In the previous posts we described condominium associations in Maui http://activerain.com/blogsview/2403151/3-must-knows-for-buying-maui-real-estate
How much your association fees should be http://activerain.com/blogsview/2404863/3-things-you-must-know-before-you-buy-a-condo-in-maui-part-2
What to look for in your association’s documents during your due diligence http://activerain.com/blogsview/2408558/3-things-you-must-know-before-you-buy-a-condo-on-maui-part-3
And what your rental options are http://activerain.com/blogsview/2411793/3-things-you-must-know-before-you-buy-a-condo-on-maui-part-4
The next few posts will describe how to rent out your Maui condo. You have a few options and I’ll give some of the pros and cons of each.
AOAO Owned Rental Management Companies
Most resort condominium developments (condo-tels), large and small, have a “front desk” operation and some other services, such as house keeping, onsite.
In some developments, usually in smaller complexes, the AOAO forms its own management company, perhaps in the form of an LLC, to run the front desk, house keeping, maintenance and the like.
These companies usually hire a manager to be in charge of day-to-day operations. The manager and company’s performance is usually reviewed by the board of directors and the other owners at an annual meeting. At the meeting the owners, which includes you, will also set an operating budget for the company.
As owners of the rental management company the condo owners, including you, have a responsibility and liability for the actions and employees of the company. If an employee needs to be reprimanded or fired, your company is on the hook if it isn’t handled properly. And, if your manager needs to be replaced or leaves, you can count on being in conference calls or meetings to deal with the situation.
This type of management company will normally take between 30% and 35% of your rental income with the balance being distributed to you. In some cases however, your distribution may be determined based on the profitability of the company, and your distribution may be paid monthly, quarterly, semi-annually or annually.
Since most of the smaller developments tend to be more “homey” and laid back as compared to the luxury resorts, they get nightly room rates ranging from the low $100’s to the high $100’s on average. Occupancy rates will vary based on several factors, but you should expect at least a 50% occupancy rate on a year around basis. Tourism is picking up again, so hopefully you will achieve a much greater occupancy rate.
I’ll cover AOAO outsourced rental companies in the next post. Or read the entire article 3 things you must know before you buy a condo on Maui.
And visit our website for other information about owning real estate in Maui and Hawaii, www.AlohaPotts.com.
Lahaina Lee Potts