Buying A Vacation Rental In Hawaii May 2026

Hawaii has empowered counties to phase out short-term rentals (STRs) in residential areas to address housing scarcity. Zoning is now the primary factor in determining a property's legality.

This report details the complexities of purchasing a vacation rental in Hawaii in 2026. Significant legislative shifts have reshaped the investment landscape, making due diligence on zoning and tax compliance the most critical components of a successful acquisition. 1. buying a vacation rental in hawaii

Investors often seek properties where gross annual income is at least 10% of the purchase price (e.g., $100k gross for a $1M property). Hawaii has empowered counties to phase out short-term

Most properties require 25–30% down to reach a break-even cash flow. Local lenders typically require 20–25% down for vacation rental financing. Hidden Costs: Most properties require 25–30% down to reach a

Better-performing properties typically yield a 4–6% cash return .

Most new STRs outside of designated resort zones are prohibited. Ordinance 22-7 requires a 90-day minimum stay for non-resort properties unless they hold a legacy Nonconforming Use Certificate (NUC).

Significant changes are underway following Bill 9, which aims to phase out approximately 7,000 units in apartment-zoned districts (the "Minatoya List") by January 1, 2029 (West Maui) and 2031 (rest of the island). Focus only on hotel-zoned units or permitted Short-Term Rental Homes (STRH).