Hawaii Airbnb: real financials from six months of short-term rental

Executive overview

Buying a Hawaii condo as a short-term rental looks profitable on paper but produces negative cash flow in the first years. The culprit is mortgage interest: in early years, most of the mortgage payment goes to the bank, not equity. The real payoff is a multi-year play — cash-flow positive from year three, not year one.

Why Hawaii and how the property was chosen

• Targeted high-occupancy markets using AirDNA; Hawaii Big Island showed 85–90%+ occupancy with permits still available
• California ruled out: great occupancy but new permit bans
• Found a three-bedroom condo with an existing permit and VRBO history; added Airbnb listing
• Property manager (20% of revenue) handles everything — cleaning, logistics, guest relations

Setup costs and initial expenses

• ~$6,000 on furniture, supplies, rugs, and kitchen items
• $2,000 for legal structure setup
• Offset some costs through brand deals (mattress, bed frame, furniture)
• Ongoing fixed costs: ~$1,400/month HOA, mortgage payment, Hawaii rental taxes (~20% of revenue)

Revenue and what was actually kept

• First guests: late March/early April 2024
• Monthly net from manager (after 20% commission and cleaning fees): $6,000–$8,000 in summer months, $11,400 peak (July)
• After taxes, HOA, and mortgage interest: most months negative
• August hit: $16,000 AC replacement wiped out the peak month, pushing September to -$9,000

Why the losses were expected

• Year 1 model projected losses up to $60,000 — primarily because early mortgage payments are almost entirely interest
• Revised estimate: likely to lose less than $60,000 in year one
• Year 2: still projected negative (~$20,000–$30,000 loss)
• Year 3+: expected to be cash-flow positive as principal portion grows, prices rise 3–5%/year, and occupancy stabilises

Non-financial upside

• Property runs hands-off; manager handles everything
• Personal use available whenever not booked
• Entry into US real estate market — first property ownership milestone
• Emotional and social value: able to gift stays to friends and family