HOA fees often impact your bottom line, causing you to lose money.
If you’re an investor, you probably asked yourself, “How do I know if a property is a good investment?” Most people would say that the only factor you need to think about is money.
If an investment isn’t making you money or you end up losing money, then it’s not a good investment, right? But sometimes, you find yourself in that gray area where you can be losing a little bit of money. Is it still a worthwhile investment?
In Hawaii’s real estate market, single-family homes often appreciate over time. This means that while you might not see immediate cash flow, the value of your property could increase significantly over time.
“If an investment isn’t making you money, then it’s not a good investment.”
Another thing that impacts your bottom line is HOA fees. If you’re already paying an HOA fee, I can tell you that you’re probably not going to be making any money.
If you’re putting down 20% on a property and your HOA fee is over $500, you might be looking at a situation where your expenses exceed your rent income. Plus, don’t forget about taxes and management fees—typically 4.5% and 10%, respectively. These can quickly add up.
For our VA clients, who often secure 100% financing, the situation can look similar. If there’s an HOA fee, it often doesn’t lead to positive cash flow.
If you have any questions about that, you can certainly email me at duke@hipacificpm.com or call our office at (808) 445-9223. Let me know how I can help.
