1850 Ala Moana Blvd #218, Honolulu, HI 96815 — 21.1% Cash-on-Cash

About this property

Unit #218 at Palms at Waikiki is a 312-square-foot legal daily-rental studio with one bathroom, listed at $197,000 and four days on market.

The legal short-term rental designation is the property's defining characteristic. Most condos in Honolulu's resort corridors carry restrictions that prohibit nightly rentals; this unit carries no such limitation, which is why the income math looks different from a standard long-term rental. That legal status is baked into the listing, not a gray-area interpretation.

A 2025 renovation freshened the interior, and the unit features floor-to-ceiling windows with a Diamond Head view plus a private lanai — uncommon at this price point for the zip. Central A/C and resort-style building amenities (pool, fitness center, BBQ, on-site restaurant) support the short-term rental positioning.

The tax-assessed value sits at $357,600 against a $197,000 ask — a 45% discount to assessed value. That gap is worth examining rather than celebrating; assessed values in Hawaii can lag market cycles, and the listing is running through a bidding platform, which introduces process risk. Four days on market is too early to read as demand signal. Non-owner-occupied status is confirmed in public records, consistent with investor use from day one.

The investment case

The highest cash-on-cash return in zip 96815 at 21.1% — nearly double the zip average of 12.4% — makes the financial case for this studio unusually direct.

List Price

$197,000

Monthly Payment (PITI+HOA)

$1,910

Principal & Interest

$1,022

Property Tax

$46

Insurance

$66

HOA

$776

PMI

$0

Est. Monthly Rent

$2,604

Estimated rent based on automated valuation of comparable listings.

Cash-on-Cash Return

21.1%

Cap Rate

10.7%

Monthly Cash Flow

$694

Gross Rent Multiplier

6.3

DSCR

1.7

At a $197,000 purchase price with 20% down ($39,400), the total monthly payment lands at $1,910. That breaks down as $1,022 in principal and interest at the current 6.43% 30-year fixed rate, $46 in property taxes, $66 in insurance, and $776 in HOA fees. The HOA line is the largest single cost after debt service and deserves attention — at 41% of total monthly outlay, any HOA increase compresses cash flow directly.

Estimated monthly rent of $2,604 against $1,910 in total costs produces $694 in monthly cash flow. The net operating income is $1,762/month, yielding a 10.7% cap rate on the purchase price. A debt service coverage ratio of 1.7 means the property generates $1.70 for every $1.00 of debt obligation — that's a comfortable buffer by conventional underwriting standards.

The gross rent multiplier of 6.3 is low for Hawaii, where GRMs above 20 are common in residential resale. That's a direct function of the short-term rental premium embedded in the $2,604 rent estimate.

Figures exclude depreciation tax benefits, which vary by individual tax situation.

The numbers hold up under basic scrutiny, but the rent estimate assumes consistent short-term occupancy — the single variable that can move this deal from strong to marginal.

Annual return outlook

The 5-year total ROI projection of 30.3% is driven primarily by cash flow, with appreciation and mortgage paydown as supporting contributors.

Cash flow contributes 21.1% of the 30.3% five-year total — it's doing most of the work. Mortgage paydown adds 5.4%, reflecting the accelerating principal reduction in the early years of a 30-year amortization. Appreciation contributes an estimated 3.8% annually, though that figure is an estimate rather than a data-derived forecast, and should be treated as a directional assumption rather than a guaranteed return.

For a property where the short-term rental thesis is central, the cash flow component is appropriately the dominant driver. If occupancy softens or platform fees rise, the appreciation and paydown components still keep the total return positive — that's a reasonable structural backstop.

The 3.8% appreciation assumption is conservative relative to Honolulu's historical cycles but reasonable as a base case given current rate environment and inventory constraints. At $197,000, the property is already priced well below the for-sale comp median in the zip, which provides some margin if appreciation underperforms.

How it compares to nearby for-sale listings

Five active studio listings in zip 96815 provide a direct pricing context for this unit, and the spread is wide.

This property's $197,000 ask sits 44% below the for-sale comp median of $349,000 across the five comparable studios currently listed in 96815. On a per-square-foot basis, $197,000 for 312 square feet works out to roughly $631/sqft. The 310-square-foot studio at 2957 Kalakaua Ave is listed at $460,000 — nearly $1,484/sqft for essentially the same footprint. Even the $194,900 listing on Ala Wai Blvd at 185 square feet prices out at $1,054/sqft.

The $197,000 price looks anomalous relative to peers. Two explanations are plausible: the bidding platform structure may be pricing this as an opening bid rather than a final ask, or the unit carries some condition or encumbrance not visible in the listing. The tax-assessed value of $357,600 suggests the market has historically valued the unit well above the current ask.

Days on market across the comp set range from 3 to 26 days, with most listings fresh. That's not enough data to establish a clear absorption trend, but it does confirm active supply in this micro-segment. Buyers should treat the bidding platform process as a variable that could push the effective purchase price meaningfully above $197,000 before close.

Rental demand in this zip

No directly comparable rental listings were identified in zip 96815 for this studio configuration, which limits independent verification of the rent estimate.

The estimated monthly rent of $2,604 is derived from automated valuation rather than confirmed comparable leases in the immediate zip. That's a meaningful caveat for a property where the entire investment thesis rests on short-term rental income. Waikiki's short-term rental market is real and active, but nightly rates vary substantially by season, platform, management quality, and unit positioning within a building.

At $2,604/month, the implied average daily rate assuming 80% occupancy is roughly $108/night. That's a plausible floor for a renovated, legally permitted studio with Diamond Head views in a Waikiki building, but it's not a guaranteed outcome. Management fees, cleaning fees, and platform commissions — none of which are reflected in the expense line above — typically run 20-30% of gross short-term rental revenue, which would compress net income materially.

Investors underwriting this deal should model a conservative occupancy scenario (65-70%) and net-of-fees revenue before committing to the $694/month cash flow projection. The legal rental status is a genuine advantage; converting that advantage into consistent income requires active management or a reliable third-party operator.

Who this property suits + risks to weigh

This unit fits an investor comfortable with short-term rental operations who wants Hawaii market exposure at a price point well below typical Waikiki entry costs.

Best fit

The legal daily rental designation makes this a niche buy. It's not a set-and-forget long-term rental; it requires either hands-on management or a hotel program enrollment (mentioned in the listing). For an investor already operating short-term rentals, or one willing to engage the building's hotel program, the 21.1% cash-on-cash return at a sub-$200K entry price is a genuinely rare combination in this market. It also works as a hybrid — personal use during preferred dates, income-generating the rest of the year — which broadens the buyer pool beyond pure investors.

Risks to weigh

The bidding platform structure introduces price uncertainty. The $197,000 figure may be an opening bid; the effective acquisition cost could be higher, which would compress every metric above proportionally. At $230,000, for example, the CoC drops to roughly 14% — still strong, but a different deal.

HOA fees at $776/month are substantial and not fixed. Any special assessment or fee increase hits cash flow immediately. Short-term rental regulations in Hawaii have tightened in recent years; while this unit is currently permitted, regulatory risk is not zero and should be monitored.

The rent estimate lacks local comparable support. Underwriting to $2,604/month without confirmed comps means the cash flow projection carries more uncertainty than a long-term rental equivalent would. A conservative investor should stress-test at 70% of the estimated rent before committing.