“VRBO” is the acronym for Vacation Rental By Owner, and we have become used to seeing VRBO ads as well as articles in the news about VRBO units and their impact on neighborhoods throughout Hawaii. At Property Buyers Hawaii, we are very familiar with the benefits they offer to the average family visiting our lovely State. We are also very familiar with the many problems they pose for the residents of the State.
First things first. There are virtually no new hotels being built on the Big Island, but there are a few exceptions, such as the renovation of Kona Village Resort and the new Holiday Inn Express slated for Waikoloa Village. The reasons are many, but mostly it costs so much to build anything now due to years and years of punishing permitting processes and the seemingly endless accommodations for environmental concerns and waste water treatment, not to mention the many community benefits requested of any developer. By the time your hotel is built, you have to charge over $1000 a night just to break even. Yikes!
Today’s hotels are already too expensive for many middle-class families who would like to bring their kids along with them to Hawaii. However, there is a solution, and that is to rent a residential house in a residential neighborhood designed for a family in the first place. It is not a resort, but who can afford a resort? Bingo, the VRBO business was hatched, and tourists are showing up, bags in hand.
Now that the government is getting involved for a cut of the profits, VRBO is here to stay, and that puts the home buyer in a bit of a pickle. That is where we come in. We represent home buyers, Property Buyers who need to know how to best buy a house, farm, commercial property or whatever. We are the people that negotiate the best price and terms possible, since we have special knowledge and use it for Buyers only.
EXAMPLE: Let’s say that a normal price for the house would be $500,000 based on a working family’s ability to buy that house. Will a VRBO investor pay more, since he or she can get good money renting the house to tourists? That is very possible, regardless of regulations, codes and restrictions that may be in place to prevent the activities or some of them. In this way, the demand of tourists may trample the social fabric that comes long with good, stable neighborhoods. Something to think about, isn’t it?
If you would like to talk story about this or any other real estate subject, we are the perfect ones to talk to, and we will always welcome your call or email!