I never thought we would own a vacation rental property — especially one in Hawaii. Becoming a real estate mogul was never our plan and yet here we find ourselves with not just one, but two properties in a different time zone that we are managing from afar. There are TWO Kutcher Condos in Maui and today I want to walk you through why we made the decision to invest (once again), what our plan is for the future, how it’s been renting our property out, tips for running a great rental property, the numbers, and why we love real estate.
Two years ago, a dream came true. I had a vision of Drew and I spending a month in one place (other than where we lived) resting and stepping away from work. It was the first time in my business that I took a true sabbatical and a year earlier we had fallen in love with Maui. Instead of going somewhere new, we wanted to go back because we had done all the tourist-y things that were the must-haves and we just wanted to live there and relax. We booked a studio apartment and planned our getaway. The place was absolutely NOTHING fancy but it was perfect for the month. We were smitten with Maui.
If you want to hear the story of flying our parents out and searching for a condo of our own, you gotta tune in!
Our First Steps
Like any investment, I sat down and ran the numbers. I calculated the expenses, added on taxes, looked at comparable properties and their rates and occupancy. I also posted to my audience and hinted that IF we did it, would people be willing to rent it? Of course, we got hundreds of comments of excited people who would definitely want to rent out our space. I also estimated the amount of money we’d have to put in to update it, change out furniture, get it painted, etc.
When we ran the numbers, we knew that it would take about 8 years to be truly profitable, but we were in a situation where we could pay cash for the actual property which took a lot of the fear out of it.
Things to consider before buying a rental property
LOCATION: Is it in a place that people visit, are there successful rentals in the area, is it a desirable location, would rentals be seasonal? Is it a place you want to visit?
TYPE OF PROPERTY: Is it a condo? Are their HOA fees? Who does property maintenance? Is it a stand alone home? What are the taxes?
BUDGET: What are you willing to spend? How long will it take to earn the investment back? Is it worth spending more to get a bigger space?
WORK: How much work needs to be done before you can rent it? What work will increase the amount you can charge as a rental? How long will it take to complete work? When can work be performed?
TENANTS: Do you want short term or long term rentals? How will you screen people? How will you protect the space?
RATES: What will you charge? What are comparable rentals listed at? What is the occupancy rate? What are high seasons and low seasons?
MARKETING: How will you market the space? Will you use Airbnb, VRBO? Create a separate booking system? Do you have any audiences you can leverage?
LEGAL: We also had to learn about Hawaiian laws, like the fact that we had to have a property manager on the island, find cleaners, and work with the HOA to ensure everything was transferred over to us. Overall we used referrals from our amazing realtor and then found a manager who was willing to work with us in the way that we saw best for the property.
When it came to renting it out we had a few options
We could have a rental management company do everything for us, so they would manage bookings, communicate with guests, and be on call for any needs. They would take a cut of our income as payment. Or, we could have the actual condo building manage it and they act almost like a hotel and book out rooms based on requests and availability. Again, they take a cut out of the profits as payment.
We wanted to manage the booking and communicate with our guests to give them a great experience, so our management handles scheduling the cleaners, managing any maintenance, and serves as our person on-island who is on call.
The option we chose gave us the highest profit margins while also giving us peace of mind and less to coordinate on our end. We lucked out with our property manager because we really like him and love to see him when we visit, and we think we’re pretty easy to work with! Drew was willing to take on the majority of the bookings so he logs into Airbnb daily, sends out all communication to guests, has a spreadsheet based on time of arrival, departure, and when the condo will be cleaned and flipped, and then he serves as a point person as people plan their trips. I also love to chime in with recommendations and say “hey” to our guests since so many of them are followers and fans!
We also created an entire website for our condo and a separate Instagram handle. The website serves not only as a place for people to check out our space but also shares our favorite things about Maui — adventures, restaurants, beaches, and activities. We wanted to have one landing page for when people ask us for our recommendations and it was fun to put it all in one spot with a beautifully branded website. Because duh, it’s me.
Designing the space lead to some surprises
It’s really hard to find things that ship to the island so you’re confined to certain sites and anything on island. Shipping was a little sketchy too, since we couldn’t have things land at our condo when we weren’t there, so we had to ship everything to our manager (which was hilarious) and then get it to our unit and up the stairs.
Nothing is done to code in Hawaii so we had some interesting discoveries with plumbing, electrical, and the angles in our building. Contractors were entirely unreliable which added to the stress and budget of our upgrades.
We worked with Crisp Interiors which was the BIGGEST blessing in the world (Emily was on the podcast) and it helped us plan a cohesive space without breaking the bank. We had to choose things that would last a long time (or be easily replaced) and more neutral items that would make for a minimal rental space but something that still felt like home. You have to really stock up on extras like extra towels, sheets, bedding, etc. You’ve got to prepare for multiples of everything so you can flip the space quickly for the next guests.
We wanted to incorporate a few things that reminded people that WE own the condo, so we included two photos of us and then I went a little overboard and got branded pillows, mugs, and a surfboard with our logo on it. Those little personal touches along with some of our drone shots make it fun for us to stay in but also neutral enough for guests while reminding them that two hardworking humans own the space!
The profitability breakdown
We’ve been super fortunate to use our platforms partnered with beautiful images to get our property seen and rented on Airbnb. Our overall occupancy rate is in the 90% range, close to 95% and we have plans to continue to get that as close to 100% as possible! We are able to charge a little higher rates because our space is so booked and we have people who wants to specifically stay at our place because it’s ours!
We were able to pay cash for our condo which was such a blessing. With our first purchase, it literally drained our bank account and we were down to pennies (which made me work super hard to get another product out to launch to help re-coop costs.) Right now we have been profitable every single month of owning it and we’re on pace to have the condo break us even from that investment. Then every penny would be profits within 8 years. Knowing that we could be under 40 and be making an income from this property was a huge incentive for us.
After a full year of ownership, we started talking about a second unit. We were so booked that people were disappointed they couldn’t get our condo for their Hawaii vacation! Now that we understood how to run a unit, what our profits could look like, and how popular our space had become, a second property seemed like a great move. It wasn’t an urgent need to purchase but we were definitely open to the idea of getting another space and knew that we wanted to stay in the same complex to make it easy and to offer two options for our guests. A few units had gone up for sale but they were either overpriced or needed a lot of work.
We had worked with our financial planner and accountants and knew that if one hit the market, we could be ready to act (and that was huge) because the market has been CRAZY since we purchased. We had automatic email notifications for when a unit was listed and that’s how we found THE one.
I get a little deeper into finding the perfect unit for Kutcher Condo Number Two in this episode. Are you listening, Goal Digger?
My top 5 tips for running a successful Airbnb
Go Beyond the Basics
We’ve stayed at many Airbnbs in the last few years and most of them just have the basics, but we wanted to do more than that. We asked ourselves what things we wish we had when we were here on the island, ya know, the stuff you can’t easily fit in your suitcase! We stocked up our place with alllll the beach needs including: an umbrella, two fold out chairs, a cooler, beach towels, beach mats, sand toys, a beach bag, snorkels, and we even have sunscreen and aloe! This helps our guests save money on their vacation AND allows us to share some extras that will make their stay easy and enjoyable.
Another thing I was serious about was not skimping on cheap linens or bedding! There is nothing worse than getting to a place and finding an uncomfortable bed or terrible pillows. While on the island I stumbled into Cariloha, an incredible island shop that sells bamboo sheets, towels, and robes and I KNEW we had to have them in the condo. We have two plush robes for our guests, awesomely soft towels, and sheets that make you want to stay in bed!
Communication is HUGE! You want your guests to feel valued and understood, and communication helps equip them to have the best time ever. We sat down and created message templates that help communicate how to enter the building, where to park, check in and check out policies, and we make sure to get their flight info so we know when they arrive on the island and get to the unit. It’s also awesome to just check in with your guests and see if they need any recommendations or ideas while visiting. We created a beautiful guestbook for our condo so our guests can see our island pictures and feel like they can get to know us while leaving a little message about their stay. On top of that, we have a little quick facts sheet and booklet out upon arrival so all of the important information is laminated for our guests and easily available should they need any help!
We understand that checking into a new place can be confusing or complicated and so we wanted to make it as easy as possible. Not only do we email all of the information to our guests but we also decided to streamline the process and installed a Schlage lock on our door so that our guests can use a simple key code to access our place without fumbling around with a lockbox or dealing with keys that can be easily lost in the sand. It also allows us to give our cleaner and manager personal codes and see on our app who is entering the building and when. The most amazing thing is that you can access all the info from an app on your phone, so you can see that the place is secure, who’s entering, and you can even unlock it from your phone.
Create an Experience Online
When you browse Airbnb, there are a ton of places that all blend together and they start to look the same! When we were brainstorming our design for the space we wanted something super clean and minimal while still feeling like home. We blew up our own personal drone photos and hung them on the walls for art, we leave a signed print for each guest who visits us and a bottle of wine for them to enjoy! I also took the time to style images of our place in a unique way so that it felt lived in and enjoyed, instead of just feeling like a little home tour. We also shot a drone photo of the beach by our place to capture the attention when people are scrolling the app and took images that set the stage and tell a story beyond just a building. I loved incorporating items like branded pillows, branded coffee mugs, and heck, we even put our logo on a surfboard (I know, I know, I made our condo a logo!)
I also knew I wanted to put together a place to share about our Hawaii home and our favorite beach spots, adventures, and restaurants on the island so we created a website and an Instagram account for the condo so that people can fall in love with our space beyond the platform it’s hosted on!
Have an Awesome Team
One of the scariest parts of getting our place was figuring out who would manage it and what that would look like with us living so far away. For many places on the island, the building that you’re in can manage your place for you and take a percentage of your profits, but then you’re pretty hands off.
We wanted to be more hands on with our place to host people that felt more like friends and family, even if they were mere strangers. So we decided to hire an on-island rep (required by the state) to help manage our cleaning and maintenance while we handled the bookings. Our rep, Dave with Rentals Maui, works with our booking calendar and schedules the cleanings and then does walk-throughs and inspections of our place before each new guest arrives. Not only are we able to screen our own guests, but we are also not giving up a percentage of our income because we were taking on that piece of things.
We interviewed a few cleaners on the island based off of our managers’ recommendation and found an amazing husband and wife team who treat our place like their own and make sure it’s perfect for each incoming guest. We also found an awesome father-son duo, Rob and Justin with Aliikui, who do INCREDIBLE maintenance work. They show up on time, every time and have been some of the greatest people to work with. Being on an island, recommendations can make all the difference so if you can have any connections, pay attention!
Have Fun With It
We wanted our place to be fun and feel like home so we included items like a Bose Bluetooth speaker, a few board games, a bar cart, a Roku so people could access their Netflix and fave TV shows, and more. We wanted to under promise and over deliver for our guests while being reasonable that most days people would be at the beach enjoying the island.
I still can’t believe we own a place on Maui! It’s pretty incredible and it’s such a gift. We want to enjoy our time in Maui just as much as our guests do, so we block off time for us to come to the island, make improvements on the condo, and rest and relax. We are always looking at how we can make our place better for our guests and what WE would want from a place.
Owning a rental property can be a lot of work but just like all things in business, if you can systemize and create templates, it’s not as hard as it might feel to run a successful Airbnb. We were shocked when we got back after five months away how our place looked and felt just as we left it (even though over 20 guests had enjoyed it!) Since we have such a great team supporting us and incredible guests who respect that and care for our space, we’ve had such an incredible experience hosting and sharing our slice of the island with others. It’s simply a joy to be able to open our doors and welcome people in!
Our plans for condo number two are pretty similar to the first. We are getting it all ready to go and will have it available to rent, and we’ll spend time enjoying it! Our first trip as a family of three is going to be for the month of February! We’re going to do a full month with Baby Kutch at our favorite place — we figure if we don’t start our kiddo young, we might never go!
What are our real estate goals? Well, we LOVE having our two condos in Hawaii, we also fully own our home, so right now we are happy and content owning 3 properties. That isn’t to say that we won’t continue to invest in real estate in the future. It’s been a learning curve but one that we get excited about and enjoy!