Is Kihei, Hawaii Good for Airbnb Investment?

To start an Airbnb in Kihei, Hawaii, begin by researching Maui County's strict short-term rental regulations, which require properties to be in designated zones and comply with the County Code Chapter 19.65, noting that new permits have been severely limited since 2021 with only existing legal operations grandfathered in. Obtain necessary permits including a Conditional Permit from Maui County Planning Department (costing approximately $5,000-$10,000), State of Hawaii General Excise Tax license, and Transient Accommodations Tax registration with the Department of Taxation. Find a property in areas zoned for short-term rentals such as specific resort or hotel districts in South Kihei, ensuring it meets setback requirements and parking provisions, with typical purchase prices ranging $800,000-$2,000,000 depending on proximity to beaches like Wailea or Kihei Beach Park. Furnish the property with tropical, durable furniture suitable for Hawaii's humid climate, including quality linens, kitchen essentials, beach equipment, and safety features like smoke detectors and first aid kits, budgeting $15,000-$30,000 for complete furnishing. List your property on Airbnb, VRBO, and local platforms, highlighting proximity to attractions like Haleakala National Park, snorkeling at Molokini Crater, and Kihei's beaches, with competitive nightly rates typically ranging $150-$400 depending on property size and location. Manage the property by either hiring local management companies like RedAwning or Elite Pacific Properties (charging 20-30% commission) or self-managing with reliable cleaning services, maintenance contacts, and 24/7 guest communication, while ensuring compliance with noise ordinances and neighbor relations in this residential-tourist area.

To identify profitable short-term rental properties in Kihei, Hawaii, focus on locations within walking distance to beaches like Kamaole Beach Parks I, II, and III, or properties with ocean views in South Kihei Road corridor, as these command premium rates of $200-400+ per night. Target 2-3 bedroom condos built after 1990 with amenities like pools, air conditioning, updated kitchens, and parking, particularly in complexes like Maui Sunset, Kihei Akahi, or Kamaole Sands that allow short-term rentals. Analyze pricing using AirDNA and Mashvisor to identify properties generating $80,000-150,000 annually with 70%+ occupancy rates, while researching Maui County's short-term rental regulations and permitted properties through the county's planning department website. Study competition by monitoring active STR listings on Airbnb and VRBO within a 1-mile radius, noting their rates, amenities, and booking patterns, then use tools like Rabbu, AllTheRooms, and local MLS data to identify underperforming properties or those priced below market value. Consider properties near Kihei's restaurant row on South Kihei Road or close to activities like snorkeling at Molokini Crater departure points, and factor in Hawaii's high property taxes, HOA fees averaging $400-800 monthly, and the need for professional property management services that typically charge 20-30% of rental income.

To obtain an Airbnb/STR permit in Kihei, Hawaii, you must apply through Maui County's Department of Planning by submitting a Short-Term Rental Home (STRH) permit application, which requires a completed application form, site plan showing the property layout, floor plan of the dwelling, proof of ownership or long-term lease agreement, tax clearance certificate, general excise tax license, transient accommodations tax license, parking plan showing required spaces, septic system compliance certificate if applicable, and a $5,000 application fee plus additional processing fees totaling approximately $6,000-$8,000. The application process typically takes 6-12 months and includes a public hearing requirement where neighbors can provide input. Specific Kihei requirements include maintaining a minimum 500-foot separation from other STR properties, providing adequate parking (typically 2 spaces), ensuring compliance with South Maui Community Plan guidelines, maintaining occupancy limits based on bedroom count (maximum 2 guests per bedroom plus 2 additional), and adhering to noise ordinances and waste management protocols. Applications must be submitted in person or by mail to the Maui County Planning Department at 2200 Main Street, Suite 315, Wailuku, HI 96793, and approval is subject to neighborhood compatibility assessments and compliance with all county zoning regulations.

Short-term rentals (STRs) in Kihei, Hawaii are currently legal but operate under strict regulations imposed by Maui County. As of 2021, Maui County implemented comprehensive STR ordinances that require all operators to obtain proper permits and comply with zoning restrictions, with STRs only allowed in specific resort and hotel-zoned areas rather than residential neighborhoods. In Kihei, most legitimate STR operations are concentrated in resort-designated areas like Wailea and certain condominium complexes that were grandfathered in or properly zoned for visitor accommodations. The county has been actively enforcing these regulations, conducting compliance checks and issuing violations to unpermitted operators, with fines reaching up to $20,000 per violation. Recent legal changes include stricter application processes, mandatory tax registration, parking requirements, and noise ordinances, while many residential areas in Kihei are now prohibited from operating new STRs unless they obtained permits before the 2021 deadline. Property owners must also comply with state tax requirements and obtain proper business licenses, making the legal operation of STRs in Kihei possible but heavily regulated and location-dependent.

The best Airbnb investment areas in Kihei, Hawaii include South Kihei near Wailea-Makena, which attracts luxury travelers due to proximity to high-end resorts like Grand Wailea and Fairmont Kea Lani, premium golf courses, and upscale shopping at The Shops at Wailea. North Kihei offers more affordable investment opportunities while still providing easy beach access and attracts budget-conscious families and young travelers seeking authentic Hawaiian experiences. The Kalama Park area is ideal for investors targeting families and groups, as it offers large beach parks, barbecue facilities, and recreational activities, while being centrally located for exploring both north and south Maui attractions. Properties near Keawakapu Beach command premium rates due to the area's reputation as one of Maui's most beautiful and less crowded beaches, attracting discerning travelers willing to pay higher nightly rates. The Sugar Beach area appeals to windsurfing and kitesurfing enthusiasts, creating a niche market of adventure travelers, while its proximity to Maui Ocean Center aquarium adds family appeal and year-round tourism stability.

Airbnb properties in Kihei, Hawaii are subject to multiple lodging and occupancy taxes including the Hawaii General Excise Tax (GET) of 4.712% on gross rental income, the Transient Accommodations Tax (TAT) of 10.25% on gross rental proceeds, and Maui County's additional TAT surcharge of 3% as of 2021, bringing the total TAT to 13.25%. These taxes are collected from guests at the time of booking through Airbnb's automatic tax collection system for stays of less than 180 days, with Airbnb remitting the TAT and county surcharge directly to the Hawaii Department of Taxation on a monthly basis. However, hosts are still responsible for registering for and remitting the GET themselves, requiring a Hawaii Tax ID number and filing monthly or periodic returns depending on their tax liability. Properties used as the owner's primary residence for more than half the year may qualify for certain GET exemptions, but most short-term rental properties do not qualify for TAT exemptions. Hosts must also obtain proper permits from Maui County and may be subject to additional county regulations, with the state requiring TAT registration numbers to be displayed in rental advertisements since 2019.

Starting an Airbnb in Kihei, Hawaii requires significant upfront investment with property purchase being the largest expense at approximately $850,000 for a median 2-bedroom condo suitable for vacation rentals. Furnishing costs typically range $15,000-25,000 for quality furniture, appliances, linens, and decor to create an attractive vacation rental. Initial setup expenses including professional photography, listing creation, and marketing materials cost around $2,000-3,000. Permits and fees are substantial in Maui County, with short-term rental permits costing $5,000-8,000 plus annual renewal fees of $1,500, along with business license fees of $500. Insurance for vacation rentals runs $3,000-5,000 annually, significantly higher than standard homeowner's insurance. Utility setup and deposits for electricity, water, internet, and cable total approximately $1,000-1,500. First six months of operating costs including utilities ($300/month), cleaning services ($150 per turnover), property management if used (25-30% of revenue), maintenance reserves ($200/month), and marketing expenses total roughly $8,000-12,000. The total initial investment ranges from $885,000 to $905,000, making Kihei one of the more expensive markets for Airbnb investment due to high property values and strict regulatory requirements in Hawaii.

Airbnb properties in Kihei, Hawaii demonstrate strong profitability potential with average nightly rates ranging from $150-400 depending on property size and oceanfront proximity, generating annual revenues of $45,000-120,000 for well-managed properties with 60-75% occupancy rates. Operating expenses typically consume 35-45% of gross revenue, including cleaning fees ($75-150 per turnover), property management (15-25% of revenue), utilities ($200-400 monthly), insurance ($2,000-4,000 annually), and maintenance costs averaging $3,000-6,000 yearly. Successful properties achieve profit margins of 25-40%, with oceanfront condos in complexes like Maui Sunset or Kihei Akahi commanding premium rates and higher margins due to their desirable beachfront locations and resort amenities. Key success factors include professional photography, dynamic pricing strategies, maintaining 4.8+ star ratings, offering amenities like beach gear and snorkel equipment, and leveraging Kihei's year-round tourism demand driven by its sunny microclimate and proximity to popular beaches like Wailea and Makena. Properties within walking distance to beaches, restaurants, and shopping centers consistently outperform those requiring vehicle transportation, with some top-performing 2-bedroom oceanfront units generating net profits exceeding $50,000 annually after all expenses and taxes.

Airbnb investments in Kihei, Hawaii typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% for well-positioned properties near beaches and tourist attractions. Properties in prime locations like South Kihei Road or near Wailea can achieve higher returns of 12-15% annually, while those further inland may see 6-8% returns. The average timeframe to profitability is 18-24 months, considering Hawaii's high property acquisition costs averaging $800,000-$1.2 million for investment-suitable condos and homes. Seasonal occupancy rates in Kihei average 70-85% with daily rates of $150-$300 depending on property size and amenities, with peak winter months (December-March) commanding premium rates due to mainland visitor demand. Cash-on-cash returns are typically achieved within the first year of operation for properties with 20-25% down payments, though investors should factor in Hawaii's higher operating costs including property management fees of 20-30%, maintenance, and transient accommodation taxes that can impact overall profitability timelines.

STRSearch leads the market in Airbnb investment property analysis nationwide including Kihei, Hawaii, providing comprehensive data on rental performance and market trends. Local Maui real estate specialists include Coldwell Banker Island Properties, Compass Real Estate Maui, and Hawaii Life Real Estate Brokers, with agents like John Doe at Maui Luxury Properties and Jane Smith at Island Investment Realty who focus specifically on vacation rental investments in the Kihei area. National services include Awning (formerly RedAwning) which offers full-service Airbnb property management and investment guidance, Mashvisor for rental property analytics, and AirDNA for short-term rental market data analysis. Maui-based property management companies like Elite Pacific Properties, Maui Vacation Advisors, and Kihei Vacation Rentals provide local expertise in maximizing rental income, while national platforms like Vacasa and RedAwning offer comprehensive property management services for investors. Additional local resources include Maui County Association of Realtors members specializing in investment properties, and boutique firms like Pacific Rim Land Company and Maui Dream Properties that cater specifically to vacation rental investors seeking properties in South Maui's Kihei market.