Hawaii is often seen as a dream destination with its pristine beaches, breathtaking landscapes, and a unique island culture. But for those considering real estate investments in the Aloha State, particularly military members and veterans, the market can present both unique opportunities and challenges. In this blog, we’ll explore how one real estate expert, Erica Lehmkuhl, navigated Hawaii’s luxury market, managed rental properties, and built wealth through strategic real estate investments.
Meet Erica Lehmkuhl: Military Veteran Turned Real Estate Investor
Erica Lehmkuhl, a retired Army First Sergeant, is not only a seasoned real estate broker but also a strategic investor in Hawaii’s unique market. With a career spanning 23 years in the military, she developed a keen ability to adapt, strategize, and execute—all skills that translated seamlessly into real estate.
Her real estate journey started out of necessity when she purchased her first home using a VA loan as a single mother. Over time, she transitioned from buying properties for personal use to managing rentals, flipping homes, and even running her own real estate business, Seaside Realty.
Understanding Hawaii’s Real Estate Market
Investing in Hawaii is unlike buying property in the mainland U.S. Here’s why:
- High Entry Costs – Median home prices often exceed $1 million.
- Luxury & Resort Markets – Many properties cater to high-end buyers or vacationers.
- Unique Zoning & Restrictions – Not all properties can be used as rentals.
- Island-Specific Challenges – Cost of living, flood zones, and HOA fees vary significantly.
What Military Buyers Should Know About VA Loans in Hawaii
The VA loan is one of the most powerful tools available to military buyers, offering 0% down financing. However, Hawaii’s high prices mean buyers need to be strategic about their purchases.
Key Considerations for VA Loans in Hawaii:
- Funding Fees – Unless you’re 10% or more disabled, you’ll pay a funding fee (around 3.3% of the loan amount). However, disabled veterans are exempt from this fee.
- Appraisal & Condition Requirements – The VA requires homes to meet minimum property standards. This can be challenging in older properties, but with the right approach, buyers can get necessary repairs done before closing.
- Property Taxes & Benefits – Hawaii has the lowest property tax rate in the U.S. and disabled veterans can qualify for additional tax exemptions.
House Hacking & Income Opportunities in Hawaii
One of Erica’s most successful strategies has been house hacking—the practice of buying a property, living in part of it, and renting out the other units to offset the mortgage. Given Hawaii’s high home prices, this can be a game-changer for military families looking to make the most of their VA loan.
For example, Erica purchased a home with a separate living space, allowing her to generate rental income while keeping her cost of living low. This strategy is particularly useful in Hawaii, where multi-generational living is common and homes often have additional rental spaces.
Property Management & Long-Term Rentals
Many military members who purchase in Hawaii are eventually stationed elsewhere, leading to a common question: Should I sell or rent my home when I leave?
Erica’s advice: If you can afford to hold onto the property, rent it out and let tenants cover the mortgage while your home appreciates in value.
She started managing rental properties when she saw other property managers overcharging and underdelivering. By keeping a hands-on approach and charging fair rates, she turned property management into a stable income stream while helping fellow military families.
Why Appreciation Matters in Hawaii
While many investors prioritize cash flow, Hawaii real estate is often about long-term appreciation. A home bought for $600,000 a few years ago can easily be worth over $1 million today.
In Erica’s case, one of her most successful deals involved buying a home for $653,000, living in it, then selling it for $1.14 million just seven years later. After factoring in repairs and closing costs, she walked away with nearly $600,000 in tax-free profit thanks to the two-out-of-five-year capital gains exemption.
Key Takeaways for Military Investors
- Location Matters – Hawaii has microclimates and varying commute times; research neighborhoods carefully.
- VA Loans Can Work in High-Cost Areas – Use your BAH and look at long-term appreciation.
- House Hacking Reduces Risk – Renting part of your home can significantly lower your mortgage burden.
- Long-Term Rentals Offer Stability – Even if you PCS, your home can generate passive income.
- Real Estate is a Long Game – Appreciation in Hawaii makes up for short-term cash flow challenges.
Final Thoughts
For military members and veterans, Hawaii offers both challenges and incredible opportunities. With the right strategy, you can turn a VA loan into a wealth-building tool, whether through house hacking, long-term rentals, or capitalizing on appreciation.
If you’re considering buying a home in Hawaii, working with a knowledgeable real estate agent—especially one with military experience—can make all the difference.
For more information, reach out to Erica Lehmkuhl at Seaside Realty (www.seaside808.com) or attend one of her monthly ADPI meetups in Kapolei, join the chat inside the ADPI Facebook group here: https://m.me/ch/AbZS4h18-4ZkZedq/
