Where Investors Look First For Vacation Rentals In Kihei

If you are eyeing Kihei for a vacation-rental purchase, you are not alone. The beaches, walkable dining, and consistent visitor demand make it a perennial favorite. The difference between a great buy and a costly mistake comes down to two things: legal use and net performance after real costs. In this guide, you will see exactly where investors start their search, how to confirm what is legal, and the quick checks that protect yield and resale. Let’s dive in.

Start with what is legal

Before you compare views or amenities, confirm whether short-term use is allowed for the specific parcel and building. Maui County adopted Bill 9 and Ordinance No. 5909, which phase out transient vacation rentals in apartment-zoned districts on a schedule that runs through 2030 for most of the island. West Maui has an earlier deadline of December 31, 2028. Short-term use is still viable in other pathways, but you must verify the one that applies to your target.

• Apartment zoning and Bill 9: Treat apartment-zoned condos as legally at risk for future short-term use unless they are rezoned or clearly exempt. See the county’s summary of the law for context and timelines. Maui County’s Bill 9 update explains the phase-out.
• H-3/H-4 rezoning concept: The county created new hotel districts and a Temporary Investigative Group (TIG) that recommended certain properties for potential rezoning. Inclusion on a recommendation list does not equal approval. Review staff materials and track council actions. The county’s staff report outlines the H-3/H-4 framework.
• Hotel/Resort zoning: Units already in hotel or resort zones can operate as visitor accommodations under zoning and are not part of the apartment phase-out. Confirm zoning on the county GIS.
• STRH permits: Single-family homes or small multi-unit properties outside hotel zones may operate with Short-Term Rental Home permits, subject to region caps and renewal rules. Use the county’s STRH portal to research permits.

Pro tip: Many Kihei condos historically operated as vacation rentals because they appeared on the county’s Minatoya apartment-district list. Under Bill 9, that history does not guarantee future rights. Always confirm current zoning, any Minatoya status, and whether the property appears in TIG materials or an active rezoning bill.

Investor map: Kihei areas to screen first

Below is a simple, investor-first way to organize your search. Start where legal use is most secure, then compare beach access, ADR potential, and costs.

Halama Street

A short, beachfront corridor near Kalama Park with a mix of low-rise multi-unit parcels and oceanfront homes. Walkability improves near South Kihei Road, with easy access to dining and services.

• Allowed STR pathway: Some parcels have apartment zoning and historic short-term use; those are subject to the Bill 9 phase-out unless rezoned. Confirm if any unit is hotel/resort-zoned or has a qualifying permit. Review county materials on the H-3/H-4 process for rezoning context. See the county’s H-3/H-4 staff report.
• Beach access and walkability: Immediate shoreline appeal with sunset views and fast access to Kalama Park and central Kihei. Portions near S. Kihei Rd test as very walkable. Check a WalkScore snapshot of S. Kihei Rd.
• ADR baseline: Use the Wailea/Kīhei submarket data in the state’s performance report as your starting point, then layer property-level analytics and booking history. DBEDT’s monthly report provides submarket ADR and occupancy.
• Typical net cap rate: Oceanfront homes can achieve premium nightly rates, but high acquisition prices and insurance can compress net yields into low single digits. See general Hawaii investment context. Review a Hawaii investment guide for cap-rate context.
• Primary risks: Bill 9 exposure for apartment-zoned parcels, insurance cost volatility after the 2023 wildfires, and HOA or special assessments where applicable. AP News details insurance pressures in Hawaii.

South Kihei condo corridor (Kamaole & Kalama area)

A long run of low-rise condo developments along South Kihei Road near the three Kamaole Beach Parks. This is the classic walk-to-beach, walk-to-dining guest experience that has fueled strong booking patterns.

• Allowed STR pathway: Many complexes here historically appeared on the county’s Minatoya list, which means prior short-term use in apartment districts. Under Bill 9 these have phase-out risk unless rezoned. Confirm zoning and any active rezoning proposals. Check the county’s H-3/H-4 staff materials for process and criteria.
• Beach access and walkability: Proximity to Kam I, II, and III is a consistent ADR driver. Many blocks along S. Kihei Rd score well for walking. View a WalkScore example for S. Kihei Rd.
• ADR baseline: Start with the Wailea/Kīhei submarket tables and adjust based on exact building, finish level, and view. Use the state’s Wailea/Kīhei submarket report.
• Typical net cap rate: Older, inland condos can show higher gross yield, but HOA, insurance, taxes, and management often pull net cap rates into the low to mid single digits. See general Hawaii cap-rate context.
• Primary risks: Legal status under Bill 9, master-policy insurance renewals, and potential HOA special assessments. Hawaii officials are working on condo insurance stabilization.

Resort-proximate pockets near Wailea and Keawakapu

These are formally planned resort areas where hotel or resort zoning aligns with visitor use. Purchase prices are higher, and amenities are robust.

• Allowed STR pathway: Hotel/resort zoning supports visitor accommodations and is not part of the apartment-district phase-out. Review the county’s Bill 9 summary for what is affected.
• Beach access and walkability: Quick access to resort beaches and dining. Guests value on-site amenities and nearby paths.
• ADR baseline: Submarket ADRs tend to be higher. Use the Wailea/Kīhei section of the state report as your baseline, then refine by building and view. DBEDT’s report is your public benchmark.
• Typical net cap rate: Higher ADRs meet higher buy-in prices and operating costs. These assets often trade at lower net cap rates. See Hawaii investment guide context.
• Primary risks: Insurance and HOA costs, plus premium pricing that can compress returns if revenue underperforms. Track building-level policies and reserves.

How to underwrite performance with confidence

A clean underwriting file helps you compare apples to apples across addresses. Use the following sequence for any unit or home you are considering.

1. Verify legal path

• Confirm parcel zoning and whether the property historically appeared on the county’s short-term occupancy list. Then check for any STRH, B&B, or other permit. Start with the county’s STRH page and permit links.

2. Benchmark demand

• Use the state’s monthly Wailea/Kīhei submarket tables for ADR and occupancy seasonality. Then compare with the property’s last 12 to 24 months of booking data. Reference the DBEDT report for a normalized baseline.

3. Collect building and HOA data

• Request CC&Rs, rental rules, master insurance declarations, renewal history, and recent special assessments. Insurance has been volatile on Maui since the 2023 wildfires. AP News outlines the broader insurance pressure.

4. Build your P&L

• Gather monthly gross revenue, ADR, occupancy, platform and management fees, cleaning, utilities, and maintenance. Model reserve funding for capex items.

5. Model taxes and surcharges

• Include the state Transient Accommodations Tax and any county surcharges. The state TAT rate increases to 11.0% on January 1, 2026. See the Department of Taxation announcement.

6. Run sensitivity scenarios

• Test 3 cases: base, downside with lower ADR or higher insurance, and upside with improved management or refreshed finishes. Cap rates can shift quickly when insurance or HOA costs change. Hawaii is exploring programs to stabilize condo insurance.

What recent policy changes mean for your yield

Bill 9 reshapes the Kihei condo map by phasing out transient vacation rentals in apartment districts over several years. For units with hotel or resort zoning, the legal pathway is clearer. For apartment-zoned condos, your underwriting should include a scenario where short-term use sunsets on the schedule specified by the ordinance.

A new H-3/H-4 hotel zoning path may preserve visitor use for selected properties through separate council action. This is a political and procedural process, not a guaranteed right. Track council agendas and staff recommendations. Review the county’s H-3/H-4 framework for background.

Finally, taxes and insurance both affect net returns. The TAT increase in 2026 will change your gross-to-net math. Insurance markets remain fluid after the 2023 wildfires. Stay close to the building’s master-policy history and renewal outlook.

A simple starting path for out-of-area investors

• Step 1: Prioritize hotel/resort-zoned options and resort-proximate pockets for the lowest legal risk. Keep a secondary watch list of apartment-zoned targets that show up in TIG materials for possible rezoning.
• Step 2: Use the Wailea/Kīhei submarket data to set ADR and occupancy expectations, then compare two or three buildings with similar distance to the Kamaole beaches.
• Step 3: Pull HOA and insurance documents early, and request the last 12 to 24 months of booking and P&L data from the seller or manager.
• Step 4: Price in the TAT increase, realistic management and platform fees, and a prudent reserve for capex. Re-run your numbers with 10 to 20 percent higher insurance to see your downside.

Ready to evaluate a specific condo or home?

If you want a data-backed short list and an operator’s eye on underwriting, we can help you compare options and, when it fits, transition to professional management. Reach out to Scott Jordan to talk through your goals, gather the right documents, and build a clean side-by-side. Make Maui Your Life - Start Your Search.

FAQs

What does Bill 9 mean for Kihei condo vacation rentals?

• Bill 9 phases out transient vacation rental use in apartment-zoned districts on a schedule that runs through 2030 for most of Maui, with West Maui earlier. Hotel/resort zoning and properly permitted uses are treated differently by the county.

How do I confirm if a Kihei property can operate as a short-term rental?

• Check parcel zoning, look for any STRH or other permits in county databases, and review whether the property appears in TIG materials for potential rezoning. The county’s STRH portal and staff reports are good starting points.

Where do investors start in Kihei for lower legal risk?

• Many begin with hotel or resort-zoned properties near Wailea and Keawakapu, then consider apartment-zoned condos only after reviewing Bill 9 exposure and any rezoning efforts.

What data should I use to estimate ADR and occupancy in Kihei?

• Use the state’s Wailea/Kīhei submarket tables for a public baseline, then verify with the property’s actual booking ledger and a local manager’s revenue history.

Which costs most affect net cap rate on Maui vacation rentals?

• Insurance and HOA costs, property management and platform fees, cleaning and turnover, taxes including TAT, and reserves for capital items commonly drive net performance and can change quickly.