Are you thinking about buying a condo on Maui?

Before you buy, make sure you consider these 10 important things to know when buying a condo on Maui.

1 . Zoning

First thing to check  is zoning. Most of my clients when they come to me and they’re considering buying a condo on Maui, they’re saying “I want a vacation rental” or “I don’t want to be around a vacation rental.”  It is important to know that condos here in Maui County have to be zoned for short-term rental if you would like to earn income on your condo by renting it. Short-term rental is deemed as anything less than six months. The Maui County has provided a list, if this condo can be a vacation rental, this condo can be long-term. You could, of course, live in them full-time or use either one of them for yourself at any point in time. However, you cannot short-term condo rental a unit that is zoned for long-term. Most of the agents in our office have lists and we’re happy to assist you in that direction. I have provided a list. Please contact me here.

2 . Maintenance Fees

Number two, maintenance fees and what do they cover? Sometimes when you get here and you look at the maintenance fee for a condo, you’re shocked, you’re like, “What does that $500 go for every month? I can do all those items.” However, it’s really important to remember here that maintenance fees here cover almost always water, sewer, rubbish, common area maintenance of the beautiful landscape we have, a pool if there is within the complex, and then bigger expenses would be insurance for the complex and that incurs hurricane insurance because we are in a hurricane zone. In addition, they usually cover regular insurance for the complex, and then a large portion of your maintenance fee does go to reserves. In Hawaii we have some of the strictest guidelines for reserves and that’s for when the complex needs new roof, when the complex needs to be striped for its parking lot, and when the complex is going to need new paint on the exterior. So it covers a lot and they can definitely vary.

3 . Lease Hold or Fee Simple

Is the property you are buying Lease hold or Fee Simple? Fee Simple is the most common type of ownership and it’s known throughout the United States and throughout the world, and that’s where when you purchase a condo you are owning a proportionate amount of the land as you are as an owner within that complex. Lease hold, however, is less common and but it’s common here in Hawaii, (although it’s kind of slowing down). Lease hold is where you rent the land that that complex is on and you also pay a lease rent much like you would be if you were a tenant. Most of these leases started out at 99 year leases, and some of them are 30 to 40 year leases, and some of them have gotten down to 15 or 16. Here on the Southside of Maui, I believe there are only seven or eight complexes that are actually left leasehold, so it’s not super common, but we definitely provide you with that information so you know what you’re getting into.

4. Pets or No Pets

One of my most popular questions: Pets or no pets? Again, this comes down to zoning and rules within the certain complex. A vacation rental condo, not very many of them do allow pets. Most of the longterm complexes allow pets. However, sometimes you’re limited to the type of pet and the weight of the pet. So some complexes, for example, you could have a pet up to 35 pounds. Some complexes you can have maybe two pets unless you’re getting like some goldfish or something like that.  So it really depends on each complex and we can have to delve into it. Also, sometimes those rules change. So it’s important that we kind of stay abreast of the new rules.

5. Parking

Parking’s important. We have less parking here on Maui (and Hawaii) than a lot of complexes in other States. Some of our condos do have garages, maybe one car garage or a two-car garage in some very limited capacity. But for the most part it’s open parking, open stall, because we have great weather, we don’t have snow, you don’t have to dig out. So most complexes that I’m aware of have at least one parking stall. It may be assigned or unassigned, maybe it’s open parking. And then some complexes, you have two assigned parking stalls and the ones with one, sometimes you cannot deviate that. So it’s really important to know what you are going to have with the purchase of your condo. We’re super active here in Hawaii so you’re not going to use your car as much as you might somewhere else, but we do know that your cars are important so it’s good to know what you can get upfront.

6. Financing

Financing available basically has to do with you as a borrower. If you are getting a loan on your condo, you’re going to qualify for a loan and you have to give your taxes and all those things to a good lender. However, the condo complex also has to qualify for a loan and what that means is the lender is going to delve into the financials of that particular complex. If they have good reserves, which we talked about earlier, which was a part of your maintenance fee. If they have a lot of delinquent people that have not paid their maintenance fees. Right now in this economy, we’re not seeing a lot of that, but the lender does dive very deeply into there. The other thing they look at is litigation. They want to see if there’s any pending litigation on the complex. So not all complexes can qualify for all types of lending, but with a good qualified lender, they can get you to the right spot so you are prepared for them.

7. Common Areas and Usage

One of the many benefits of living in a condo complex is that you don’t have to worry about the landscape or the maintenance of the pool. But you would want to know the rules about those certain common areas and how they can be used. For example, you cannot come take over the pool with 30 of your closest friends every single day. You’re probably going to make your neighbors mad. However, you want to know where the pool is, whether or not there’s tennis courts, there may be a clubhouse, there may be an outdoor kitchen. For example, Kai Malu, one of my favorite complexes that has the most amazing common area has a beautiful infinity pool. And I had a client in there and she wanted to swim it till 10 o’clock at night. Well, guess what? The pool closes at nine? So that’s something that we looked at very carefully. So common areas and usage. Super important to know what you’re getting into up front.

8. Financial Stability of the Association

We discussed earlier the financing of the complex. This is something you get once you purchase a condo and you are in the Escrow process, you will get a whole set of condo documents. I call it good bedtime reading because sometimes it’s very overwhelming to read all those documents, but those documents have all the financial stability. It’ll have a reserve plan usually for 10 years that the association has called someone else in to do a review on. And you see what’s coming up in the board minutes and you can say “okay, they’ve got deep legs. I’m going to be in partnership with some good people moving forward“. The other piece to that when I was referencing lending of the complex is I feel like I’m in good company when a lender who is maybe taking on 60 or 70% of the financial burden when I’m getting a loan on a condo, whereas I’m getting only 10%, I feel like I’m in good company because they’re reviewing those financial documents as well.

9. Proximity to The Beach

Outside areas and usage of. So that’s super important. Number one question is how close is that condo to the beach? Am I going to walk there? Am I going to drive there? Am I going to ride my bike there? And which beaches are there? Some beaches have lifeguards, which is super important to some people. Other people just want to have the flexibility to walk to dining or beach parks or things like that. So it’s really important to know what the surrounding areas are. It’s also really important to know maybe what’s going on with it the vacant land that’s coming up and what the potential for that is. So good to educate yourself, not just on the complex, but what’s going around the complex.

10. Easements and Surrounding Areas

Easements and the surrounding area, which I kind of just talked about a little bit. Easements. Maybe there is an area within your condo complex where there’s an electrical box and nothing can be put there.

Maybe there’s a beach access easement. That happens a lot through some condos. I know for example at Maui Banyan, there is an easement for the neighborhood above. Actually I’m selling a property in the neighborhood above and this is why I know this is this neighborhood in Kihei has an easement to walk through Maui Banyan directly to the beach and that was something that was decided right when the Maui Banyan was built with the association above it. So it’s important to know there might be some pros for you obviously for this neighborhood that would be a pro. Maybe the people at Maui Banyan don’t know that or like that, for example. But it’s important to know and those again are going to be in the condo documents that you get at the beginning of your due diligence period.

Got Questions? I am here to help

Anyways, that’s our TOP 10.  I’m sure you guys have tons of other questions, so please feel free to contact me at Hawaii Life.

I’d love to meet you all. Please stop down in our office at The Shops At Wailea. We have flyers to share with you on condominiums available for sale on Maui including Maui Park Shore 303.