1031 Exchange in Kahului Wailuku Lahaina MSA

The Kahului-Wailuku-Lahaina MSA presents ultra-high-value 1031 exchange opportunities with the lowest property tax rates in the US (0.18%), but requires substantial capital due to median home prices of $1.1M-$1.4M and tourism-dependent economy recovering from Lahaina fire impact.

Population

165,000

Key Industries

Tourism/Hospitality, Government, Healthcare

Information is for educational purposes only. Consult qualified professionals for specific advice. This market requires substantial capital and carries unique risks including tourism dependence and natural disaster exposure.

Local Tax Considerations

Property taxes, transfer taxes, and local incentives

Property Tax Rates

Average Rate

0.15% - 0.20%

Assessment Method

Assessed Value (Hawaii Property Tax Code)

MSA rate (0.18%) vs State average (0.26%)

-31% below state average (lowest in US)

Transfer Taxes & Fees

Transfer Tax Rate

0.1% - 1.25% graduated

Hawaii conveyance tax ranges from 0.1% to 1.25% based on property value, plus recording fees

Local Tax Incentives

Hawaii Economic Development Incentives

Various state incentives for business development and renewable energy

Eligibility: Qualifying commercial, industrial, and renewable energy projects

Maui County Development Incentives

Limited local incentives for affordable housing and economic development

Eligibility: Qualifying affordable housing and job creation projects

Opportunity Zones

Number of Zones

2

Key Locations

  • Lahaina (post-fire reconstruction)
  • Wailuku

Opportunity Zones offer significant tax benefits for long-term investments, including deferral and potential elimination of capital gains taxes.

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Market Profile Dashboard

Economic indicators and market trends

Population

165,000

Growth: +0.8% annually

Median Income

$95,076

Unemployment

3.0%

Job Growth

-2.5% (post-fire adjustment)

Economic Drivers

Tourism/Hospitality
Government
Healthcare
Agriculture
Technology
Real Estate

Market Trends

Median Home Price

$1,100,000 - $1,400,000

-8.4% to +6.2% YoY (post-fire volatility)

Average Rent

$3,850/mo

+8.5% YoY

Cap Rates

3.5% - 5.0%

Compressed by high values

Demographics

Median Age

42.9 years

Bachelor's Degree+

35.8%

Owner Occupied

58.2%

Property Type Analysis

Investment opportunities by asset class

Vacation Rental

Premium vacation rental market with strong demand but regulatory restrictions and extremely high acquisition costs.

Market Metrics

  • Cap Rates: 4.5%
  • Vacancy Trends: Seasonal patterns with 15-25% vacancy during slower periods
  • Demand Forecast: Strong long-term demand but subject to tourism cycles and regulations

Risk Factors

  • Extreme acquisition costs ($1M+ typical)
  • Tourism dependence and economic cycles
  • Regulatory restrictions on short-term rentals
  • Natural disaster exposure (fires, hurricanes)

Opportunities

  • Premium vacation rental rates ($400-800/night)
  • Strong long-term appreciation potential

Long-Term Rental

Limited inventory with strong demand from local workforce, but extremely high acquisition costs limit returns.

Market Metrics

  • Cap Rates: 3.8%
  • Vacancy Trends: Very low vacancy at 4.2% due to housing shortage
  • Demand Forecast: Strong demand from local workforce and high cost of living

Risk Factors

  • Extreme acquisition costs reducing returns
  • Limited inventory and development constraints
  • High cost of living affecting tenant pool

Opportunities

  • Housing shortage supporting strong demand
  • Stable local workforce rental market

Neighborhood Spotlights

Up-and-coming areas and investment hotspots

Lahaina (Reconstruction Zone)

Historic town rebuilding after 2023 fires with opportunity zone designation

Investment Thesis

Long-term reconstruction opportunity with opportunity zone benefits, but requires patience and significant capital for rebuilding efforts.

Median Price

$950,000 (pre-fire baseline)

Price Growth

TBD (reconstruction phase)

Rental Yield

4.2%

Days on Market

N/A (limited inventory)

Key Highlights

Opportunity Zone designation
Historic tourism destination
Major reconstruction underway
Long-term appreciation potential

Development Pipeline

Major reconstruction and redevelopment projects planned

Kihei

South Maui resort area with vacation rental and residential properties

Investment Thesis

Strong vacation rental market, resort proximity, and consistent tourism demand supporting premium property values.

Median Price

$1,460,000

Price Growth

+8% YoY

Rental Yield

4.8%

Days on Market

65 days

Key Highlights

Prime vacation rental market
Resort and beach proximity
Strong tourism demand
Premium property values

Development Pipeline

Limited new development due to zoning constraints

Wailuku

County seat with government employment and more affordable housing options

Investment Thesis

Government employment stability, opportunity zone benefits, and relative affordability for Maui market.

Median Price

$889,000

Price Growth

-14.4% YoY

Rental Yield

5.5%

Days on Market

78 days

Key Highlights

County government center
Opportunity Zone designation
Relative affordability
Government employment stability

Development Pipeline

Government and mixed-use development projects

Kahului

Commercial and airport hub with industrial and residential properties

Investment Thesis

Commercial center with airport proximity, industrial employment, and essential services supporting steady demand.

Median Price

$1,000,000

Price Growth

+2.6% YoY

Rental Yield

5.2%

Days on Market

58 days

Key Highlights

Commercial and industrial center
Airport proximity
Essential services hub
Steady employment base

Development Pipeline

Commercial and industrial expansion projects

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Compare Markets

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Metric Kahului Wailuku Lahaina (Current) Honolulu Hilo Urban Honolulu
Population 4.0M 4.0M 4.0M 4.0M
Median Property Price $750K $750K $750K $750K
Average Cap Rate 5.2% 5.2% 5.2% 5.2%
Job Growth Rate 2.1% 2.1% 2.1% 2.1%
Rental Yield 4.8% 4.8% 4.8% 4.8%
Days on Market 25 25 25 25

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The information provided on this website is for general informational purposes only and should not be considered as professional tax, legal, or financial advice. While we strive to keep the information accurate and up-to-date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the information contained on this website.

1031 exchanges are complex transactions with significant tax implications. Any action you take based on the information on this website is strictly at your own risk. We strongly recommend consulting with qualified tax advisors, legal professionals, and financial experts before making any investment or exchange decisions.

Market data, statistics, and trends presented on this website are for informational purposes only and may not reflect current market conditions. Past performance is not indicative of future results, and all investments carry risk.

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