Hawaiʻi cap rates

Hawaiʻi multifamily cap evidence and operating comparisons

The useful benchmark is one that matches the property’s geography, income basis, condition and buyer pool. Cap rate is annual net operating income (NOI) divided by price, before financing. A county gross rent-to-value index is a different measure.

A total sale count is not necessarily the number of sales with disclosed caps. Published averages, medians, asking yields, modeled references and professional surveys are different statistics. Undisclosed weighting or NOI conventions prevent a reliable statewide average and like-for-like appraisal. Two publishers using the same provider do not create independent confirmation.

What changes the underwriting locally?

Use local operating evidence to decide which property assumption needs verification next. Each interpretation below is conditional editorial analysis, not a measured cap-rate forecast.

Urban Honolulu and Makiki: a transaction is an input, not a neighborhood curve

Reported evidence: The July update identifies a 23-unit Makiki transaction among only five total monthly trades. It does not establish a Makiki median cap. Hawaii Multifamily Advisor September update

Local underwriting mechanism: One large transaction can dominate monthly dollar volume without dominating the unweighted median. Building tenure, utilities and work needs can separate two nearby walk-ups more than their street names suggest.

RentalCalcs interpretation: The July median supports a starting conversation about actual trades. It cannot prove broad compression from the earlier quarterly median because the period and cohort change.

What would change the view, and what to obtain?

Contrary evidence: A matched set of arm’s-length sales with consistent trailing NOI could support a trend; until then the direction remains uncertain.

Property decision: Obtain fee-simple versus leasehold terms, remaining land-lease obligations where applicable, utility responsibility and buyer-adjusted sale NOI. A lower yield is not justified solely by the Makiki address.

Supported submarkets and the missing evidence

No island-weighted statewide average, neighborhood cap curve or current matched-series apartment operating survey was established. Hawaiʻi County and Honolulu ACS rent references are older and broader than the sale sample. Maui/Kauaʻi conventional apartment yields remain unverified. The Q1 median’s +59bp move is a cohort comparison, not a repeat-property value loss.

The Hawaiʻi county directory and Honolulu County cap-rate screening page serve local screening questions. Their modeled housing indexes are not a substitute for the apartment observations here. Do not copy a county index into a building’s appraisal.

Compression, stabilization or expansion?

The broker’s small sale sample shows that deals clear at yields different from active asking inventory. UHERO independently shows why affordability, insurance, fees and supply constraints can pull in different directions. CBRE’s national survey explains capital-market uncertainty, but does not validate an island cap level. Scarcity can support rent while expenses reduce sustainable NOI.

RentalCalcs base underwriting position: start with unchanged exit yield and verified buyer NOI. This is a conservative scenario choice, not an assertion that the state’s cap rates will stay flat. The three cases identify evidence that can change the choice; no probabilities or basis-point targets are assigned.

Short-term policy rates do not equal property borrowing costs. Loan spreads, term, leverage and amortization affect coverage. Better physical occupancy does not guarantee stronger collected NOI; a smaller construction pipeline does not eliminate existing lease-up competition.

Translate income and yield into property value

Value = annual NOI ÷ (cap rate ÷ 100). At constant income, a higher cap means a lower value. A move from 5% to 6% is +100 basis points and reduces value by 16.7%, before debt or sale costs; it is not a 1% value decline.

Original arithmetic, not observed local prices. This fixed matrix does not change with the tool above. NOI changes are total over the chosen holding period, not annual growth. Neither view includes debt payoff, transaction costs, sale tax or interim cash flow. Use the full calculator for those cash movements.

One acquisition, reconciled from rent roll to investor cash

The illustration uses 20 units at $1,250 monthly scheduled rent, an 8% vacancy/collection loss and independently stated buyer expenses. These are standardized teaching assumptions, not estimates of attainable Hawaiʻi rent, taxes or premiums. The 5% entry cap is a chosen scenario, not an observed statewide recommendation.

Replace the illustrative costs with property evidence

Rental proceeds are subject to Hawaiʻi GET as well as income-tax rules; transient use has separate TAT implications. Obtain a tax professional’s calculation of taxable base, surcharge and any pass-through. Honolulu property classification must be checked on the parcel; Residential A guidance is not a blanket apartment rate. Hawaiʻi Department of Taxation rental guidance

Verify insurance replacement cost, flood/wind terms, deductibles and interruption coverage. For leasehold or condominium interests, reconcile land rent, association charges and special assessments. The illustrative budget assumes fee-simple conventional annual leases and no separate association/land rent; add those obligations when present.

The $12,000 GET allowance is an assumed annual owner cash cost, with no tenant reimbursement in the illustration. It is not a statutory tax computation. Replace it with the actual taxable receipts, applicable surcharge and lease treatment. Income tax is outside NOI; transient TAT is outside this conventional annual-lease example. Check Honolulu parcel classification separately.

The assumed loan is not a current quote. For a hypothetical 1.25× minimum DSCR before reserves, the loan ceiling is about $1,139,118 at these terms; actual sizing also depends on LTV, debt yield and lender reserve/NOI definitions. With a full reserve deduction, DSCR becomes 0.98×. Negative cash is displayed as a loss, never hidden.

Yield on cost is separate: a hypothetical 10% higher stabilized NOI of $118,800 on price, closing and initial work of $2,284,800 produces 5.20%. It is not the going-in yield. Carrying costs and overruns would increase that cost basis; the income improvement has not been earned.

Core results and worksheet are free. Assumptions do not transfer to linked calculators; enter the actual rent roll, costs and loan terms. A tool click is separate from a completed analysis or saved deal. Sale proceeds require debt payoff, selling costs and applicable taxes.

Before relying on a Hawaiʻi cap rate

What is a good cap rate?

No single yield is defensible for all of Hawaiʻi. Compare matching closed-sale income, buyer expenses and work requirements, then test debt coverage and invested cash. A higher nominal cap may compensate for missing income or capital obligations rather than create a better return.

Can these apartment references price a duplex or another asset class?

There is no automatic transfer. One-to-four-unit rentals can compete with owner-occupants, while office, retail and industrial leases carry different downtime, credit and leasing-capital obligations. Use a matching sale cohort. The single-family analyzer helps build a smaller rental’s own income budget.

How should a buyer verify NOI?

Reconcile a trailing year of collections, free rent, delinquency and reimbursements to the leases and bank-backed operating statements. Replace taxes, insurance and management with buyer costs. Separate recurring repairs, immediate work and reserves. The NOI classification guide explains the expense bridge.

What if the deal depends on subsidized income or a refinance?

Verify the contract, approved rent, tenant portion, inspection and recurring compliance costs. The voucher-income valuation guide explains why a reference schedule is not contracted NOI. Refinance proceeds also depend on lender income, loan terms and payoff; higher appraised value alone does not guarantee available cash.

Sources, lineage and update policy

Research accessed October 18, 2026. Observation periods, publication and access dates are different. The source ledger identifies known coverage and undisclosed methods. Public brokerage research has commercial interests; public availability is not unrestricted dataset republication permission. This report summarizes limited facts and contributes original comparisons and underwriting analysis.

No automated build advances the editorial date. Revisit local facts and conditional conclusions together on new editions, corrections, material borrowing-cost changes or relevant operating/rule changes. First-publication dates are added only after public release.

Send a correction with the source and observation date · Hawaiʻi county directory · California’s separately researched report