Kapolei, HI

At first glance, the answer would be yes. To me, the HOA dues are high, I have a hard time accepting them, (this is my first time of purchasing at a resort).

So I decided to do a little research:

Believe it or not, compared to other places, they're not so bad. The HOA fees at Wailea Beach Villa's are around $3,500.00 per month, more than double the fees here. (Their villas are larger).

Look at the Ritz Carlton Kapalua,

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Ritz Carlton Kapalua

* 1 Bd-Average cost/yr (COA, taxes, insurance, FF&E=$4,119/mo): $49,428
* 2 Bd-Average cost/yr (COA, taxes, insurance, FF&E=$6,278/mo): $75,336

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So the Ritz Carlton Kapalua HOA, taxes, furniture replacement reserve and insurance run $6,278.00/mo for a two bedroom! If you look at our expenses for the two bedroom, the HOA is around $1,200.00 per month, the property taxes are around $1,100.00 per month and I spend around $1,200.00 per year on insurance. So it's a 1/3 of what the Ritz Carlton Kapalua costs.

(The Ritz fee also includes a reserve for purchasing new furniture when the old furniture wears out.) You will need to factor in about another $400.00 - $500.00 per month in reserve for furniture replacement or about one nights rent.

So I still don't like the monthly expense but it does seem that the fees are in line or better than with other properties. Not having to pay franchise fees for a name brand like Ritz Carlton or Four Seasons does help.

With that said, it would be nice if the board could look for areas where expenses could be reduced during this downturn. This is one of my goals if elected to the board.

[ Where I got my information: I just received this email from the Ritz Carlton Kapalua. (We shop every real estate opportunity in Hawaii and we look at everything. Trump Waikiki, Honua Kai in Ka'anapali, Ritz Carlton Kapalua, Maluaka, Ho'olei, Papali Wailea, Ritz Carlton Lagoons Kauai, etc.) The Wailea Beach Villa HOA information is from shopping Maui real estate and looking at the HOA dues on-line.]

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Please allow me to represent you as your buyers agent on selection day. There is no cost to you and your purchase price is exactly the same. What you select and how much you pay will make a big difference in your profitability; both from an appreciation standpoint and if renting, covering expenses. Afterwards, we can also work together to "get heads in beds".

(All of the thoughts expressed in this blog are my own personal opinion, they are no guarantee that you will achieve similar results, it's just me sharing my own experiences and what has happened in my own situation. I cannot know what will happen in the future.)

The backlash from companies holding expensive junkets and conventions while receiving federal bail out money is taking it's toll on hotel revenue as groups cancel their conventions in droves.

Wall Street Journal Article

The interesting point made here is that "Hotels are Businesses Too". All of these cancellations are going to take their toll on the employees who will be laid off as hoteliers try to decrease their overhead as their revenue numbers decline.

The silver lining for us homeowners at the Beach Villas at Ko Olina (who rent out our villas) is that we were never setup for conventions and groups so we don't have this business to loose. To attract group bookings we need the food & beverage component along with conference rooms.

The bulk of our business comes from individual families or small groups of families traveling together who are looking for luxurious accommodations at a "value" price. By value I mean we have $400.00 - $800.00 rates instead of $1,500.00 - $2,500.00 per night rates. Not $200.00 per night rates for a two or three bedroom suite.

So we have a couple of challenges:

While hotels in Hawaii are crying because their 98% occupancy levels have fallen into the 70%'s, I don't know if we we'll every be able to achieve 75% to 95% occupancy on a consistant basis since hotels use group bookings and conventions to smooth out occupancy during slower times of the year.

With lower purchase prices being touted for the June sales event, with all things being equal, you won't have to rent out as many nights as before.

The other challenge for us is in our ability to cut expenses which is limited by the sales agreements we signed with the developer when we purchased our villas. Some of the language may preclude us from being able to do any meaningful cost cutting which could then be reflected in lower Home Owners Association (HOA) fees.

Again, with the lower purchase prices for the June sales event, the savings in mortgage payments will offset the HOA dues. Not so lucky for us current homeowners.

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Please allow me to represent you as your buyers agent on selection day. There is no cost to you and your purchase price is exactly the same. What you select and how much you pay will make a big difference in your profitability; both from an appreciation standpoint and if renting, covering expenses. Afterwards, we can also work together to "get heads in beds".

(All of the thoughts expressed in this blog are my own personal opinion, they are no guarantee that you will achieve similar results, it's just me sharing my own experiences and what has happened in my own situation. I cannot know what will happen in the future.)

With my very informal analysis (feel free to correct me if you know the actual #) I believe that there are around 40 villas for rent out of the 125 or so that have already been purchased. Talking with homeowners, I think this number is going to increase as people who previously would not have worried about their monthly expenses are now considering rentals to offset their expenses. Think people in the financial sector for example.

(Of course the down side to renting out your place is that you are going to have wear and tear. We repaint and patch up the place once a month along with touching up the furniture periodically to keep the place in tip top shape.)

So if more people need to rent out to help with expenses, let's say the number will rise to 50% or 60 villas or so.

The unknown in all of this is what will happen when the next 125 villas are sold.

My two schools of thought:

1 - If the prices get low enough, people may decide that they don't want to hassle with rentals. This would be really good.

2 - New buyers with less income may become the new buyers at the property and for them, they will still need rental income to offset expenses.

So depending on which type of buyer is attracted to this sale, bargain hunters, people with less income, investors, etc. will determine what happens. Centex is in the best position to know the type of buyers it has received deposits from thus far.

I am hoping that it will be the high quality buyer based on the thought that these buyers have come from the existing Centex database and that these potential purchasers had considered purchasing at the higher price. It's the new buyers I don't know about.

Total # of rental units:

So I believe that we will have up to 50% of our units as rental units eventually or around 125 or so. We are not running full occupancy with the current rental units so it's not going to be pretty.

The good news is that our inquiries are up around 600% over the same time last year and we are getting many more reservation requests than we can accept for Easter, Spring Break, Thanksgiving, Christmas & New Years of 2009.

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Please allow me to represent you as your buyers agent on selection day. There is no cost to you and your purchase price is exactly the same. What you select and how much you pay will make a big difference in your profitability; both from an appreciation standpoint and if renting, covering expenses. Afterwards, we can also work together to "get heads in beds".

(All of the thoughts expressed in this blog are my own personal opinion, they are no guarantee that you will achieve similar results, it's just me sharing my own experiences and what has happened in my own situation. I cannot know what will happen in the future.)

A Short Sale Strategy for Ko Olina and Kapolei HI

For additional information and resources, visit my short sale website at :

Short Sale website

I wonder if there isn't a convergence of events where one needs to anticipate the future in order to best choose a strategy for the present. If one considers the following potential assumptions based on the current political climate:

1. The Foreclosure process is going to be dramatically changed over the next several months, potentially making them more difficult and time consumptive.

2. The lenders are going to have ever increasing numbers of non performing loans and greater and greater needs to convert non performing loans to their cash equivalents

3. Values are going to continue to decrease over the short term due to less buyers, more distress sales appearing on the market and the host of other economic uncertainties that are going to be appearing as the economy sorts itself out over the next year or two.

4. That short sales provide the best answer to both property owners and lenders in solving the challenges of the first 3 assumptions.

As we sit today, the short sale process is frustrating, cumbersome, inefficient and woefully inconsistent. I think that has a lot to do with the fact that lender's have looked at it as an inconvenience versus a solution to their problems. The longest pending shortsale I currently have is 9 months (the seller's bankruptcy has been a big complicator) and the average seems to be 1 to 3 months to simply get an answer plus the normal escrow time.

My reflection on this leads me to wonder if as the backlog increases, the availability of cash in pending short sales to fund these non performing loans becomes larger and larger and the government's pressure for lenders to seek solutions to their problems versus to simply freeze the market and await a miracle, that the obvious effect is going to be a rush to accept and close short sales.

In our Boards Short Sale addendum, the offer is presented subject to the lender's approval and the purchaser has the option of canceling the contract at any time prior to the lender's acceptance of the terms. All dates begin at the time of that lender's acceptance and if there is a due diligence period, a purchaser can actually cancel the contract during that period of inspection even after the lender's acceptance.

My strategy when representing seller's in short sales is to obtain one strong offer through negotiations between the buyers and sellers and to try to negotiate agreement between the parties that in leiu of additional offers being presented to the lender that the buyers agree to remain in the contract through the waiting period of the lenders acceptance in exchange for their exclusive consideration.

Short Sales are becoming the solution of choice by the current administration and there is additional presure from the government for banks to get these transactions improved and are even providing incentives to lenders to do so. If you are a homeowner who is having trouble with their current mortgage, a well negotiated short sale may be a very good solution for you. As a Certified Distress Property Consultant (CDPE) I am well trained and qualified to provide you with the information you will want to know if you are considering such a transaction. If you are in the Ko Olina and Kapolei market, you are in my market and I would be able to assist you myself. If you located outside of my marketplace, as a CDPE member, I am able to connect you with an expert in most parts of the country and would be glad to do so if you send me your location. Just click here to start the process: I need an expert

What does seem to be apparent is that if there is a major shift in the processing of these applications for short sales in the next few months, an investor will be better served to be in place than to be just getting started in the process.

Since a large majority of my market consists of upscale rental properties and second homes, it is a great opportunity for investors to explore the possibilities and to see if the current market conditions aren't providing a unique opportunity to purchase a longterm investment at a wholesale price.

For a list of available short sale Condo and Townhouses in Ko Olina CLICK HERE.

If you would like to have your own search made for you of distressed properties based on your own personal preferences, this link will accomplish that, Make Me A Website.

Whether you are a homeowner seeking a solution to your own personal mortgage crisis or a purchaser who is interested in purchasing a home from the largest category of currently available homes, I highly recommend that you consider utilizing someone who is trained and experienced in the process. It is unlike a traditional transaction and I would think you would like an expert on your side of the transaction.

I hope to hear from you.



Michael Hege' RA,CDPE
Certified Distress Property Consultant
Kapolei Realty, Inc
(808) 225-3660
www.HomesOahuHawaii.com
www.KapoleiToday.com
www.IHateShortSales.com (but hate foreclosures more)

In a recent article sourced from Realty Trac, January foreclosure data in Hawaii and the mainland was reported. As a state, there were 337 filings in the month, more than double than the Jauary 2008 count of 123. Before August 2008, the average monthly amounts had been 149. As you can see from the chart, August launched the increase in filings and is directly attributed to the crisis that occurred in the national and global financial markets.



Of the state totals, Oahu (Honolulu County) had the highest count of filings at 152 but the lowest per household of one per 2,203. The other counties had per household filings of closer to one per 1,000 households.

As a total of the national filings, we continue to be a very small amount with the National total at 274,399 in the month of January alone. The statewide average of one per 1,504 households was significantly better than the national average of one filing per 466 households.

What I found to be the most interesting part of this report was the fact that until August 2008, the filings in Hawaii had continued to be well below the 300 to 400 per month that had been seen in the housing slump of the mid 90's. At our current levels, we find ourselves within a similar level of activity.

The numbers are staggering! When you think of 274,000 households being faced with foreclosure in a single month, it is impossible to not think of the national tragedy it represents. If home ownership is/was the American dream, is not over 1/4 million people losing that dream in a single month something that was unimaginable only a year or two ago?

Another thing that I find frightening in my own market area is the following. On Oahu, there are currently 70 single family homes and 54 condos/townhouses being offered for sale as lender owned and foreclosure properties. There are 222 single family and 226 condo/townhouses that are currently being offered as short sales. That is equal to over 572 properties that are either in or possibly heading toward foreclosure. That compares with the total of all properties closed on Oahu in January of 281. We currently have a 2 month inventory of just distressed property. I find that distressing.

My business involves all of the above. Both my office and myself work very closely with lenders who are the owners of foreclosed properties and with purchasers who purchase them. Based on what we see on the horizon and the time it requires for lenders to place the homes on the market once the foreclosure has occurred, I feel that we are only looking at the tip of the iceberg in the numbers above. If you have more questions on the subject, please feel free to contact me Here .