Should I Buy My Maui Vacation Rental Property in Kihei or Lahaina
Almost every time I talk to potential investors in Maui real estate looking for vacation rental properties, they want to know if they should buy on the west side (Lahaina) or on the south side (Kihei). Ultimately, the answer is up to you and depends if it is going to be a place you frequent or live in part time or is something you’re looking at purely as an investment property. If you are planning on living in it, then by all means by where you want to live! If it’s purely an investment property, I like Kihei. Here’s why:
Why Kihei Is Better Than Lahaina for Short Term Rental Property Investors:
Look, Lahaina is beautiful and if you find the right deal at the right price, well then abandon this article right here and buy in Lahaina. If you want to use it part time for your own private vacation rental and you’d prefer to be in Lahaina, again, abandon this article and buy in Lahaina. If, on the other hand, you’re looking for where to invest, don’t have a preference and want to do a side by side comparison, I think Kihei is a better choice for a few reasons.
Reason #1: Lahaina is a bit more isolated.
When we talk about Lahaina, we usually refer to it and the surrounding areas (Kaanapali, Honokowai, Kahana, Napili, Kapalua) as the West Side. We refer to Kihei and surrounding areas (Wailea, Makena) as the South Side. The West Side has one road going in and out and is roughly about a 45 minute drive or so from Central Maui. The South Side is about 20 minutes.
This may not seem like a big deal, but it is. The vast majority of residents on Maui live within 25 minutes of town (central Maui). Contractors, handymen, cleaners, etc. are prevelant in these areas because of the close proximity to the big box stores (Home Depot, Lowe’s, Costco, etc.) Of course, you’ll find many resources on the West side as well, but you will have a smaller net to cast. And if you are like us, and have high standards, you may go through many different handymen, cleaners and contractors before you find the ones you can rely on. Many of these specialized trades will charge extra to travel to or deliver product to the West side.
Reason #2: One way in.
As a 10 year firefighter on Maui, I’ve seen all kinds of accidents all over the island. However, when there are vehicle accidents on the Pali (local term for Honoapiilani Highway that runs from Town to the West Side) traffic backs up for awhile. Since there is only one road in and out, they’ll often shut down the road if there is a fatality and traffic could be backed up for hours. They’ll also close the road that goes around the North side of the island, so don’t even think about trying to go that way.
From the tunnel to Lahaina town is very, very dry and every year the road also gets shut down due to brushfires in the area. It’s a real inconvenience and one of the reason a lot of locals don’t like to go to the West side unless they live over there.
Reason #3: Leaseholds!
While there are leashold properites on the South side, there are WAY more of them on the West side. Leasehold investing is a whole other topic, but for the purpose of this article, I’d stay away from any properties that are considered leasehold. In short when you buy a leasehold property you don’t own it indefinitely like you would a fee simple property. You own it until the lease on the land runs out. This could be 15 years, 30 years, or more or less!
Reason #4: Beach Erosion
This technically only applies to a handful of properties on the West side, but it’s still something to take into consideration. Several of the condominium complexes zoned for vacation rentals on the West side have had to fight problems with beach erosion. These buildings were constructed so close to the ocean that their foundations have been threatened by sand being washed away from the area. This has been a quiet problem for several years and there is no good answer to the problem just yet. In the meantime, the management companies of these condos have been increasing their HOAs dramatically.
I look at buying vacation rental propreties in Maui for the investment value. That value includes accessibility and something I call the “headache factor.” Vacation rental properties in Lahaina may be very lucrative – even more so in some cases than comparable Kihei properties, but the headache factor of owning and managing properties on the West side is not as worth it to me. Those variables along with my desire to mitigate risks and maximize revenue guide me to buying vacation rental condos in Kihei over Lahaina.