Should You Rent or Sell Your Home in Honolulu?
Should You Rent or Sell Your Home in Honolulu?
Deciding whether to rent or sell your home in Honolulu can be a tough call. Hawaii’s housing market is unlike anywhere else — high demand, limited inventory, and strong rental potential make both options appealing.
If you’re relocating, upgrading, or managing an inherited property, here’s how to decide which path makes the most sense for you.
1. Start With Your Financial Goals
Before you crunch the numbers, take a moment to think about what you really want out of this decision.
Ask yourself:
Immediate Cash Needs: Do I need access to my home’s equity right away?
Long Term Cash Flow: Would steady rental income be more helpful long-term?
Lifestyle Goals: Do I plan to move back to Oʻahu someday? If so, retaining a property you already own may be easier than purchasing a different home in the future as prices continue to appreciate.
If you see yourself returning or want to keep your property as an investment, renting can be a smart way to hold onto it. But if you’re ready to buy elsewhere or simplify your finances, selling could be the better move.
2. Check Current Market Conditions in Honolulu
The Hawaii housing market can shift to be more advantageous to sellers and sometimes to buyers — but overall, it stays competitive because of limited supply.
If You Sell:
Home prices remain strong, especially in areas like Kailua, Kapolei, and Honolulu.
Inventory is still low, meaning sellers often receive solid offers.
If You Rent:
Rental demand stays high from local residents, military families, and remote workers.
Well-priced homes and condos often rent within days.
If homes in your neighborhood are sitting longer on the market but rental inquiries are steady, leasing your home might bring better returns in the short term.
3. Run the Numbers Side by Side
Let’s talk numbers — because this decision ultimately comes down to what makes the most financial sense.
If You Sell:
Deduct closing costs, agent commissions, and your remaining mortgage balance. Also consider upgrades and improvements to the home you may want to make ahead of listing.
Factor in capital gains taxes if it’s not your primary residence. If you live out of state HARPTA / FIRPTA tax withholdings may also apply.
If You Rent:
Estimate rental income based on similar homes nearby. Are there repairs to the home needed to make it rent ready?
Subtract expenses like property taxes, insurance, HOA dues, maintenance, and management fees.
Allow for occasional vacancy (planning for 1 month a year is usually safe, but if you get a great long-term tenant, it could be years without vacancy).
If the property still produces positive cash flow, renting could help you build long-term wealth while your home continues to appreciate in value. However, even if your property produces negative positive cash flow - it may still make sense to retain it if you’re hoping for long-term appreciation.
Over the last 40 years on Oahu, the annualized appreciation on Oahu for single family homes is 5.09% and 4.94% for condos. This means, on average, if you have been holding onto a single family home on Oahu since 1985 - your home would have appreciated 593%. But is holding a property with negative cash flow realistic for your budget and lifestyle? Will it hold you back from a different purchase? These considerations will help guide your decision.
4. Think About Your Long-Term Plans
Your long-term vision matters just as much as your current financial situation.
If you plan to move back to Hawaii, renting lets you keep a foothold in the market while earning income.
But if you’re ready to invest elsewhere, selling could give you freedom and flexibility.
A balanced approach? Rent your home for a year or two and see how it goes. You’ll gain experience as a landlord and can still sell later if home values climb.
5. Be Honest About the Work Involved
Owning a rental property in Honolulu can be rewarding — but it does take work. Between finding reliable tenants, handling maintenance, and keeping up with Hawaii’s rental laws, it’s a lot to manage on your own.
If you’re off-island or simply short on time, partnering with a licensed property manager can make things much easier. A good manager can handle:
Marketing and showings
Tenant screening and lease preparation
Rent collection and bookkeeping
Maintenance and inspections
That way, your property earns income while you stay hands-free.
Final Thoughts: What’s Best for You?
There’s no universal answer — it all depends on your financial goals, timeline, and lifestyle.
For many Honolulu homeowners, renting first can be a smart way to generate income and hold onto a valuable asset in one of the nation’s strongest real estate markets.
Whether you choose to rent or sell, make sure your decision aligns with both your short-term needs and your long-term vision.
Give us a call — we’d love to help talk through your options and share some of the scenarios we’ve run into in the past.
