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Searching for Kaka’ako condos for sale: 6 Important tips to remember

Searching for Kaka’ako condos for sale: 6 Important tips to rememberrtant tips to remember

Kaka’ako is a vibrant metropolitan neighborhood at the heart of Honolulu, Hawaii. Nestled along the southern shores of Oahu – at the midpoint between Downtown Honolulu and Waikiki – Kaka’ako gives residents and visitors access to the best of the island’s economic hubs and recreational attractions.

This eclectic community is urban island living at its finest – and you can make it your home, too. Here are some tips to help you in your search for Kaka’ako condos for sale:

What’s inside:

Do your research on Kaka’ako

Start your research by looking into Kaka’ako’s history.

Start your research by looking into Kaka’ako’s history. From there, you’ll understand the various stages of growth of this area, as well as the obstacles it had to overcome to become the dynamic urban center that it is now.

Fully embodying Oahu’s identity as “The Gathering Place,” Kaka’ako was envisioned to become a dynamic residential and commercial area where residents can work, live, and play. Formerly a community that thrived on fishpond farming and wetland agriculture, the area has undergone centuries of development and revitalization to become one of Honolulu’s most exciting neighborhoods.

Today, two major development projects are transforming Kaka’ako from an industrial hub to this beautifully curated city:

Our Kakaako

“Our Kakaako” is a multi-million residential and commercial project headed by Kamehameha Schools, in partnership with Castle & Cooke Homes Hawaii Inc.

The entire plan revolves around the concept of a mixed-use neighborhood where traditional culture and modernity coexist harmoniously. Here, colorful murals adorn the walls of homegrown shopping and dining districts, state-of-the-art residential towers, and thriving commercial spaces.

Ward Village

Ward Village, on the other hand, is a 60-acre master-planned community designed and developed by the Howard Hughes Corporation. This residential-commercial neighborhood is focused on walkability, thus, ensuring that the entire community will have a beautiful, cohesive design. Here, you can expect well-planned high-rises, wide sidewalks, shaded walkways, expert landscaping, and a diverse range of dining and entertainment options.

Know the property you’re buying

Know the property you’re buying

When you think of “condominiums,” mid- to high-rises will usually be the first things that come to mind. However, in terms of real estate ownership, these properties can come in any shape or form, as long as they possess these two things:

  • Individual ownership interest. This refers to your exclusive right of possession and ownership of a specific condominium unit. Like any other type of real estate property, it has an individual deed or lease, is separately assessed for taxes, and can be mortgaged.
  • Common ownership interest. This refers to your percentage of undivided interest in the common elements that come with the property. This type of ownership interest distinguishes condominium ownership from other traditional forms of homeownership. “Common elements” cover parts of the land or structure that are jointly owned and used by all unit owners. These include the foundations, main walls, roof, recreational facilities, and more.

In Hawaii, you can purchase condominiums in two ways: through fee simple or leasehold. Fee simple condominiums are considered the “most complete” form of ownership since this covers the condo unit, as well as the land it sits on. Leasehold condominiums, on the other hand, only cover the unit and the right to use the land for the duration of the ground lease. This right to land use is also subject to certain restrictions.

If you want to know more details about condominium ownership and living in Hawaii, you can check out this guide from the Hawaii Real Estate Commission.

Study your condo documents carefully

Study your condo documents carefully

Condominium sellers in Hawaii are required by law to disclose certain information to prospective buyers. Here are some of the most important documents to look out for:

  • Declaration and Amendments. This is usually the first and most important set of documents provided by the condo seller or their agent. It details the features of the condo unit, as well as the common elements that fall under its ownership, such as shared amenities and parking spaces. When going through the information outlined in these papers, make sure that they are consistent with the property itself and the information stated in the Title Report.
  • By-laws and Articles of Incorporation. This set of documents details how the Homeowners’ Association (HOA) is governed in the condominium. It also shows the established roles and responsibilities of the Board of Directors (BOD). The Articles of Incorporation are the legal foundation of the HOA and are integral in protecting the BOD and other homeowners from potential liability.
  • House Rules. As its name suggests, these are the rules and restrictions that dictate how homeowners, residents, and guests should act and behave while in the property. Familiarizing yourself with these rules is important as they are indicative of the kind of living environment you’ll have should you decide to purchase the condo unit. Take note of items related to day-to-day activities such as car washing, the use of bikes or skateboards, noise control, guests, parking, rentals, pet ownership, and design guidelines. Also, check if the rules are consistent with Honolulu’s condo ownership ordinances and zoning laws.
  • Financial statements and budget. If possible, it’s best to look over both current and proposed financial statements of your condo’s HOA. These should show a detailed breakdown of incoming and outgoing funds. Take note of significant changes in the annual budget, especially if these result in substantial raises in HOA fees, and find out why. This will give you an idea of what to expect in terms of HOA fees, where the money goes, and if it’s money well-spent on behalf of the homeowners.
  • Minutes of meetings. This is a condensed version of everything that transpired in the last three annual meetings among the HOA and BOD. This should provide in-depth information about issues raised and resolutions made in condominium development. Check this document for discussions on special assessments, potential disagreements, financial status, ongoing litigations, and other notable topics, as this will provide insights into the reputation and management style of that condominium’s HOA.
  • Managing Agent’s Disclosure. Also known as Form rr105c, this document contains a general summary of the whole condominium development (not just the individual unit). This includes information about the percentage of owner-occupied units, contact information of the HOA president, where to access HOA documents, recent increases on HOA monthly dues, recent developments or repairs in the property, and more.

Stay updated on the local real estate market

Stay updated on the local real estate market

Any savvy property investor knows that the key to getting the best real estate deals is to keep your ear to the ground. Knowing current market trends allows you to make smart decisions regarding your investment in real estate.

To help you out, here are some of the things you need to know about Kaka’ako’s condo market:

  • The Oahu real estate market is still maintaining its record-breaking momentum from 2021. According to the latest market report from the Honolulu Association of Realtors, the market continues to see modest increases in sales, prices, and inventory this April 2022. Condo sales, in particular, rose by 4.2% year-over-year, with the median sales price reaching $510,000 – 13.3% higher than last year.
  • The condo market in Honolulu’s metro region is particularly robust, constituting 60% of sales in April and claiming the largest increase in volume at 16.5% year-over-year. Condo properties in the $700,000 to $999,999 range saw the highest gain, with sales skyrocketing by 101.6% from 2021 figures. This was followed by condos in the $1M to $1.9M range, which saw a 54.8% sales jump.
  • Owning a Kaka’ako condo continues to be a great long-term investment for many.

Account for the costs of convenience

Account for the costs of convenience

There are many perks to buying a condo property that you won’t get with a single-family home. For example, condominiums are typically located in prime urban locations like Kaka’ako, which offer residents not only convenient access not only to the best retail and dining districts but also to gorgeous ocean, mountain, and city views.

Another perk is having state-of-the-art amenities and home maintenance services at your disposal. Many luxury condominiums in Kaka’ako provide residents with rooftop pools, fitness centers, barbecue cabanas, resort-like spas, and even private workspaces and meeting rooms. On-site management and HOAs would ensure that your property is well-maintained, and that any issues would be promptly repaired.

However, these conveniences can come at a price. Aside from the down payment and monthly mortgage, you also must consider two substantial costs while looking through Kaka’ako condos for sale:

Residential property tax (Fiscal 2021-2022)

There are two tax rate tiers for residential properties in Honolulu. If your Kaka’ako condo is priced at $1M or below, you must pay 0.45% – or $4,500 per $1M – of net taxable assessed value annually. For properties priced above $1M, payment is at 1.05% or $10,500 per $1M of net taxable assessed value per year for the amount of assessed value above $1M.

Hefty as these rates may seem, they are actually much lower than rates in other U.S. counties. This makes living in Oahu an economically wise decision. If your condo is your principal residence, you can file for a homeowner’s exemption and lower your property tax rate to 0.35% annually. These rates are subject to change with each fiscal year.

HOA fees

These fees are extra monthly costs paid to your condominium HOA in exchange for the general upkeep and repair of common areas, such as landscaping, parks, gyms, swimming pools, and other condo amenities. Some HOA fees may also cover sewage, water, security, basic cable, and internet connection. Since the HOA manages the condominium’s facilities, the fees they collect typically cover flood, fire, and hurricane insurance, as well. Owners may additionally be required to obtain an HO6 policy to insure the contents (“walls in”).

In Honolulu, condominium HOA fees can fall anywhere between $500 and $3,000 per month, depending on the size of your unit and the range of offered amenities. It’s best to study your condo documents and assess whether the amenities are worth the monthly costs and are the kind you’ll use or benefit from.

Moreover, find out if the condo you’re eyeing has any current or pending special assessments – additional costs charged to each homeowner for big, unexpected repairs such as elevator or roof damage – that can be added to your monthly HOA fees for months or even years.

Ask the right questions about your potential home

Ask the right questions about your potential home

The condo lifestyle in Kaka’ako may come with a myriad of perks and benefits, but as with any investment, there are also some risks and disadvantages involved. To protect yourself from unfortunate scenarios, it helps to ask questions as you go through your condo-buying journey. Here are some of them:

When was this condo built?

When looking at potential Kaka’ako condos for sale, it’s important to consider the year it was built. Condo maintenance fees will make up a substantial part of your monthly expenses when you purchase this kind of property, and the condominium’s age can be a deciding factor.

Older condominiums usually need more upkeep or repairs, and this can translate to a higher monthly HOA fee or a special assessment. Newer condo developments might not have as many maintenance issues, but fees can still be expensive depending on the type and quality of amenities they offer.

Does this condo meet your lender’s loan requirements?

If you’re planning to finance your purchase with a mortgage, you and your Realtor should make sure that this potential condo meets all of your lender’s loan requirements. Some loans have some stringent conditions when it comes to the condo finance process, depending on certain factors such as occupancy, financial solvency, and construction status.

First, ensure that the condominium building isn’t involved in any ongoing litigation or serious legal issues that could result in automatic loan denial among most banks and mortgage lenders. Moreover, take note that if you’re buying a Kaka’ako condo as a rental investment, most mortgage plans will ask for a larger down payment (i.e. 25-30%). Some mortgage loans also require that a minimum of 50% of the units in the condominium development are owner-occupied.

Does this condo have amenities that fit your lifestyle?

As with any home-buying process, purchasing a condo is more than just a real estate transaction – it’s about choosing a new home environment and lifestyle. Amenities make up a huge part of condo living, ranging from the standard resort-style pools and well-equipped gyms to more luxurious features such as private dog parks, putting greens, private theater rooms, party rooms, and more.

When searching for Kaka’ako condos for sale, make sure to ask your Realtor for the complete list of amenities that come with the property, since this can be the deciding factor on the kind of lifestyle you will have in the condo. Remember to ask basic questions like:

  • Does the condominium allow pets? If they do, take note of details about pet restrictions such as the type of pets allowed on the premises, the number of pets, or the size and breed of a pet.
  • Does this condo unit come with parking? Does the condominium offer guest parking? Parking spaces can be limited in a condominium, and some units for sale might not come with a parking space. If you have a car, or if you’re someone who likes to have guests over often, make sure that parking stalls are covered or secured in your condo purchase. If not, ask if parking stalls can be rented separately.
  • Does the condominium have central air conditioning? Kaka’ako can give you beautiful sunny weather and a vacation-like island lifestyle year-round. However, given its tropical climate, air conditioning is essential. Check if your condominium has central air conditioning, how often it is maintained, and how old it is. Some older condominiums might not have central AC, so ask if AC units can be installed.

Will this property meet your long-term needs?

Whether you’re purchasing a condo as a rental property, a retirement plan, or as a vacation home, it’s important to ensure that your real estate investment can meet your long-term financial and personal needs.

Observe trends in the local real estate market to gauge the area’s demand and the potential increase in value. Kaka’ako has a variety of future development plans in the works, so you can rest assured that it is an area with consistent demand and potential for appreciating property values.

Of course, take note that the neighborhood has an upbeat and dynamic urban environment. There is always something new being developed or built in the area, so discuss with your Realtor how Kaka’ako will fit your lifestyle and future plans before searching for condos for sale.

Explore this thriving urban metropolis with Marshall Mower

With over 23 years of hyperlocal expertise and real estate experience, Marshall Mower is the Realtor you can trust to find the perfect Kaka’ako condo for you.

Marshall’s achievements, awards, and testimonials speak volumes about his knowledge and skills. He has been listed among the Top 50 Hawaiian Realtors (Pacific Business News) and has been recognized as one of Hawaii’s Top 100 Realtors (Hawaii Business Magazine). Marshall is also a holder of numerous accreditations such as REALTOR BROKER, RB-18111, Certified Residential Specialist (CRS), Accredited Buyer Representative (ABR), Graduate Realtor Institute (GRI), Seniors Real Estate Specialist (SRES), and e-PRO Internet Professional.

When it comes to finding your dream home in Kaka’ako, there’s no one more qualified than Marshall Mower. Get in touch with him today by calling 808.277.7878 or by sending an email here.

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