While this might all sound oh so technical, it really does matter because if you are going to invest as Flippers as we do, or Build or in some cases Remodel verses Rehab, not understanding things we often take for granted throughout the mainland can - and often - will come back to haunt you.. EVEN THEN LOCALS STILL GET CAUGHT UP in the Fickle Nature of what is just referred to as The Bishops Trust (verses Estate). You might not remember the following story, but commit the name to memory like a good Pinapple!
"The Bishop Estate was created in 1884 by the will of Bernice Pauahi Bishop, the great-granddaughter of King Kamehameha the great. Princess Pauahi died of cancer at the age of 52 and left the most of her estate for the benefit of the Kamehameha Schools. Princess Pauahi specified that the estate be governed by a five member board of trustees, to be appointed by the Hawaii Supreme Court.
The governor of the state of Hawaii appoints the Supreme Court justices and also provides the names of candidates to be considered for the Bishop Estate Trustee position.
The Bishop Estate is the largest private property owner in the state of Hawaii and having assets of around $10 billion whose sole beneficiary is the Kamehameha Schools, located on a ridge above Honolulu.
On August 9, 1997, the Honolulu Star-Bulletin published an article by five prominent citizens of Hawai'i titled, "Broken Trust", in which the removal of all but one of the trustees was recommended and the state of Hawaii was urged to investigate the Board of Trustees.."
http://www.dkosopedia.com/wiki/Bishop_Estate
Now I recommed you go here at some point; you will see I cut & pasted the above. But you can go on from here and go back and read it later. So lets jump to the Market Conditions of Oahu & Maui, which is where I am talking about when I just refer to the Islands.
It started on the Big Island of Hawaii in Spring of 2011, being in touch with my friend and Hawaii's Premier Photographer of Flowers who lived in Wiakoloa, Kona. this is on the "DRY" side of the Island, verses Hilo, which is the WET, VERY VERY WET side of the Island.
FIRST GOOD POINT: They are Islands and it's a Jungle! Remember that! They have creepy things that make you go Ouch in the Night - when you're NOT in the resorts. It rains a lot more on the North side of Maui, for example. And it's more Isolated there, thus you have the likes of the famous who everybody knows lives there... Like Oprah, Willie Nelson, Steven Tyler from Aerosmith, Ram Dass and others... You also will NOT be getting the cell reception quality we take for grante, when you get off the plane or are in Honolulu, then drive out of town for example. Yes, you must think like this! Here, I worry more about Crime & Zip Codes; there I think more about Cell Phone reception and "is the SFR on city water and if on a "well," just because it rains a lot, does that mean the well will NOT run dry before the end of season? And we're not talking the rual back woods here kids!
Water is an issue once you drive out of the resorts and outside the general cities/townships: It really beome a problem on Maui. Still, this is NOT a reason for us not to be there in mass! We just need to be aware like we are about rehab details of a hom: We just expand our thinking to some of the "local issues."
So we are just talking knowing Hawaii's idiosyncrocies, which are disimular to "regional states" on the mainland, like going from The California Redwoods to the Canadian Boarder: The Pacific Northwest, which technically starts at Salinas, California below San Jose, California and the Bay Area. This is also known as ECOTOPIA, title of the book by Earnest Callenbach who coined the name; also now so referred to by the Wall Street Journal, etc., i.e. The Bible Belt).
Basically speaking, like the good researchers we of the DG Family have become, how could I have a rekindled a 36 year friendship with somebody who has been living there for 20 years and not "check into things?" NOT GOING TO HAPPEN! HAHA, I don't know Dean but I don't think he'd ever forgive me!
Well, to my total and utter surprise, what I found was - dada - PRICE FIXING! What? How can that be? Don't we all establish values of R/E? NOT LIKE THIS.. I'm talking from Leading people in trouble on, letting them go down smoking, following up on the same properties and picking them up as REO's; "the best properties selectively" then using them as "turn over properties" to those who come from off the Island and don't purchase the Over Priced homes they've convinced the locals they are worth and have established the listings prices on! That's full circle, that is price fixing: Welcome to Hawaii.
If you think those prices you are reading about are real, then how do you justify a house on the market for 581 days at 150% over FMV? Just using Zillow on the first day got me thinking that site had to be off..
How about this: Finding 3 such properties in Oahu by the same Broker on the big island attempting to get established and going the same! Ahhh, but he has competition of other Brokers doing the same! Thus, THIS IS THE LEGAL DEFINITION OF PRICE FIXING! It is NOT establishing Values through the Comp process. I FOLLOWED A COUPLE, TRACED BACK ELEVEN. NO, I did not, nor do I intend to "Drop A Dime" on them... As an rentrepreneur however, it made me look deeper into the Stats of the Islands.
A quick note before I go on: Most of these installments will be shorter, but I need to give you a base reasoning becuase I believe I "found something" that this greater family might explore. You see, here in Phoenix I had kept coming across End Buyers from The Islands. I didn't understand what they meant when I asked how it is in the islands, and they would respond, "You should go there?" I thought they were talking to me as an individual because I had never done so... They meant "As A Buy/Fix/Fip or Hold Investor!" They are here because we ae not there in the numbers we could/we should be! If's like the Local's need us. AT least that's how I am coming to see it!
I'm going to come back with some gathered Stats in the next installment. Yet, here is something to leave you with: You come to the Island to buy a place, Price are marked down and right now a lot of people from India are coming in as buyers. Ok, so the Visitors & Convention Buearu and others are marketing there now. That's all that means. So you have a steady stream of Buyers looking for a deal and what to theys see? Again: these over priced listings but till way above real values, and not many Investors! Yes, listed prices might be way below the Pre Crash, but look closer... They were WAY above above other over priced areas in the contry, Like the Scottsdale, AZ's of the mainland. Product with equity can be had at far lower prices and deals done because lots of people still want AND NEED an out!
The listings are 30%, 60% over FMVForeclosure Value. 150% over in some cases. How about a $3.1million dollar Flower Farm, mareked down to $2.85m and the real value is $800,000? On the market for 2.5 years, YA WONDER WHY THE LOCALS AREN'T BUYING? And it's slower then you are led to believe for everything else too! Oh yeah, I forgot to mention that this magnificient multi structured furnished property tends to run out of water for a couple months...$250,000 to dig another well 780-900ft (I could hire the Ram Rod & rent the equipment and do it for under $22,000;.. That surprised my friends living there. Well 17 years in the Pacific Northwest and one learns about digging wells. I could do that in Oregon for half that if I'm only going 500ft, which is a pretty common depth.
Yes this is a pretty expensive property and not anything Typical of a SFR. But think about this for a moment How much are you going to make on a simple, standard Assignemtn Deal in those numbers, with world wide money coming over and looking for a deal EVERY DAY? An assignment is an assigment. Here's one for you: The VERY FIRST P.A. supplied to me by an Agent's Office had "And/OR Assign" on it, for a $4 million dollar property, printed right after the blank iine to fill in your name as Buyer!
So when you look at a nice larger property at a steal of a price, and you see it's on well water and a lot of properties are, FIND THE DEPTH and Ask Questions! DO NOT ASSUME coming from the mainland that it's a neighborhood and it's on city water. Also, that because it looks like a magnificent DREAM FANTASY Property that it's on city water!
OK, Back soon for a 3rd and shorter installment. Tried to clean up the grammer & spelling, but not good at editing myself!
Who is Dean Graziosi?
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