Is Kaunakakai, Hawaii Good for Airbnb Investment?

To start an Airbnb in Kaunakakai, Hawaii, begin by researching Maui County's strict short-term rental regulations, as Kaunakakai is located on Molokai island which falls under Maui County jurisdiction - note that as of 2021, Maui County has imposed significant restrictions on new short-term rental permits, with most areas requiring conditional permits or being prohibited entirely, so verify current zoning laws and permit availability through the Maui County Planning Department. Obtain necessary permits including a Conditional Permit for short-term rental use, State of Hawaii General Excise Tax license, and Transient Accommodations Tax registration, which can take 6-12 months due to lengthy approval processes. Find property in areas zoned for short-term rentals, focusing on residential or hotel-resort districts, with properties typically ranging from $400,000-$800,000 in Kaunakakai given the limited inventory and island location. Furnish the property with durable, tropical-appropriate furniture, essential amenities like air conditioning or fans, full kitchen equipment, quality linens, and safety features including smoke detectors and first aid supplies, budgeting approximately $15,000-$30,000 for complete furnishing. List your property on Airbnb and other platforms like VRBO, highlighting unique Molokai experiences such as proximity to Kaunakakai town, local fishing spots, and authentic Hawaiian culture, with competitive rates typically ranging $150-$300 per night depending on property size and amenities. Manage the property through local cleaning services, maintenance contractors familiar with island logistics, 24/7 guest communication, and compliance with occupancy limits and noise ordinances, while considering hiring a local property management company due to Molokai's remote location and limited service providers.

For identifying profitable short-term rental properties in Kaunakakai, Hawaii, focus on oceanfront or ocean-view locations within walking distance of Kaunakakai Wharf and downtown, as this small town on Molokai attracts visitors seeking authentic Hawaiian experiences away from crowded tourist destinations. Target 2-4 bedroom properties with traditional Hawaiian architecture, outdoor spaces like lanais or gardens, and amenities such as full kitchens, air conditioning, and parking, as guests often stay longer (5-7 days) and prefer self-sufficient accommodations. Pricing analysis should account for Molokai's limited accommodation options, with nightly rates typically ranging $150-400 depending on size and location, while considering seasonal variations during winter months and summer family travel periods. Competition research reveals minimal STR inventory compared to other Hawaiian islands, with most listings concentrated near the wharf area and Papohaku Beach, creating opportunities for well-positioned properties. Utilize AirDNA and Mashvisor for market data, consult with Molokai Realty companies like Molokai Properties Limited for local insights, monitor Airbnb and VRBO for competitor analysis, and leverage the Molokai Visitors Association for tourism trends, while ensuring compliance with Maui County's STR regulations and considering the island's limited infrastructure and seasonal accessibility challenges.

To obtain an Airbnb/STR permit in Kaunakakai, Hawaii, you must apply through Maui County's Department of Planning since Kaunakakai is located on Molokai island. First, submit a Short-Term Rental Home (STRH) application to the Maui County Planning Department at 2200 Main Street, Suite 315, Wailuku, HI 96793, or online through their permitting portal. Required documents include a completed application form, property deed or lease agreement, tax map key information, floor plans, site plan showing parking and landscaping, proof of liability insurance ($1 million minimum), Hawaii General Excise Tax license, Transient Accommodations Tax registration, neighbor notification affidavits (properties within 500 feet), and a $5,000 application fee plus additional review fees totaling approximately $6,500-$8,000. Kaunakakai-specific requirements include compliance with rural zoning restrictions, maximum occupancy limits based on bedrooms (2 guests per bedroom plus 2 additional), mandatory on-site parking (1 space per bedroom), septic system compliance certification, and adherence to Molokai's community character preservation guidelines which may limit certain exterior modifications. The timeline typically ranges from 12-18 months due to required public hearings, neighbor input periods, and county council review, with permits valid for 5 years and requiring annual renewals with updated documentation and fees of approximately $500-$1,000 annually.

Short-term rentals (STRs) in Kaunakakai, Hawaii are subject to Maui County's restrictive regulations that severely limit their operation. As of 2021-2022, Maui County implemented some of the strictest STR laws in Hawaii, effectively banning new short-term rental permits in most residential areas and requiring existing operators to obtain conditional permits or cease operations. In Kaunakakai, which is located on Molokai island, STRs are generally prohibited in residential zones, with only a limited number of grandfathered properties allowed to continue operating if they obtained proper permits before the regulatory changes. The county has been actively enforcing these restrictions through fines and legal action against unpermitted operators, citing concerns about housing availability for local residents and community character preservation. Properties in hotel or resort-zoned areas may still be permitted for STR use, but residential neighborhoods in Kaunakakai face significant restrictions, making legal STR operations extremely limited and requiring compliance with strict permit requirements, neighbor notification processes, and operational standards for any remaining legal units.

The best areas for Airbnb investment in Kaunakakai, Hawaii are the waterfront properties along Kaunakakai Harbor and Wharf Road, which attract tourists seeking authentic Hawaiian fishing village experiences and easy access to ferry services to Maui, plus the residential neighborhoods near Kapuaiwa Coconut Grove where visitors enjoy the historic royal coconut palm grove planted in the 1860s for King Kamehameha V. The downtown core around Ala Malama Street offers proximity to local shops, restaurants, and cultural sites while maintaining the town's rural charm that appeals to travelers seeking an alternative to crowded resort destinations. Properties near the Kaunakakai Airport area benefit from convenient access for inter-island travelers, while homes closer to the eastern shoreline provide stunning ocean views and access to traditional Hawaiian fishponds that attract eco-tourists and cultural enthusiasts. These areas capitalize on Molokai's reputation as the most Hawaiian island, drawing visitors interested in authentic cultural experiences, outdoor activities like hiking and fishing, and the island's famous Molokai Mule Ride and sea cliff tours.

Airbnb properties in Kaunakakai, Hawaii are subject to multiple lodging taxes including the Hawaii Transient Accommodations Tax (TAT) of 10.25% and the Maui County Real Property Tax which varies by property classification but typically ranges from $9.37 to $13.90 per $1,000 of assessed value for short-term rental properties. The TAT is collected monthly and must be remitted to the Hawaii Department of Taxation by the 20th of the following month, with hosts required to register for a TAT license before operating. Maui County also requires a Short-Term Rental Home (STRH) permit and collects additional fees, with property taxes paid semi-annually in August and February. Collection typically occurs through the booking platform (like Airbnb) for TAT when hosts opt-in to tax collection services, though hosts remain ultimately responsible for compliance. Exemptions are limited and generally apply only to stays exceeding 180 consecutive days by the same guest, which would classify as long-term rental rather than transient accommodation. Hosts must maintain detailed records of all bookings and tax collections, and failure to comply can result in penalties of up to 25% of unpaid taxes plus interest charges of 2/3% per month.

Starting an Airbnb in Kaunakakai, Hawaii requires significant upfront investment with property purchase being the largest expense at approximately $650,000 for a median 2-3 bedroom home suitable for vacation rental. Furnishing costs typically range $15,000-25,000 to create an attractive, fully-equipped rental including furniture, appliances, linens, kitchenware, and décor. Initial setup expenses include professional photography ($500), listing creation, welcome materials, and basic supplies totaling around $2,000. Permits and fees in Molokai County include transient vacation rental permits ($1,000-2,000), business licenses ($200), and potential impact fees ($3,000-5,000). Insurance costs approximately $3,000-4,000 annually for vacation rental coverage including liability and property protection. Utility setup and deposits for electricity, water, internet, and cable total roughly $1,500, with monthly utilities averaging $300-400. First six months operating costs include utilities ($2,100), cleaning services ($3,600 assuming $150 per turnover), maintenance reserves ($2,000), property management or marketing ($4,000), and miscellaneous supplies ($1,500), totaling approximately $13,200. The complete startup investment ranges from $690,000 to $710,000, making Kaunakakai one of the more expensive markets for Airbnb investment due to Hawaii's high property values and regulatory requirements.

Airbnb properties in Kaunakakai, Hawaii typically generate annual revenues between $35,000-$65,000 for modest properties and $75,000-$120,000 for premium oceanfront units, with average daily rates ranging from $150-$400 depending on location and amenities. Operating expenses generally consume 40-55% of gross revenue, including property management fees (15-25%), cleaning costs ($75-$150 per turnover), utilities ($200-$400 monthly), insurance ($2,000-$4,000 annually), and maintenance reserves (5-10% of revenue). Net profit margins typically range from 25-35% for well-managed properties, with successful operators like those managing beachfront cottages near Kaunakakai Wharf achieving occupancy rates of 70-85% by emphasizing authentic Hawaiian experiences and proximity to Molokai's cultural attractions. Key success factors include strategic pricing during peak seasons (December-April and summer months), maintaining strong guest reviews through personalized service, offering unique local experiences like fishing charters or cultural tours, and leveraging Molokai's reputation as an unspoiled destination. Properties that incorporate sustainable practices and partner with local businesses for guest experiences tend to command premium rates, with some operators reporting 15-20% higher revenues compared to standard listings, though the limited tourist infrastructure and seasonal demand fluctuations require careful cash flow management and realistic occupancy projections.

Airbnb investments in Kaunakakai, Hawaii typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, though these figures are significantly impacted by Hawaii's high property acquisition costs averaging $800,000-$1.2 million for investment-suitable properties. The remote location on Molokai island limits tourist volume compared to Oahu or Maui, resulting in average daily rates of $150-$250 and occupancy rates of 45-65% annually, with peak performance during winter months when mainland visitors seek warmer climates. Initial profitability typically occurs within 18-24 months after accounting for furnishing, licensing, and marketing expenses, while full investment recovery generally takes 8-12 years depending on leverage used and property management efficiency. The market benefits from limited hotel inventory on Molokai, creating opportunity for vacation rentals, but investors must navigate Hawaii's strict short-term rental regulations and higher operational costs including utilities, maintenance, and property management fees that can consume 35-45% of gross rental income.

STRSearch is a national platform that specializes in identifying profitable short-term rental investment opportunities including in Kaunakakai, Hawaii. Local real estate agents serving Molokai include Molokai Realty, Island Sotheby's International Realty, and Coldwell Banker Island Properties who have experience with vacation rental investments in the area. Hawaii Life Real Estate Brokers operates statewide and has agents familiar with Airbnb investment properties on Molokai. National services like Awning, RedAwning, and AirDNA provide market analysis and property management specifically for short-term rentals in Hawaiian markets including Kaunakakai. Vacasa and Evolve offer property management services for Airbnb investments throughout Hawaii including Molokai properties. Local property management companies such as Molokai Vacation Properties and Ke Nani Kai Resort have been managing short-term rentals in the Kaunakakai area since the early 2000s. BiggerPockets and Roofstock also provide resources and occasionally list investment properties suitable for Airbnb conversion in smaller Hawaiian markets like Kaunakakai.