74-5618 Palani Rd Unit I5

Kailua, HI 96740

$125,000C+

1 bd · 1.0 ba · 535 sqft · Built 1969 · Condo · Active · 10 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,177/mo
• Mortgage (P&I): −$656
• Tax + insurance: −$189
• HOA: −$625
• Vac / Maint / Mgmt: −$457
• Net cashflow: $250/mo
• Annual: $3,004/yr
• Cap rate: 8.70%
• Cash-on-cash: 8.58%
• DSCR: 1.38
• 1% rule: 1.74%
• Cash to close: $35,000

Investor read

• This is a 1-bed/1.0-bath condo listed at $125k.
• At list price, monthly cash flow is $250 ($3k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $125k).
• Only 10 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $864 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 83/100 on livability (#2 in HI, #906 nationally) — a professional / high-income tenant draw. Strengths: crime A+, amenities A+, commute A+; Watch: cost of living F.
• Hawaii Department Of Education (suburban): math 32% / reading 50% proficiency, ranked #1 of 1 in HI (top 100%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Kealakehe Elementary School (math 9% / reading 16%, grade F, #175 of 183 statewide, top 96%, 842 students, 65% FRL); Kealakehe Intermediate School (math 12% / reading 28%, grade F, #39 of 42 statewide, top 93%, 663 students, 64% FRL); Kealakehe High School (math 27% / reading 62%, grade F, #20 of 43 statewide, top 50%, 1,450 students, 48% FRL) — zoned schools average 59% FRL vs 39% district-wide (20 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Zoned-school proficiency averages 26% at this address vs 41% district-wide (-15 pts) — the specific schools serving this property underperform the Hawaii Department Of Education average; the district grade overstates school quality for this exact location.
• Watch-outs: HOA is 29% of rent.
• Market conditions: Rents rising (+2.5%/yr); 408 active listings in the ZIP; 5 comparable units currently listed for rent nearby; rentals at typical pace (median 23d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 982 units permitted in Hawaii County in 2024 (0 in 5+ unit buildings).
• Hawaii County population projected at +24% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 4 sale attempts since 17y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• Current owner paid $72k; list at $125k implies a 72% gain — meaningful room to come down on a strong offer.
• Cap rate 8.7% vs local median 1.6% in Kailua — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.

Questions for listing agent

• Built in 1969 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are A-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.
• How much new apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.