guide to investing in honolulu vacation rentals

Short Term Rentals Oahu 

Jump to: Where to Buy | Rules & Permits | Taxes | ListingsContact Us | Create An Account

Buying an Airbnb in Hawaii can be a rewarding experience that allows you to generate additional income through rentals and enjoy the beauty of the islands. However, it is important to carefully consider all of the challenges and considerations involved and to work with a reputable real estate agent or property manager to ensure that you are making a smart investment.

One of the first things you will need to consider when buying a vacation rental in Hawaii is the location of the property. Hawaii is made up of eight main islands, each with its own unique character and attractions. Some popular destinations for vacation rentals include Oahu, Maui, and the Big Island, all of which offer a wide range of activities and amenities for visitors. It's also important not to neglect what you would want in a Hawaii home, especially if you plan to visit or live part of the year here. 

Consider factors like proximity to popular attractions, access to public transportation, and the overall appeal of the area to potential renters. You should also consider the local zoning laws and regulations, as there may be restrictions on the types of properties that can be used as vacation rentals in certain areas. We'll cover all of this below.

This guide aims to bring clarity to the Hawaii Vacation Rental Laws on Oahu island and to help you discern between what's legal and what's not, as you explore your Hawaii vacation home options and if hosting an Airbnb in Hawaii is right for you. If it is, we'll continue the discussion with insights on how to obtain a Hawaii Vacation Rental permit, Taxes, Rental Rules, and which neighborhoods to focus on when searching Oahu short term vacation rental condos. 

Disclaimer:  The Oahu short term rental rules have been quite fluid over the last few years Zoning and building house rules can and do change. While the information below is believed to be reliable, we cannot guarantee it will apply to your specific purchase, at that specific time. It's important to consult and perform continued due diligence when purchasing a condo with vacation rental intentions. 

Where can I find legal Vacation Rentals on Oahu? 

Jump to Vacation Rentals in: Turtle Bay | Ko Olina | Waikiki | Makaha

Your best bet to finding legal Oahu Vacation Rentals in Hawaii is to search within the 4 Resort Zones listed below. It's important to note that there are hundreds of vacation rentals in Honolulu not within the Resort Zones, but this is because they obtained one of very few Non Conforming Use Certificates (NUC's) many years ago.

The state hasn't issued any new NUC's since, however, we do expect them to open up an applications for new Short Term Rental permits in the coming year. For now, focus your search to the below condo projects, categorized by the Oahu Resort Zones.

Waikiki Condotels

Jump to Vacation Rentals in: Turtle Bay | Ko Olina | Makaha | Waikiki 

Waikiki is the tried and true brand for sure. Visitors are met with an overwhelming variety of restaurants, nightlife, and bars -- most of which is in walking distance. Nearly all of the Waikiki Condos are within blocks of famed Waikiki Beach so this location is an easy pick for visitors. The demand is always going to be there in Waikiki but it's matched with supply. Waikiki is home to tens of thousands of hotel rooms, as well as dozens of Waikiki vacation rental condos for sale. 

Buying a vacation rental in Waikiki is going to offer you the most entry level options for sure. You'll find a number of Waikiki Condo-Hotel (Condotel) buildings in the area that look, feel, and operate just like a hotel would with a front desk concierge, small rooms with a queen or twin-beds, and a mini fridge.

A Waikiki condotel can start as low as $200,000 making them a budget-conscience purchase for investors. Naturally, this type of unit brings a budget-conscience visitor. Honolulu Condotel units are also the most common type of vacation rental available for sale in the Waikiki condo market, spreading the demand. 

One of the most important things to know about investing in Waikiki Airbnb's is that many of the Condo-Hotel buildings require that you rent your unit through the Hotel Pool. Your condo is effectively managed and booked by the hotel's management and this comes with a hefty management fee, usually 50% or more of your gross rent. Definitely not the best cash-flow scenario but for some, this type of ownership allows them to live in Hawaii part time while benefitting from some coverage of ownership costs and hands-free management of the rental.

The only legal vacation rentals in Honolulu outside of Waikiki are Executive Center and the Sky Ala Moana; the east tower. 

Before getting too excited about any particular Waikiki Vacation Rental, be sure to give us a call so we can curate the building(s) that best fit your lifestyle, management, and cash-flow requirements. 

Turtle Bay Resort Zone | North Shore Vacation Rentals

north shore vacation rentals for saleThis is our favorite zone for legal vacation rental because of the sheer lack of Hotel competition in the region. North Shore Oahu is one of Hawaii's most iconic tourist destinations due to it's isolated, old Hawaii feel that provides one of the most authentic Hawaiian experiences. This is a stark contrast from the urban, hotel dense experience of Waikiki.

Oahu's North Shore Features 7 miles of white sand beach, world-famous shrimp trucks, historic Haleiwa Town, and is globally recognized as the mecca of big wave surfing. Hundreds of thousands of tourists flock to the region every year; most traveling by tour bus from their Waikiki hotel since Turtle Bay Resort is the only hotel in the entire region.

Unlike the dozens of Waikiki condo hotels for sale, there are only 2 legal North Shore vacation rental condos. Both of which are located within the Turtle Bay Resort Zone benefitting from walking distance to the beach and 2 amazing golf courses; the Arnold Palmer & Fazio.

Living on the North Shore

Here's a video we did highlighting what the North Shore lifestyle is all about. It should provide you some context behind why this is such an in-demand destination for visitors. We also feature and tour one of our recent listings in Kuilima Estates; a popular North Shore vacation rental condo.

Ko Olina Resort Zone | West Oahu Vacation Rentals

Jump to Vacation Rentals in: Turtle Bay | Ko Olina |  Makaha | Waikiki 

Our second pick for vacation rental investmenting on Oahu would be the Ko Olina resort community in West Oahu. This community flew largely under the radar for 2 decades until Disney's Aulani Resort & Four Seasons Ko Olina opened their doors.

Like Turtle Bay, the Ko Olina resort zone offers very little competition in the way of nearby hotels or competing vacation rental buildings. The Ko Olina Marriott, Disney Aulani, and Four Seasons Ko Olina are the only hotels between Waikiki and Makaha, Oahu's furthest community west, and it offers an entirely different visitor experience than the other resort zones.

Living in Ko Olina is almost too good. Resort living is reflected to you at every turn through thoughtfully designed landscapes, golf courses, incredible restaurants and shops, Ko Olina Boat Harbor, and numerous beach opportunities offered by 4 man-made swimming lagoons.

The two projects below offer the most comfortable, family friendly options for a vacation rental on Oahu. They're newer and larger than most accommodations you'll find on island which allows for the unit costs to be shared accross multiple family in some instances. Beachvillas at Ko Olina is one of only a few luxury vacation rentals on Oahu. Coconut Plantations requires 30-day minimum rentals and rental rates are still very strong despite not allowing nightly rentals.

Makaha Resort Zone

Jump to Vacation Rentals in: Turtle Bay | Ko Olina |  Makaha | Waikiki 

Perhaps the most intriguing vacation rental investment on Oahu is the Cottages at Mauna Olu project that's been building brand new homes in Makaha in 2019. This community offers brand new Oahu homes since breaking ground in 2019 and through the passage of Bill 41, found itself grandfathered into legal vacation rental rules through it's lucky location within the only resort zone in the Waianae region. This is the only resort zone I'm aware of that offers Single Family Homes, making it the most unique option in the state, not to mention the largest. 

These homes are oriented within the idyllic gated community of Mauna Olu Estates perched above Makaha Beach in beautiful Makaha Valley. This is your most authentic Hawaiian experience, as Makaha is one of the most isolated neighborhoods on Oahu, furthest from the metro districts of Honolulu & Waikiki. Always hot, always sunny, and arguably the nicest and most private beaches on island.

The size of these homes makes them a top pick for multi-family travelers. Yard spaces allow for outdoor entertainment opportunities that can't be found most of the aformentioned options, not to mention the most beautiful sunsets on Oahu. 

I'm starting to here some impressive anecdotes on rental numbers here and I'll be curious to see how things mature since many of the Airbnb listings here are very young since owners only recently received their keys. 

Oahu Short Term Rental Law 

Hawaii short term rentals laws are different on each island but it's Oahu island that's been under the most scrutiny. Numerous pieces of legislation over the past 3 years have placed heavy rental restrictions on homes not previously permitted for vacation renting, or not within designated Resort Zones in Honolulu County. Newly passed and highly controversial Bill 41 now serves as the Honolulu Vacation Rental "law of the land" regulating all advertising, permitting, and taxation of vacation rentals; bringing massive disruption to Airbnb hosts and vacation rental managers alike. 

Is Airbnb Legal in Honolulu, Oahu, Hawaii?

Yes, but only if you have obtained a Nonconforming Use Permit, a new Short Term Rental permit (still awaiting for applications to open up) or your home falls within a designated Resort Zone. Here are some of the recent changes to the Oahu Short Term Rental Law:

Latest Update -- January 2024: Federal Judge issues summary judgement to restrict the city from enforcing the 30 day mininum rental rule. Homeowners may continue operating rentals for periods of 30 days or more; C&C of Honolulu shall not enforce 90 day rule. 

  • Bill 41 will go into effect on 10/31/2022, restricting all homes without a Short Term Rental Permit or within Resort Zones to a minimum renting period of 90 days or more. See update above.
  • If you're a host or operator of 30-90 day Honolulu Vacation rentals that were in operation prior to 10/23/22 you may continue to rent them until April 23, 2023.
  • As of April 23, 2023 all rentals of less than 90 day terms but convert to 90 days or more, or have registered to receive a new short term rental permit (Still awaiting guidance. Likely a lottery system.) 
  • All previous NUC permits must comply with newly proposed annual renewals after their exisiting renewal periods expire
  • All Transient Vistors must park in driveways or designated parking stalls and not on public streets.
  • When advertising your short-term rental on platforms like Airbnb, VRBO, Zillow, etc, your NUC number as well as your tax map key must be displayed on advertised listings. 
  • All rentals advertising for less than 90 days must include the following verbiage on advertisements " this property may not be rented for less than 90 consecutive days. Rental prices will not be reduced or adjusted based on the number of days the rental is actually used or occupied.
  • Non-compliance or continued operation of illegal short term rentals are subject to fines between $1,000 - $10,000/day depending on reoccuring offenses.

Honolulu Hawaii Tax Rates

Aside from paying your Hawaii property taxes, all vacation rental income is subject to General Excise Tax, (GET) Transient Accommodations Tax (TAT), and Oahu Transient Accommodations Tax (OTAT). Generally these taxes are passed on to guests. 

How much is Hawaii GET Tax?

  • Hawaii Sales Tax is also referred to as General Excise Tax (GET). The base rate is 4% with the Oahu surcharge of 0.5%. Total sales tax due is 4.5% of gross rent.

How much is Hawaii TAT Tax?

  • For rental periods of less than 180 days, Hawaii obligated landlords to paying Transient Accommodations Tax (TAT) at 10.25% of gross rents

How much is Oahu Transient Accommodations Tax? 

  • On top of your GET & TAT obligations, you must pay OTAT of 3%.  (Applies to all rental income from rental terms shorter than 180 days).

It's important to emphasize that both forms of taxes are required for short term rental operations. Owner's of Hawaii investment property may apply for a GET & TAT license by visiting Hawaii Business Express.

Looking to Invest in Hawaii Real Estate? Contact us below!

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Legal Short Term Rentals on Oahu May 22, 2024
Avg. DOM
Avg. $ / Sq.Ft.
Med. List Price
311 Properties
Page 1 of 26