The past few weeks of activity in Kakela Makai Oceanview subdivision seems to have signaled an increased degree of confidence in Kauai’s Southshore Real Estate Market. With total lot sales for the year at 4 we now have 5 lots in escrow. Kakela Makai is a 199 lot subdivision in Kalaheo just below the Kukuiolono Golf Course. Beautiful oceanviews of the Poipu Coastline with the average lot size of approximately 10,000 sq. ft. The average lot price is around $365K and custom home prices are $900K to 1.7 million. The CC&R’s allow for a main home and a guest home, underground utilities and each homeowner must install their own septic system. There is a community clubhouse with a pool for all to share for a low yearly maintenance fee of $500  Â
For a listing of lots available and a up to date site map see http://www.yvonnesummerfield.com/land.php
To see more photos please click on http://www.yvonnesummerfield.com/address.php?property_ID=100
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The size of the second home market is significant. Second-homes accounted for 4 out of 10 homes sales in 2005 and that included vacation homes and investment property. According to the National Association of REALTORS® (NAR), a record 2.82 million second homes were sold in 2004. Both 2004 and 2005 were record years for second home sales. Vacation home sales during that time period made up 12% and investment property made up 28%. Whether it’s a vacation home or a rental property, a second home can give you many of the same personal and financial benefits as your first home. However, make sure you understand the tax implications before you buy, so you can make the most of your home investment.
Lifestyle benefits
If your second home will serve as a personal getaway, you’re probably looking forward to having a place to relax with family and friends. Whether it’s a home in a residential neighborhood or a condo by the beach, knowing that you can retreat from the hustle of daily life to your own private Kauai vacation spot has an obvious appeal.
Financial benefits
Investing in a second home has the potential to pay off in a number of ways. First, there are the same financial rewards that come with homeownership in general: tax-deductible interest* and possible price appreciation. In addition, you may be able to use the home as a source of rental income. If it’s a vacation home, renting it out for part of the year can help offset the costs of ownership. If it’s strictly a rental property, you can use it as a significant source of income—although the tax implications may be somewhat different.
Protect Your Wealth
Real estate is a great investment, it may not provide huge returns but your wealth will remain safe from market crisis, and other problems. Also, the properties’ worth increases over the years and tends to always keep up with inflation which will prevent it from reducing your overall assets’ value. ( see pdf on Kauai’s 2006 MLS statistics for apprecation rates)
Tax implications*
You can deduct the mortgage interest you pay on a second home, but not on an investment property. Which category your home belongs in depends on how you use it. To the IRS, a second home is one that you personally use at least 14 days per year, or at least one day for every 10 days it’s rented out, whichever is greater.
Although you can’t deduct mortgage interest for an investment property, you can deduct operating expenses (such as maintenance and advertising costs) that exceed the rent you collect, as well as losses on the sale of the home. Neither is deductible for a second home.
*Consult your tax advisor
Do you feel that purchasing a condo on Kauai can be a money maker? For the condo to cash flow you almost need to put 50% down and only mortgage the other half. The advantage to a rental condo is usually the occupancy rate is at least 70%, and can get as high 85%, so there is always revenue and at a higher dollar amount than a long term rental. The key is to get started with a piece of property you can afford and a dollar amount you can work with. How much does one have to spend to find something decent around Poipu? I just listed a 3/2 private lush landscaped home in Koloa with walking distance to Koloa shops for 785K. I just sold a Poipu Sands 2/2 condo for 950K with a net monthly income of 3,101 per month. I also have a 1/1 in the same complex in escrow at 770K with a monthly net of 2,100 per month. The lowest priced condo in Poipu can be as low as 465K for 1/1. We do have a leasehold complex Kiahuna Plantation that are directly across from the Sheraton and I am in escrow with a buyer paying cash at 324K for 1/1.