The Benn Pacific Blog

Tuesday, May 03, 2016

New vacation rental plan needed for Hawaii.

Recent findings in the Hospitality Advisors’ report for Airbnb stated that the economic impact of Airbnb on the State of Hawaii was $353 Million last year - nearly a million dollars per day!  This highlights the fact that the State needs to come up with a new comprehensive plan to address vacation rentals.  Currently, there are a handful of properties (825 on Oahu) that were granted Non-conforming Use Certificates back in 1989 when the process was established, and the large majority of those are condos in Waikiki.  The rule currently is that if you are on the Makai-side of Kuhio Ave, you are automatically allowed to have transient accommodations.  On the other side, you still have to apply for the NUC (Waikiki Sunset, Waikiki Banyan, etc).  No one seems too bent-out-of-shape on the Waikiki condos but they are upset about having residential vacation rentals in their community.

So here are the real issues: 


1) Waikiki can’t handle all the all the visitors.  Even at 100% occupancy, we don’t have enough rooms.

2) Waikiki’s visitor plant (hotels) are too old and no one is building new inventory to be operated as straight hotels.  All new construction is geared towards some percentage of timeshare or condo-hotel.  Why?  Well, the private-equity funds and investors want their money back fast on construction and selling the units will give them back 2-3 times their investment AND leave them with a highly occupied property to service their restaurants, retail and front desk (which they retain ownership of).  More importantly, it pushes the maintenance expense back to the buyers via the maintenance fees.  This results in larger, more expensive rooms and changes who can actually come to Hawaii when the average-daily-rate (ADR) is ever-increasing.

3) Visitors with groups or families are looking for a more residential vacation experience.  They want to enjoy having their entire family in one home, cook for themselves and be in a single space.  Hotels don’t offer this ability.

4) The State needs the tax revenue.  By legalizing more vacation rentals we can ensure that those parties engaged in the practice will pay the TAT and GET taxes on those rents.

5) The City could create a new class of property tax so they win too!  The hotels pay the commercial rate of $12.40 per thousand of value.  Homeowners are paying either $3.5 or $6 (depending on if they reside in the home).

6) The property owners need the revenue.  The use of your home or some portion of it as a vacation rental in Hawaii is often borne out of necessity.  It creates income that allows homeowners to afford their home. 

7) Technology is the great equalizer.  A generation ago, if you owned a hotel, you needed to hire an operator (Outrigger, Hilton, Marriott, etc) to manage your property.  The primary function being – to fill the rooms.  Waikiki has always been largely a wholesale booking market (meaning travel agents book the rooms for the hotel).  Today, with increasing regularity, guests can book directly with the web.


What is the solution?


1) We need to re-examine the NUC program and allow more properties to handle legal vacation rentals.  Some suggestions:

a. If the home is in a residential area, the homeowner needs to get permission from his direct neighbors to allow the transient usage.

b. The NUC can restrict occupancy based on the square footage of the home.

c. The NUC can restrict certain activities (loud parties, functions, weddings).

d. The homeowner can pay the commercial property tax rate.

e. The homeowner shall pay the TAT and GET taxes.

f. The property shall be actively managed and operated by a local representative (no absentee management)

g. The property can be managed by the Inn Keeper’s Law, not he Landlord Tenant Code.


We need to come up with a workable solution to accommodate our visitors and to allow our Kama’aina to afford their homes.  If a homeowner can afford to pay all the taxes that the hotels have to currently pay, then we can create a nice alternative experience for our visitors while generating revenue for our municipal services.


Posted by Trevor Benn on May 03, 2016 at 07:57 AM
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Wednesday, December 16, 2015

The Donald Effect

In 2009, eleven buyers at Trump Waikiki sued the developer to get out of their Purchase Contracts.  The argument was that Trump could remove his name off the building if the development, or subsequent management, did not live up to the “Trump standard.”

What happens if the reverse is true?  What happens if Trump does not represent the standards of the building owners?

We saw protestors recently outside the proposed Trump International Hotel in Washington D.C. after “The Donald” made disparaging remarks about Hispanics.  Even celebrity chef Jose Andres cancelled plans to build a restaurant there.

Ultimately, tying your brand to a living human being is a risk.  Just ask Subway…

Posted by Trevor Benn on December 16, 2015 at 11:03 AM
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Wednesday, November 25, 2015

Trevor’s rants

When I was in college, the big debate at the time was where to locate the convention center.  I wrote a paper that proposed building it on the Ala Wai Golf Course and also sticking the Honolulu Zoo, Waikiki Shell and the Aquarium on the same site.  Thus, you would free up those locations for other public uses whist creating a more robust convention space (imagine having cocktails while giraffes walk by the window, or a meeting room overlooking an elephant enclosure).  We could have created walkable bridges over the Ala Wai connecting Waikiki to this space, cleaned up the Ala Wai and have restaurants and shops fronting the waterway like a Boardwalk promenade. 

Alas, I submitted my thoughts to my professor and, while it got an “A,” it never reached any higher. 

Then, about 5 years ago, when at a fundraising event for a certain City Councilman, I raised another question.  “Why do we want to build a fixed rail system when the self-driving car will be available in about the same timeframe?”  I argued that we could propose to Washington, and our local-born President, to become the epicenter for self-driving technology and try to get Federal funds, then match that with the private companies spearheading the research (Google, etc).  The response was literally “I don’t know anything about that.” 

So, I espoused the idea of this kick-ass-mind-blowing-tectonic-shift in everything we do.  Imagine this:

• A car is a wasted asset.  It sits for 95% of your day in your parking space.
• In the future we won’t “own” a car, we will have a car “membership” and we press a button on our phone and it will come to pick us up.
• Riding will become a passive experience….like riding a plane (watch TV, read a book, or eat a meal)
• No traffic lights or additional infrastructure needed.  Once the cars know where the other cars are and where they are going, there should be no traffic or accidents.  Even if a car is restricted to 30 MPH, you will still get to your destination faster with no stops!
• You will always be dropped off at the front door, no looking for parking.
• You will never have to maintain a car or fill gas again.  It will self-diagnose and take itself in.
• You will never pay for parking again.
• You don’t even have to drop your kids off at school, they can go themselves and you could monitor them on your phone
• Forget going out to dinner, the food could come to you in a specialized heated compartmented restaurant delivery car. 
• USPS, UPS and Fedex will have a box on your property where the automated delivery drops off your boxes.
• And most important of all… there will be no need for any new infrastructure.  The existing roadways are adequate.  A five lane highway could put 7 cars moving three inches apart if they wanted to.   

So, the response from our City Councilman?  “Well that’s years off and people won’t give up their cars!” Really?  Is it that far off?  Google, Apple and all major automobile manufacturers are already building and testing these cars.  What will come first, the rail construction or the self-riving car? 
And I like my cars too, just like I used to love my picture-tube TV.  But when the flat screen LCD showed up, I set that picture tube on the sidewalk for bulk garbage pickup.


Now we have another issue to tackle.  UH Football.  So here are my thoughts.

The State granted all the Makai land in Kakaako to OHA to pay off some of the monies owed to them, then tied their hands by telling them they couldn’t build residential like all the developers on the other side of Ala Moana Blvd.  I won’t get into that…but what about building a new venue?  Call it a multi-purpose stadium. 

I was recently at Madison Square Garden watching the Knicks lose to the Cavaliers.  What I noticed was that the experience was about 50% of the game and 50% about being in the venue.  They had legitimately good food, great drinks, interesting timeout events, free t-shirts, foam fingers, hawkers, celebrity cams and jumbo-trons everywhere.  In San Diego’s Gaslamp District, residents and visitors stay in neighborhood hotels, eat at the great restaurants and walk to Petco Park to catch a Padres game.

Imagine a venue, on the waterfront, showcasing Hawaii’s beauty to the world while exhibition MLS, MLB, NBA, NFL games are going on!  Imagine that we support UH Football and, while we want them to win, we show up to the event because the venue, food, friends, and energy are so phenomenal.  We go to the games regardless of the outcome!

With the new venue, we can construct hotels, shopping and restaurants around it.  Once we have all that in place it will be a great venue to host local, national, and international events.  Imagine a live MMA or boxing event that was broadcasted in primetime on the mainland US but still 3PM in Honolulu.  You grant tax-exemptions for events held there and they will come.  Built it and they will come.



Posted by Trevor Benn on November 25, 2015 at 11:49 AM
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Friday, October 30, 2015

TRID questions.

TRID Questions.
by Ryan Oda, (RA) MAT and Holly Hino-Augustin (NMLS#325967)

1)  Q:  First of all, What is TRID? 
    A:  TRID stands for the TILA-RESPA Integrated Disclosure. TILA is the “Truth-In-Lending-Act” and RESPA is the “Real Estate Settlement Procedures Act of 1974.”  These two Acts have governed mortgage disclosures for the past 30 years but contained conflicting and confusing language.  In attempt to cure this the Dodd-Frank Wall Street Reforms directed the this “integrated disclosure.”

2)  Q:  What are the changes? 
    A:  Borrowers will now receive their Closing Disclosure Statement, that breaks down all their fees, 3 days prior to signing their final mortgage loan documents.  This way the borrower has a chance to review all their closing fees upfront before going to the closing table.  If the borrower signs the Closing Disclosure on the 1st day it was issued, then the borrower can sign their final mortgage documents on the 3rd day.  However, if the borrower doesn’t sign the Closing Disclosure Statement, it is deemed received by the 3rdday, then the additional 3 day waiting period can begin prior to signing the final mortgage documents.  This could push your loan closing back by 1 week.  Its best to review it right away and sign it as soon as possible trigger the 3 day waiting period.
3)  Q:  How does this affect the consumer? 
    A:  It can affect consumers interest rate lock and ultimately the fees involved to close the loan.  There is a lock deadline on every locked interest rate and if that deadline isn’t met then fees to extend the rate will be enforced and depending on the circumstance it can become a borrowers charge.  It can also effect the final closing date.  It will take more time to close loans, so consumers as well as realtors need to be aware of this.   

4)  Q:  What can the consumer do to prevent delays? 
    A:  The consumer needs to be available and make their mortgage loan a priority by getting in all their documents to the lender in a timely manner, and keeping in close communication with the loan officer throughout the transaction.  Once again, reviewing and signing your disclosures as soon as you get them rather than putting it aside is the best thing a consumer can do.


Posted by Trevor Benn on October 30, 2015 at 09:10 AM
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Tuesday, September 22, 2015

Realtor(R) Roda’s 12 Questions When Analyzing a Neighborhood

12 Questions When Analyzing a Neighborhood
by Ryan Oda (RA), MAT

Getting Around:

How’s the morning rush-hour traffic?
Is the neighborhood walkable? Many older streets in Hawaii don’t have sidewalks.
Is the neighborhood bike friendly?
How close is the nearest supermarket, shopping mall, hospital, and restaurants? 

The Homes:

Is there a neighborhood association?
How often do homes come up for sale?
What’s the median home price?
Are there any desirable streets to live on?

The Community:

What’s next door? It’s important to be aware of any upcoming developments.
What school district are you in?
Is there ample street parking, especially after work hours?
Does the community match your lifestyle? 

Posted by Trevor Benn on September 22, 2015 at 01:39 PM
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Friday, September 11, 2015

First-Time Home Buyers Guide to Submitting an Offer

First-Time Home Buyers Guide to Submitting an Offer
By Ryan Oda (RA), MAT

Understand the Purchase Contract
The purchase contract is a legal, binding document. With the other addenda and forms, the purchase contract is over 15 pages long. The verbiage can be confusing, so have your Realtor® breakdown each section. If you have questions, ask.

As the buyer, it’s important to know your rights. You are ultimately responsible for understanding what you are signing.

Speak with your Lender
You, your Realtor®, and your lender should all be in constant communication. If you are interested in making an offer, have your Realtor® contact your lender. It’s important you get prequalified. This will make your offer stronger and more competitive when presented to the seller.

Monitor the interest rates. If the rates dropped, from the time you got pre-approved, you just might qualify for more.

Discuss Terms
Does the seller prefer any specific terms? Find out what the seller wants and give it to them, especially if there are multiple offers. Aside from price, you can make your offer more attractive by adjusting the terms of the purchase contract.

For example, rather than having a 14 day home inspection period, you can put 10 days (or less). Just make sure your home inspector will be available. Another example involves your first and second cash deposits. A seller might request that you put more money up front to show that you are committed to the purchase. Adjusting your contingencies makes your offer look sharp.

Posted by Trevor Benn on September 11, 2015 at 03:08 PM
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Thursday, August 27, 2015

5 Easy Money Hacks to Help you to Save for a Down Payment

5 Easy Money Hacks to Help you to Save for a Down Payment
By Holly Hino-Agustin (NMLS#325967) and Ryan Oda (RA), MAT

1. Start early. Saving and investing is largely impacted by compounding interest over time. The sooner you start, the longer time your investments can grow.

2. Live below your means. Just like the formula for losing weight appears to be simple (burn more calories than you consume), so does the formula for building wealth (keep more than spend).  Yet, so many struggle with both.  Ask yourself, “Do I really need this?” Make a list and write down all your monthly expenses. If purchasing a home is on top of your priority list, you will eventually find things to cut out. Here are few saving tips:

a. Do you really need cable television? Have you examined the on-demand alternatives, like Netflix?

b. Rather than eating out, eat in. Don’t forget to support your farmers market too. Compared to retail supermarkets, your savings will extend if you purchase your groceries from local vendors. 

c. Rather than driving, catch the bus, walk, or ride your bike. Hawaii has been recognized to have some the best public transportation in the nation.

d. Compare rates. Many reoccurring fees are often neglected and overlooked since you have been paying them for so long. You might actually think you are getting a good deal, but you could be possibly overpaying. When was the last time you compared insurance rates, cell phone plans, or credit cards? Some credit cards have cashback rewards. If you pay off your credit card debt ever month, the cashback program is a great way to “earn” while you spend.

e. If go out, spend wisely. When you are going to spend money, find out if there is a sale or discount. For example, you can watch a matinee movie and save on the ticket cost. Cutting coupons can be tedious, but it is worth your time. Over a period of time, the few dollars you save on each purchase will add up.

3. Think about after-tax consequences when spending.  Remember… a penny saved is not a penny earn.  A penny saved is 1.5 pennies earned!  That $10 plate lunch is really $15 when you realize you had to earn $15, pay Uncle Sam $5 to get your $10.  If you looked at each purchase as being 50% more expensive, you would certainly think twice about it.

4. Get a second “job.” If you have a hobby, consider turning that into money making opportunity. If you like photography, you could offer your services to businesses for marketing.

5. Invest wisely.  For example, some companies, like Vanguard Funds, offer low-fee entry investment products to consumers. Examine your risk tolerance and speak to a professional.


Posted by Trevor Benn on August 27, 2015 at 02:26 PM
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Monday, August 10, 2015

How to Get a Mortgage.

How to Get a Mortgage
By Ryan Oda (RA), MAT

Getting prequalified with a lender is one of the first things you need to do in the home purchasing process. The prequalification process will determine how much you can afford.

1. Your Realtor is your lifeline. Before you shop around on your own, ask your Realtor if they have any recommendations. Most experienced Realtors have an established relationship with a handful of lenders. Often times, many brokerage firms, like Benn Pacific Group, have an in-house lender. As the consumer, you have the right to use any lender you want. Like choosing a Realtor, make sure the lender pick meets all your needs.

2. Have all your documents organized and ready. When you get prequalified, the lender will require you to provide your personal information, your residence history, employment history income, debt history, asset balances, and anything else deemed necessary.  The more information you provide the more accurate your pre-qualification will be.  They will also need to pull your credit report so it’s best that you do not obtain any new credit during your home buying process.

3. Choose a loan type and down payment amount.  The type of loan you chose is correlated to how much cash you are putting down. A well versed loan officer will look at your situation uniquely. 20% down is the ideal number. However, if you have less than 20% down there is still hope.  There are multiple products that your lender can discuss with you that don’t require the ideal down payment.

4. Start shopping for a home. Now that you got prequalified, your Realtor will pull listings that you can afford and arrange for you to view properties you are most interested in. 

5. Once you have an accepted contract your lender will submit your loan application and send you a copy of the Good Faith Estimate.  As this time you can choose to lock in your rate. Like the stock market, mortgage rates fluctuate daily too. Your lender will advise you what the market is doing daily so you can decide on what’s the best interest rate and points to lock in at. 

6. Once you’ve accepted the lenders disclosures the lender will typically request for a deposit.  The deposit is used to order the appraisal.  The appraisal is then ordered and turned around within 5 business days.

7. The file is now ready for Underwriting!  This is where the loan gets approved or denied.  If you have a good loan officer who knows their guidelines inside and out, your loan should have no problem getting approved.  When you receive your Conditional Loan Approval it’s now time to shop for Homeowners/Hurricane Insurance and go to closing.

8. Closing, this is the best part!  Your Loan Officer and Realtor will meet you to sign your loan closing docs and the deed to your new home.  It’s just days before you get the keys! 

Benn Pacific Group’s in-house lender is Holly Hino at Sandalwood HomeLoans.  Feel free to contact her for more information and a loan qualification today.

Holly A. Hino-Agustin
NMLS #325967
Vice President/Loan Manager
Sandalwood HomeLoans, LLC.  (NMLS #332037)
1585 Kapiolani Blvd. Suite #1040
Honolulu, HI 96814
Phone:  808-599-0503
Efax:  808-675-5467
Email:  .(JavaScript must be enabled to view this email address)

Posted by Trevor Benn on August 10, 2015 at 08:39 PM
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Monday, July 13, 2015

What’s in a Name?

What’s in a Name?
By: Ryan Oda (RA), MAT

What’s in a name? If we are to believe the Hollywood, American corporations, and merchandising and sale executives, a name can mean absolutely everything. A celebrity endorsement has the power to make or break a product, the power to establish credibility or to sully a company’s reputation forever.

In 2013, celebrity chef, Paula Deen, lost endorsements from the Food Network, Smithfield Foods, Walmart, Target, QVC, Caesars Entertainment, Home Depot, Novo Nordisk, JC Penny, Sears, Kmart, and Ballantine Books when she was a target of a racial and sexual discriminations lawsuit.

More recently, real estate mogul and presidential candidate, Donald Trump, has found himself in hot water with his criticism of Mexican immigrants. Trump is now feeling the full effects of his comments, as business affiliates attempt to distance themselves from him. Macy’s has cancelled its Trump clothing line, NBC has announced that Trump will no longer host “The Apprentice,” Univision has pulled the Trump-funded beauty pageant, and the PGA of America has relocated one of its tournaments from Trump’s Los Angeles golf course. According to Business Insider, Trump has lost an estimated $50.5 million due to his controversial comments.

How does this affect Trump’s business affiliations in Hawaii? In November 2006, Trump International Hotel and Tower in Waikiki sold all of its 464 condominium units on the first day. Although reports later showed that Trump had no hand in developing the condotel. As reported by Chris Bailey of Hawaii Magazine, Trump only agreed to license his name to the project, despite being listed as a co-developer of the development. A group of buyers sued for being misled, since Trump played no actual role in the development. The buyers claimed that removing the Trump name would devalue their purchase.

Flash forward to 2015. How will Irongate, buyers, and other stakeholders respond to Trump’s highly publicized comments about Mexican immigrants? Will they, like so many others have, decide to sever ties with the Trump brand, or will they continue to trade on a name that has suffered a recent fall from grace? Will Trump’s name continue to offer prestige and credibility, or will it cause potential investors and buyers to pass? There are possible hazards of attaching a brand to a living human being, especially to a celebrity. That is, these endorsers are people, and people do make mistakes. Only time will tell, but the power of a name, for better or worse, is undeniable. 


Posted by Trevor Benn on July 13, 2015 at 10:45 AM
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Tuesday, June 30, 2015

10 Valuable Lessons for a First Time Home Buyer

10 Valuable Lessons for a First Time Home Buyer
by Ryan Oda (RA)

1. Start saving early for your down payment. For a 30-year conventional mortgage, the lender will require you to only put down 20% of the purchase price. The more you save, the greater your buying power increases.  If you do not have 20%, you still can get a mortgage. However, the lender will require you to get mortgage insurance, or other alternatives.

2. Build your credit. The lender will analyze many factors for your loan amount. Having poor credit—or no credit at all—will cause delays in your home purchasing process. The factors that affect your FICO score are: (A) payment history; (B) credit utilization; (C) length of credit history; (D) types of credit history; (E) new credit lines.

3. Find a Realtor you can trust. Your Realtor’s fiduciary responsible is to you. In addition to getting you the best deal, your Realtor is there to look out for your best interest. And here’s the best part… as the Buyer, most times the Realtor’s services are free to you!

4. Securing a low mortgage rate is great, but finding a loan officer you can trust is just as important. 

5. When you are unsure, ask questions. Your Realtor has access to valuable resources and information. As an expert, a responsible Realtor should educate you on the entire home purchasing process. This ranges from explaining the purchase contract to informing you how title is transferred.

6. Don’t rush, but be ready to make a move. Buying a home will be the largest purchase of your life. Be patient and do not settle for less. In an active market, the “hot” properties do not last long. When you see “the house,” put your best foot forward and give it your all.

7. Buy the best house you can afford in the right neighborhood. “Best” and “right” are subjective. Ever buyer has different taste. Only you can determine this. Some factors to consider are safety, traffic, proximity to shopping venues, distance to work, distance to family and friends, and quality of the neighborhood schools.

8. Read the home inspection report. Purchasing real estate is a backwards process because it requires the consumer to submit payment first, then to inspect property once in escrow. Per the purchase contract, you have the right to inspect the home you are buying. The home inspection report will explain everything wrong with the property. Although the report may seem overwhelming, it is important you consult with your home inspector and Realtor to see how severe the problems are.

9. Look at real estate through an investment lens. Some of the financial advantages of owning real estate are: (A) hedging against inflation since your monthly mortgage payments are fixed; (B) deducting a portion your mortgage interest from your yearly tax obligation; (C) deferring of capital gains tax through a 1031 Exchange; (D) taking out a loan on your equity. Owning a home not only provides intrinsic value, but it can also build your wealth.

10. “Grow” with your home. If something goes wrong, do not sweat it. Rather, learn from each experience so that problem can be minimized or eliminated in the future. As time progresses, you will know how to be a better home owner—enjoy it.

Posted by Trevor Benn on June 30, 2015 at 11:51 AM
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