buying Google stock on margins & options. But if your cash-on-cash return is less than 6%, and if you can get at least that much in many places on the Mainland, then why are you still crowing about being in Hawaii real estate?
I've been behind on this board for a couple days, but an e-mail I got this weekend suddenly makes a lot more sense in the context of your 28-year comparison. Allow me to offer you this anonymous quote from a respected friend: "FYI, the S&P was at 96 in January 1979. You know where it is today. My math shows me that's a 10% gain per year, without the headaches of real estate. This reminded me of when I was a stockbroker/branch manager in California. Real estate was our biggest competition. We just had a boom there and trying to sell securities was work. I ran a 30 year comparison for a 2 bedroom, 3 bedroom and 4 bedroom house vs the S&P. Clearly the S&P won, but we both know there are some tax advantages as well as headaches to home ownership. Once I ran the numbers vs one of the most attractive real estate markets in the country I never looked back."
Speaking of real estate, where are all the gold & commodities people that were crowing here last year? I'm wondering when those asset classes will be on sale again too...