First Hawaii Home

The more I look at whether to buy a townhome or condo, the more it appears that a condo makes the most sense based on my needs. I’ve outlined some of the essentials for my first real estate purchase:

• In Honolulu (reduce amount of commute and time spent in traffic)
• Around $300K (hopefully I can qualify for a loan this size)

Yes I know you’re laughing, this list is pretty short but that’s the reality we live here in Hawaii. The fact that I need something in the city combine with my miniscule budget dictates that the only choice I’ll have is a decently priced condo. Now that I’ve got my mind set on purchasing a condo, here are a few things I’ve learned on what to look for before you make that condo purchase.

3 Things to Look For When Buying a Hawaii Condo

1. Location, Location, Location

   You want to make sure you buy a condo that in a good part of town with a history of attracting a large base of buyers or renters. Buying a property that has no demand for renters will do you no good and you want to make sure that your property has the potential to appreciate in value so you can sell it in the future and upgrade to something nicer. You’ll also want to take a walk and observe the neighborhood of a condo you’re interested in. Do you feel safe? Is this somewhere you’d want to live? A casual stroll around the neighborhood can tell you a lot.

2. Condition of the building

   Ask questions about the history of the building and what needs fixing. You probably don’t want to buy a condo in an old building that’s falling apart and needs major renovation. Also, you can’t tell just by looking at the condo you’re buying, you’ll need to dig up as much information and history on the building itself as these potential problems can’t be seen from the outside.

3. Maintenance costs, fees, and expenses

   Fees and maintenance costs can sneak up and bite you. There are a number of costs involved when owning a condo. These include: building maintenance fees, real property taxes, property management fees, insurance, and mortgage expenses.

Well I had a slight set back today. I when to www.annualcreditreport.com today and ran my credit report and found that I have a credit score of 831. I got a bit confused when browsing the site so through all the confusion I failed to select my FICO score with my credit score package. Anyway, feeling shorthanded, I called Steve Garcia from Wells Fargo Hawaii and report my credit score.

To give all of you some background information on myself, I have been doing web development/search engine marketing here in Hawaii for the past 5 years and just recently spun off my own Hawaii SEO company in February of 2007. According to Steve, self employed business owners normally need to provide two years of tax return documents in order to verify their income. Being that I’ve been in business for only one year as of a few days ago, he recommended that if I tried to get a home loan now, I would most likely be denied. This is tough to hear because most of the realtors at Prudential Locations (Hawaii real estate specialists) have been telling me that it’s a great time to get a home loan because of the extremely low interest rates. However, because of my current employment situation I’ll have to wait between 9-10 months before attempting to get my first home loan.

There are some disadvantages to running your own business, this is one of the prime reasons, but I’ll try to have a breakout year in 2008, make a lot of money and attempt to save most of it!

So I’ve been able to narrow my decision on what to buy to either a townhome or condo. It was easy to rule out a house as these cost over $600K here in Hawaii! Yes, unfortunately for our generation (X & Z) it’s going to be really hard to buy a house with a normal job…you’ll have to make an absurd amount of money to be able to afford one but that’s a whole different discussion. It looks as though I could get a decent townhome in the Kapolei area for just over $300K or a decent condo in Honolulu for under $300K.

To truly know what I can or can’t buy, my mortgage broker Steve Garcia over at Wells Fargo told me I should run my credit score. Running my credit score will give Steve a better idea on how large of a home lone I would qualify for which could possibly limit me to a cheaper condo if my credit isn’t so hot. I just recently purchased a car and found that my credit score was 720 which I was told was pretty good. However, Steve informed me that home loans look at something called a Fico (Fair Isaac Corporation) score which is used by banks to help their decisions with lending credit. Steve also informed me about a website which offers free credit scores www.annualcreditreport.com. I’ll report later what my credit score is after I run the report. I’m hoping for some good news!

What I’ve learned over the past few years since I’ve been out of college is that knowledge is power. I know that may seem cliche, but it really is true. Unless you deal drugs or run an illegal business, you really need to work hard at something to become successful. The same is the case with real estate, especially living in Hawaii. Here in Hawaii, we have a limited supply of homes and land (consequence of living on a tropical island) and an oversupply of demand from local residents and both foreign and domestic investors. So in order to buy a home in Hawaii, you really need to do your homework and understand how real estate works.

I know that I have a lot to learn which is why I decided to find a mortgage broker and real estate agent. Most people don’t bother talking to a mortage broker or a real estate agent early on in their real estate search. Just because you call and meet with them for information doesn’t mean that you’re expected to buy a house right away. Your job is to find as much information about the real estate process. As for me, I’ll be meeting with a mortgage broker and agent next week.

My goal with the mortgage broker is to find out how large of a loan I can secure. The only type of loan I’ve received was my car loan and I’m not quite sure what to expect with a home loan. The few things I’ll have questions about include:

* Background checks – Credit checks, pay stubs, tax returns, etc
* My concern is that I just bought a new car and recently started my own business. Because I haven’t filed taxes for the new company just yet, I’m wondering if that will impede my ability to secure any type of loan.
* How to best leverage my money to purchase the loan (putting 5% vs 20% down)

I’ll find out soon enough and report back!

Lastly, I hope to meet with a real estate agent next week to talk about my real estate objectives. I know there’s a number of things I need to learn such as:

* How to find properties that are great deals due to location, price, area, etc.
* How to deal with the seller’s real estate agent
* What to look for in an open house to make sure the property you are looking at is worth the investment (maintenance fees, infrastructure, traffic, location, termites, etc)
* I’m sure there’s a whole bunch of other stuff I need to learn