2947 Kalakaua Ave APT 302, Honolulu, HI 96815 — 27.7% Cash-on-Cash

About this property

Unit 302 at 2947 Kalakaua Ave is a 373-square-foot studio condo in a beachfront building on Honolulu's Gold Coast — one of the only addresses in the area where short-term vacation rentals are legally permitted.

The Diamond Head Beach Hotel & Residence sits directly on the ocean, with grassy lawn access to the water and proximity to Sans Souci Beach, Kapiolani Park, and the Waikiki Aquarium. Those aren't marketing flourishes — they're the operational foundation for the vacation rental income this unit already generates. The owner currently self-manages on vacation rental platforms, with an on-site hotel management option available if a buyer prefers a hands-off structure.

Security infrastructure includes nightly guard coverage, FOB-gated access, and fire sprinklers — meaningful details for a property marketed to remote investors. Parking is available via a gated garage (fee-based) and free or metered street options nearby.

At 307 days on market, the listing has sat longer than the five nearby for-sale comps, all of which appeared within the past ten days. That gap warrants attention. The property is leasehold rather than fee simple — a structural distinction that affects long-term financing options and resale liquidity, and almost certainly explains both the low list price relative to the tax-assessed value of $370,500 and the extended market time. Buyers should contact the listing agent to understand the lease terms and expiration before underwriting this deal.

The investment case

At a $175,000 purchase price, this unit generates an estimated $808 in monthly cash flow after a $1,830 total payment — producing a 27.7% cash-on-cash return that is more than double the ZIP 96815 average of 12.4%.

List Price

$175,000

Monthly Payment (PITI+HOA)

$1,830

Principal & Interest

$967

Property Tax

$41

Insurance

$58

HOA

$764

PMI

$0

Est. Monthly Rent

$2,638

Estimated rent based on automated valuation of comparable listings.

Cash-on-Cash Return

27.7%

Cap Rate

12.5%

Monthly Cash Flow

$808

Gross Rent Multiplier

5.5

DSCR

1.9

The numbers here are genuinely unusual for Honolulu. The cap rate of 12.5% and net operating income of $1,816 per month on a $175K asset reflect the combination of a suppressed purchase price (leasehold discount) and a strong estimated rent of $2,638 per month. The gross rent multiplier of 5.5 means the property pays for itself in rent in roughly five and a half years — a ratio that's rare in any coastal Hawaiian market.

Monthly carrying costs break down to $967 in principal and interest at the current 6.43% thirty-year fixed rate, $41 in property tax, $58 in insurance, and $764 in HOA fees. The HOA is the single largest line item after debt service. At $764 per month, it's material — investors should verify what it covers and whether any special assessments are pending, particularly given the building's hotel-management infrastructure and oceanfront exposure to weather-related maintenance.

The debt service coverage ratio of 1.9 means the property generates nearly twice the income needed to cover its debt obligations. That's a comfortable cushion. The tax-assessed value of $370,500 against a $175,000 purchase price is a notable gap — one that reflects the leasehold structure rather than a market mispricing in the traditional sense.

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

The investment case here is straightforward on paper: low entry price, strong rental income, and metrics that outperform the ZIP by a wide margin. The leasehold structure is the variable that demands the most scrutiny before committing.

Annual return outlook

The 5-year total ROI of 38.9% is built on three components — cash flow leads, but mortgage paydown and appreciation each add meaningful weight.

Cash flow contributes 27.7% of the five-year return, making it the dominant driver. That's the income-investor thesis in its clearest form: this property earns its return primarily through rent, not through betting on price appreciation.

Mortgage paydown adds 7.4% over five years — a mechanical return that compounds quietly as the loan balance shrinks. For a property at this price point, that's a real number worth tracking.

Appreciation contributes an estimated 3.8% annually, based on a projection for the Honolulu market. Because that figure is an estimate rather than a data-scraped historical rate, treat it as a directional input rather than a guarantee. Hawaiian coastal real estate has historically held value well, but leasehold properties don't always track fee-simple appreciation on a one-to-one basis — another reason lease terms matter here.

Taken together, the 38.9% five-year ROI is weighted toward realized income rather than speculative price gains. That's a more defensible return profile than appreciation-dependent deals, particularly in a higher-rate environment where carry costs are elevated across the board.

How it compares to nearby for-sale listings

Five studio, one-bath condos are currently listed in ZIP 96815, ranging from $69,900 to $460,000 — and this unit at $175,000 sits well below the group's median of $349,000.

On a price-per-square-foot basis, this property at $175,000 across 373 square feet works out to roughly $469 per square foot. The comp at 2957 Kalakaua Ave — one building away on the same street — lists at $460,000 for 310 square feet, or nearly $1,484 per square foot. That's more than three times the price per square foot for an effectively identical product type in the same micro-location. The leasehold structure fully accounts for that gap; fee-simple condos in this corridor command a substantial premium.

The $69,900 outlier at 300 Wai Nani Way is also leasehold, which explains its price relative to the group. The remaining comps — at $197,000, $349,000, and $429,000 — are all fee-simple properties with meaningfully different ownership structures.

At 307 days on market, this unit has been available far longer than any of the five comps, all of which appeared within the past ten days. That's not necessarily a red flag about the property itself, but it does suggest the leasehold disclosure is creating friction with buyers who may be unfamiliar with the structure or unable to secure conventional financing on leasehold terms.

Rental demand in this zip

No direct rental comps were available in ZIP 96815 for studio units, so the estimated rent of $2,638 per month rests on a modeled projection rather than observed market transactions.

The absence of comparable rental data is worth flagging plainly: the $2,638 monthly rent estimate is a projection, not a figure anchored to a set of active or recently leased studio units in this ZIP. That introduces uncertainty into every downstream metric — cash flow, CoC, cap rate, and the five-year ROI all flow from this number.

What the listing does provide is real-world context: the unit is already operating as a vacation rental, owner-managed across short-term platforms. Vacation rental income in a legally permitted oceanfront building in Honolulu can plausibly exceed long-term lease rates — but it also fluctuates with seasonality, platform fees, occupancy rates, and management overhead that a static rent estimate doesn't capture.

Buyers underwriting this deal should request actual booking history and net income records from the current owner. If the unit is producing income close to $2,638 per month net of platform fees and cleaning costs, the investment case holds. If realized income is materially lower, the cash-flow picture compresses quickly given the $764 monthly HOA. The legal vacation rental status is a genuine asset in this market — it's what separates this building from most of the surrounding inventory.

Who this property suits + risks to weigh

This property suits an income-focused investor comfortable with leasehold ownership and the operational demands of short-term rental management — or willing to hand that off to the building's on-site hotel management.

Best fit

The investor who fits this deal is one who has done leasehold due diligence before — or is willing to do it carefully here. The 27.7% cash-on-cash return and $808 monthly cash flow are genuinely strong, but they're only accessible to a buyer who can finance a leasehold property, understands the lease expiration timeline, and is comfortable with the vacation rental operating model. For a self-directed operator who can manage short-term bookings and absorb occasional vacancy, the income profile is compelling. The on-site hotel management option makes a passive ownership structure viable too, though that will reduce net income below the projected figures.

Risks to weigh

The leasehold structure is the central risk. Leasehold condos can be difficult to finance with conventional mortgages, and resale liquidity is narrower than fee-simple alternatives. Lease renegotiation or expiration risk is real and must be evaluated against the specific lease terms before any offer. The $764 monthly HOA is the second-largest cost line and deserves scrutiny — special assessments in aging beachfront buildings are not uncommon. The rent estimate of $2,638 per month lacks rental comp support, meaning the cash-flow projections carry more uncertainty than a deal backed by observed market transactions. Finally, 307 days on market in a zip where comparable listings are moving in under ten days is a signal worth investigating, not dismissing. The price has not changed from the original listing, which suggests the seller isn't under pressure — but also that the leasehold disclosure may be the friction point for most buyers.