The Kaka'ako Condo Lotto - You Can't Win Unless You Play The Game!

You can't win unless you play the game!

The Name of The Game!

 It involves know how, skill and a bit of luck...

When it comes to finding and purchasing a New Kaka'ako Condo for sale in your price point, it often involves pre-planning, strategic timing, and a bit of luck. Because of the current high demand for housing in Honolulu, Real Estate developers often have a huge pool of interested buyers with very limited inventory in certain price points, especially affordable and workforce housing.

If you are in the market for luxury and market units, sales are typically brisk these days with first come first serve buyers making full cash offers. If your interested in reserved and affordable housing, expect long lines on opening day at the development sales office, with some even camping out in advance. In order to accommodate the high demand for housing, developers often initiate lotteries for interested buyers, meaning that at the end of the day, not everyone will have a opportunity to purchase, despite the fact of being pre-approved with deposit in hand and when required, completely vetted as eligible for reserved or affordable housing. If you show up to the sales office without your pre-approval letter, completed paperwork and application forget participating in the lottery you will most likely be too late. If you are going to play the Kaka'ako Condo Lotto and win, you will need to prepare in advance, know precisely what you want, what you can afford, and have your financing in order. 

Purchasing a newly constructed Kaka'ako Condo may seem too risky, expensive, beyond ones means or just an impossible game to win but the reality is just about anyone can play the game and win; and like other games, The Kaka'ako Condo Lotto, has it's winners, losers, payouts and dashed dreams. What many people don't realize is, that if you have a job and excellent credit, you can probably purchase a New Kaka'ako Condo that you can afford. If your credit is poor or lacks history and you need financing to purchase a property, the best option is to rent until you can improve your credit, save for a down payment and be aware of the options and benefits made available to first time home buyers, veterans, and low income households.

Knowing how to play is half the battle. Following through with all the requirements, getting pre-approved not just prequaled for financing, and knowing where and when to show up with your T's crossed and I's dotted not just your teeth brushed and eye's crossed, gets you in the running to owning residential Real Estate in Metro Honolulu. 

Terms & Conditions:

The Hawaii Community Development Authority (HCDA) is a State agency that was established to supplement traditional community renewal methods by promoting and coordinating public and private sector community development. 

HCDA bases it’s Reserve Housing Program and Qualified Income Program on the U.S. Department of Housing and Urban Development (HUD) area median income (AMI) estimates from previous years. These programs are supposed to determine what can be considered “affordable”. The rounded 2013 HUD estimated AMI for a family of four living in the area is $86,300. For a two-person household, the 2013 estimate is $66,160.

Who can play?

Kaka‘ako has several categories of housing being proposed:

Luxury and Market Housing: this is the most profitable and preferable to developers as it includes an interested buyer and a willing seller who simply work out a deal based on current market conditions and pricing. First come first serve with cash buyers being prefered. Typically investor units are offered first followed by owner/occupant, than reserved units, as the luxury and market sales often subsidize the reserved housing units.

Workforce or Reserved Housing: This means that the unit price is restricted to 100-140% of the HUD-estimated area median income. The Workforce Housing Program is defined under Subchapter 4 of the HRS 206E-33. Workforce developments must set aside 75% of residential units as for-sale units for families making the workforce 100-140% AMI. The Government doesn’t have to help developers cover costs incurred by that and the development must meet a certain unit-size requirement. The developments are exempt from buy-back, equity-sharing and public dedication fees. No government money goes in to either HCDA-approved Reserved Housing developments or Workforce Housing developments.

Affordable Housing: in which the unit price is restricted to 80-100% area median income. HCDA’s Reserved Housing Program is defined in the Hawaii Revised Statutes (HRS) under 206E-33, 8. The article states that an “increased supply of low and moderate income housing may be required as a condition of redevelopment and residential use.” Whenever any developer proposes a residential development on a lot that is 20,000 square feet or greater, this requirement is automatically triggered. The specific requirement is further defined in HCDA’s own rules: 20% of the total residential floor area in for-sale units must be reserved as such. For rental units, it’s 15%. 20% of for-sale units must remain low and moderate for 5 years. The 15% of rental units must remain low and moderate for 15 years.

Low Income: is recognized at 60% or less of the area median income, requiring subsidized-rental housing, typically.

Very Low-Income: 30% or less of the area median income makes Public Housing options available. Further restrictions mandate that very low-income families should only have to spend a maximum of 33% of their gross income on housing costs. Pricing of these public housing options can be no higher than a third of the 30% AMI family’s total income. 

Eligibility Requirements:

Owner-Occupant Eligibility Requirements: To qualify as an eligible owner-occupant buyer of a reserved housing unit, a prospective buyer:

1.   Must be at least the age of majority (18 years old);

2.   Must not have a majority interest in a principal residence or a beneficial interest in a land trust on a principal residence within or without the State of Hawaii for a period of three years immediately prior to the date of application for a reserved housing unit;

3.   If married, the buyer’s spouse must not have a majority interest in a principal residence or a beneficial interest in a land trust on a principal residence within or without the State of Hawaii for a period of three years immediately prior to the date of application for a reserved housing unit;

4.   If you have dependent children, your dependent child must not have a majority interest in a principal residence or a beneficial interest in a land trust on a principal residence within or without the State of Hawaii for a period of three years immediately prior to the date of application for a reserved housing unit;

5.   Must intend to be the owner and occupant of the reserved housing unit; and

6.   Shall not have record or history of conduct or behavior, including past rent payments, which may prove detrimental to other owners or HCDA. This criterion shall be applied within parameters set by federal laws on discrimination, including the Americans with Disabilities Act.

The Rules of Play:

Income and Asset Restrictions. In addition to the foregoing eligibility requirements, an eligible owner-occupant buyer’s maximum annual adjusted household income must not exceed $108,738 for a family of only one person, or $120,820 for a family of two or more persons. “Adjusted household income” means the total income, before taxes and personal deductions, received by all members of the prospective buyer’s household, including (but not limited to) wages, social security payments, retirement benefits, unemployment benefits, welfare benefits, and interest and dividend payments (but not including business deductions). Also, to be an eligible owner-occupant buyer, the buyer’s assets must not exceed $146,796 for a family of one person, or $163,107 for a family of two or more persons. “Assets” include, but are not limited to, all cash, securities, and real and personal property at current fair market value, less: (i) any outstanding liabilities secured by such assets, and (ii) any retirement accounts, and (iii) gifts to assist in unit down payments.

Transfer and Shared Equity Requirements. If the buyer of a reserved housing unit wishes to transfer title to the unit within a period five years after the buyer acquires the unit, the HCDA will have a first option to purchase the unit under certain conditions and at a sales price based on a formula set forth in Section 15-218-36 of the Kakaako Reserved Housing Rules. If the buyer sells the reserved housing unit after the applicable five year buy-back period, or the HCDA elects not to repurchase the unit within the buy-back period, the HCDA shall be entitled to receive a share of the equity in the unit according to a formula set forth in Section 15-218-41, of the Kakaako Reserved Housing Rules.

Rules applied outside Kaka‘ako:

If you are an interested buying Honolulu Real Estate please contact me at HI Pro Realty LLC to see how we can assist you in achieving your Real Estate goals with our expert knowledge and dedicated, responsive, and professional service.

The Kaka'ako Condo Lotto -

You Can't Win Unless You Play The Game!