Good Things to Know if You Want to Buy a Maui Vacation Rental Condo

(Updated May 2025).

If you are interested in buying a Vacation Rental Condo in Maui, here is some great information to get you started.

Types of Ownership

There are two types of ownership on Maui (and all of Hawaii, for that matter): Fee Simple and Leasehold.

Fee Simple ownership is the type that people are most familiar with. You own a portion of your condominium (your unit) and a piece of the entire complex, including the common area on the grounds. It is just like the home you may own on the mainland.

Leasehold is a type of ownership where you own the condominium, but you are on a long-term or ground lease for the land beneath it. These lease terms run anywhere from 50 to 99 years. Leasehold condominiums are about 20 to 80% less expensive than Fee Simple condominiums due to uncertainty at the end of the lease, the duration of the lease, and different financing considerations.

Pricing

As of 2025, prices for vacation rental condos in Maui generally range from $500,000 to well over $20,000,000.

Prices reflect the following features:

• Location
• Complex / Facility Amenities
• Quality of the Individual Units
• Rental history (if available)

Financing

Most lenders consider condominiums that are used for vacation rentals as Condotels. As of 2025, lending requirements for Condotels typically include:

• A down payment of at least 30-40%
• Proof of strong credit score (usually 720 or higher)
• Debt-to-income ratio below 43%
• Potentially higher interest rates compared to primary residence mortgages

Many vacation rental condos on Maui are categorized as “non-warrantable,” meaning they have a higher down payment requirement due to less than 51% owner occupancy. While some condos might qualify for a lower down payment as a second home, this is the exception rather than the rule. It’s essential to have the 25% down payment ready and celebrate if underwriting allows for a lower amount.

Online lenders may offer lower down payments using Debt Service Coverage Ratio (DSCR) loans, but this often results in higher monthly payments. Be aware that lenders will require reserves for maintenance fees and insurance.

We work with a stable of local lenders and can provide you with a list if you like. Local lenders tend to manage the transactions better than out-of-state lenders, as they understand how everything works a little better.

Transaction Process

Hawaii is an escrow state, which means that our transactions are facilitated by escrow/title companies. These companies serve as neutral intermediaries who hold all of the funds until closing and help facilitate the transaction. Generally, purchases take between 30 and 60 days to close, with cash purchases sometimes closing more quickly.

We are very accustomed to working with people from the mainland and even other countries, so it is very easy for us to facilitate transactions from a distance. In fact, I have sold properties to people I never met until after closing.

Monthly Costs

Monthly maintenance fees for condominiums usually cover insurance, water, sewer, common area maintenance, garbage, and basic cable. As of 2024, these fees typically range from about $400 per month up to $2,500 or more. Sometimes, the maintenance fees include electricity.

Special Assessments: At the time of this writing, approximately 40 condominiums on Maui have some type of special assessment. These assessments could be due to various reasons, such as reserve fund replenishment, plumbing replacements, insurance increases, or even shoreline erosion issues. Condo associations either prorate the assessments so they are paid monthly or require a lump sum payment. The latter is becoming more common in a higher interest rate environment. Be sure to inquire about any special assessments before purchasing.

Insurance Considerations

Hawaii law requires that condo associations carry a master insurance policy that covers buildings, common areas, and liability for injuries sustained in common areas.

After the Lahaina fires in 2023, some condominium associations have had their insurance premiums reassessed, with rates increasing by 500% to 2,000%. This has led to some associations imposing additional assessments to cover these costs.

In addition to the condo policy, you will need an HO6 or Condo Policy, which covers the “studs in” and includes cabinets, appliances, personal property, liability, and loss of use. Ensure your coverage is sufficient, especially if you have a high-end remodel.

Rental Management

There are many ways to rent a condo while you are not on the island:

• Self-management using platforms like VRBO, AirBnB, or newer platforms such as Vacasa and TurnKey.
• Using local management companies. Management fees currently run anywhere from 20% all the way up to about 50%, depending on what they include.

We have relationships with many management companies and can put you in touch with several of these if you like.

Current Market Conditions

As of 2025, the Maui condo market is feeling the weight of regulatory uncertainty, lower visitor numbers after the Lahaina fire, and increased association costs driven primarily by higher insurance costs. Increased supply and limited demand are putting downward pressure on values. Condo developments with consistently scarce inventory are one part of the market showing more pricing resiliency. 

Buyers entering the market will find way more options than what was available over the last four years, with less competition. This is a buyer’s market. 

Most people purchasing condominiums continue to do so for quality of life (or love of Maui) and anticipation of future appreciation. While it remains challenging to find a condominium that will cover the mortgage with rental income alone without a substantial down payment, Maui condos remain an attractive option for those looking for a long-term, lifestyle property with the potential for appreciation.

Legal and Regulatory Considerations

Short-term rental regulations: Maui County has implemented stricter enforcement of short-term rental laws. Ensure that any property you’re considering is zoned correctly for vacation rentals.

Zoning: In May of 2024, the Mayor of Maui proposed legislation that will sunset the ability to vacation rent over 7,000 short-term rental condominiums on Maui. These condos are part of the Minatoya list. While this legislation is still under discussion, it’s advisable to focus on properties with hotel zoning, which are likely to be unaffected.

Property tax considerations: Non-resident property owners may face different tax rates. Consult with a local tax professional for the most up-to-date information.

Environmental regulations: New construction and renovations may be subject to updated environmental impact assessments, particularly in coastal areas. Be aware of shoreline erosion issues and sea-level rise impacts, especially in areas like Kahana, where multimillion-dollar shoreline mitigation projects are under discussion.

Contact us with Questions or for Representation

If you have more specific questions or would like us to help you find a condo in Maui, contact the Maui Real Estate Team today!