Betty Sakamoto: Aloha and welcome to Betty's Real Estate Corner brought to you by Sakamoto Properties, where prestige is our business, reputation our foundation. Today in the studio is Dean Otto.

Dean Otto: Hi Betty, thanks for having me.

B: I'm glad you're here today, Dean.

D: Aloha.

B: Aloha. We're listening to, obviously, Danny Couch brought us into the show again today, which is always my favorite thing. And for the new year there's nothing greater to me than living in Hawaii. My family are in Buffalo, New York, and I love Buffalo. Everybody can make fun, but I'll always love Buffalo. But I'll tell you it is cold this year.

D: It's always great to be a real estate agent on Maui when it's -40 degrees in Chicago.

B: Right, and I was listening to things on Buffalo this morning that said with the windchill factor, it was 62 degrees or something. I always just make up the temperature. But it always gets a little crazy.

D: Exactly, and of course recalling of our clients in all those cold weather, cold weather areas right now and reminding them how beautiful it is. And most of them, as you know, probably had a chance to watch the Hyundai Tournament of Champions this weekend, too. So, I mean, what a perfect time to have perfect weather for our tournament while it's just so cold and frigid in the mainland, so it couldn't have gone any better.

B: The tournament was the greatest, every day the weather was perfect. The only day that was a tiny bit difficult was the Pro-Am and those guys are tough, you know, the amateurs. They can play that course in any weather. So it was good.

D: It's just not fair to have the pros playing in perfect conditions when, you know, the rest of us have to live with the 40 mph winds and the rain. So?

B: Only from time to time.

D: I don't feel bad for them.

B: No, I don't think so either. It was actually, everyday was great for the pros, but they deserved it, too. And it was fun to watch them. The big winner is Zach Johnson. Really, really nice family man?3 little kids. When he won and the kids were there he was trying to pick up one, pick up the other, and it looks like a brand-new baby, maybe couple of months old. But what a great, perfect champion this time for Kapalua, because it is such a great family location and so many families are visiting at this time of year. It was perfect.

D: Yeah, you're right. He is a great champion for us. And you're right also, he definitely is the family man. I thought it was the funniest thing on TV watching him walk off the 18th green after grinding it out for the last 4 hours and see his little kid running up and the camera caught him making these really silly little baby noises to his kid that was almost embarrassing but it was just a classic, classic case of just being so thrilled to have his family there. And it was just a perfect ending to a great tournament.

B: He was great. Last year he played with Roy on his team in the Pro-Am. So when I saw him and he had played good the first couple of days. You know, I mentioned to him, "You know, you kind of learned a couple of things from those guys, didn't you?" And he laughed and just really nice, nice, nice, man. I'm happy he's our champion.

D: We're very disappointed about the fact that Roy didn't win the Pro-Am.

B: I'm so disappointed.

D: Being a, I think, 3 time champion? Or was it 2 time?

B: Well, he's won one each of the different ones. He's only won the Hyundai once, but he did win the Isuzu, and the Lincoln-Mercury, and the Mercedes, etcetera, etcetera. So it's been, we have a lot of those huge crystal trophies around and it's been fabulous. But it took a lot of years. He's played every year so he deserved to win some of those.

D: Sounds like a ringer to me. And as punishment for not winning he was not allowed to come on the radio show today.

B: That's right. We can't bring him here if he's not going to win any trophies. So he'll have to work harder for next year.

D: Yeah, but great tournament. I mean, we had all the great players. All the, sort of, stars who are peaking right now with Jordan Speith and?

B: Oh, he was fun to watch, wasn't he?

D: Yeah, and Dustin Johnson. I mean, these are the guys that we're going to be watching all year, I think.

B: Adam Scott.

D: Adam Scott. Webb Simpson. I think we're going to be getting used to seeing those names at the top of the leader boards this year.

B: I was a little disappointed that we missed out on a couple of the young guys. McIlroy. I can't think?now that we're sitting here I can't think of their names.

D: McIlroy, Phil Mickelson, Tiger Woods. Those are the names that typically have chosen not to come to Kapalua in the past. It's a difficult time of the year. So, obviously they're looking at coming a long way from wherever they're at and, family vacation, and it's a 365 day season for them. So having an extra week off is a big deal and it can create a little bit of concern for this particular tournament being so early in the year. As you're not going to get some of those champions. But, you know, as I said, I think that the people that were here are the current champions, the people that are playing the best, the people that are peaking, you know. And I see those other guys fizzling out a little. But these guys are little hungrier, a little younger, and a little more on their game right now.

B: There were some great people. I think the hard thing is, if you think about yourself when your kids were a little bit younger, no matter what it is. I mean, you've had a great year, you're a great champion, you've got a ton of money. But now, if you've got to take your whole family away from home for the holidays, it's really hard. And kids, you know, it's horrible. Because they think Santa Claus will never find them. And they've been believing and loving, and loving Christmas and the whole thing at home, so I really give any of the guys that don't come, you know, a lot of my sympathy. Because I think it would be hard?I would never have wanted to drag my daughter somewhere on a trip for Christmas because home was where you wanted to be.

D: Yeah, it's a tough life out there for the golf pro. They're traveling every week and they really have very little time with their families, when you think about their schedules. And, for example, the guys from, that finished the tournament on Monday afternoon, you know, got on a plane Monday night, were off to Oahu for the tournament on Oahu. They, I think, had 9 holes of practice today and they go straight into a Pro-Am tomorrow and straight into another tournament so they're really?there's not a whole lot of spare time in the life of a pro golfer. It certainly is a great career, but it ultimately comes with some downsides. And ultimately it's the time away from your family and the travel side with that, would be the downside to that, isn't it.

B: Yeah, we welcome all here, you know, because it matters to all of us, and our businesses, and the tournament, and for the overall tourism effect for Maui. But, again, I think, let's give them a little sympathy and really praise the guys who are here. I mean, again, Zach Johnson. He's got 3 little kids here, which is really, pretty amazing. And Streelman?

D: Streelman, yeah.

B: He has a 5 or 6 day old baby, born by cesarean, and he was here with his parents. And he had such a great time. He was going out the other night on a whale watch with his parents and, you know, he was a little sad to be away from his wife, but I think when they realized what had happened, she was good, healthy--baby is doing great, and he came because that's what he does. It's his job. And hopefully next year he'll be back with a little baby in tow with him and it'll be super. So?

D: Yeah, absolutely.

B: Anyway, Dean, the next?one of the things we wanted to talk about today before we got into real estate: New Year's resolutions or not?

D: Do you have one?

B: Let me think for a minute.

D: Okay.

B: I probably got a couple.

D: Yeah, I know exactly. I was reading an article yesterday about New Year's Resolutions and, of course, the obvious one is to get in shape and lose weight. Yeah, I think that according to this study that I was reading, 43% of the people have a New Year's resolution to lose weight or to get in shape. So, I think we can scratch that one off the list cause you know that never happens.

B: You know, I, of course, like everybody, I have that one in mind. One of the things I decided this year was that's not going to be my resolution. Because I think that's a little, maybe, I don't want to say self-defeating because you can do it, but certainly as I get older one of the things that's hitting me is, I think, a good New Year's resolution for me would be to just make a healthier lifestyle. Eat a little bit better, maybe do a little less chocolate in my life, and?

D: What?

B/D: [laughs]

B: And keep adding exercise, you know, as much as I can. We're all working a lot but I still think that would be great to remember a little bit helps. And I read something years ago that if you could do 7 minutes of exercise a day, it'd be better than nothing. And I think once you start 7 minutes, you're probably going to get to 20 or a half hour quite a few of the days. So I'm going to try to just do better, but, you know, not focus on losing weight. If I do those things, I would lose weight, so?

D: Correct.

B: That's what I'm doing.

D: Yeah, and I think the thing to do is to schedule exercise into your daily regimen. I think it's also going to be talking about it is easy, but actually fitting it into your schedule, if you have a busy schedule like we do, and making the time to do it, is key. The second most popular New Year's resolution is saving money and financial?improve your financial stability. So, of course, that's the big challenge: How do we save money or how do we become more financially stable? And when you consider the fact that 20% of people in America right now claim that they spend more than they earn and about 50% of Americans say they spend as much as they earn. So, you know, it's not an easy thing to say "save money." And I think one of the things that I wanted to talk about briefly was the idea of how you save money and, you know, obviously real estate is, in my opinion, one of the only ways in this crazy world we live in to accumulate wealth. And, you know, when you consider the benefits of homeownership, as it relates to saving money, there's a variety of different things we could talk about. I mean, equity versus rental. You know, renting you're throwing money out the window, equity, hopefully, you're creating equity for a future benefit. Of course, there's the mortgage deduction?mortgage interest deduction, which is a big part about how we save. Save on taxes, which is ultimately a savings as well. And then, thirdly, there's no other investment better than owning your own primary residence, which is that if you purchase a property and sell it as a primary resident, you have a $250,000 tax exemption exemption exclusion.

B: $500,000 as a couple.

D: $500,000 as a couple. So, there really is an investment that gives you $500,000 tax-free. And ultimately, when you consider the taxable tax rates, you're talking about a 30-40% savings. And unfortunately, there aren't too many investments that are going to generate that kind of return. So, you know, owning your home, being a primary resident is really the best investment you can make. And it ultimately results in the best potential to accumulate wealth or to create savings. Which is really what we're talking about right now.

B: I think that you're right, Dean. And one of the things and almost anyone should do that's been thinking real estate, thinking a home, thinking an investment property, is to take some time, talk to a real estate broker, talk to your financial people, talk to a mortgage person. Because if you take a long look, if it's going to be your home and what you're going to write off between real estate taxes, what you're going to write off in interest, all of the sudden you can discover that you're going to have a better cash flow situation owning, than you're going to have if you continue to rent. And then most of us, whoever can remember, I can, the first time I purchased a home, and I thought we would never ever be able to afford it. Well, the interesting thing about that is that you never miss a beat, you never miss a thing because you do change your life a little bit just instinctively. And when you say, "how to save money," and I know it's hard, Dean. But each of us, even if you aren't thinking about exactly saving, if you're just a little more careful about what you're buying, if you buy less. I mean, being more careful about what you're buying and if you bought that new home this year, and now you're out shopping, whether it's groceries or clothes or things for your kids, whatever it is, just buy a little less. I mean, you can save more money than you would ever think, if we just give ourselves a little bit of time when we're ready to make a purchase. I just think, intelligent purchasing will save money.

D: Correct. And then once you purchase your home, obviously that's your goal, and you have sort of goal in your mind to own and support this property that ultimately, you have a good incentive to be able to save money in other areas. Let's say, equity is a great thing versus rental. The other thing, too, is you have two different kinds of real estate. One is your home, your primary residence, the other one is an investment property. And I've had several questions in the last few weeks: What should I be doing? Should I be buying a house for myself? Should I be buying an investment property? And the truth is that there is no greater value than buying your home, your own primary residence for 2 main reasons. One is that you get that mortgage interest decuction, which is huge. As well as you have the tax savings of $250,000 or $500,000, as Betty mentioned. You just can't touch home ownership when you're the primary resident. If you are?if you do have an investment property, you certainly have the tax advantages of doing the 1031 tax deferred exchange then you can defer your gains into future investments. And ultimately there's nothing as good as owning your own home, based on those tax incentives.

B: Probably one other thing we haven't touched on yet. A reason you should own your own home, it's pride of ownership, for yourself, for your family. You know, creating a neighborhood where your children will grow up and go to school and hopefully you'll be there, in a lot of cases, through the majority of the years that your kids are in school. Even if you decide to trade up or to do something as the years go on, probably you'll stay in the same neighborhood as your kids are already in school. So I think, also, there's all the investment reasons that you should, but pride of ownership. One other thing. There's nothing like your own home.

D: Absolutely, and I love owning my own home, too. And everyday I see the improvements that I made and am grateful for not compromising on those improvements. Because it's something you live with everyday and everyday I see those improvements and I really appreciate what I really have.

B: You did a great job there. Dean and his family purchased a house, it's a lot of years now, the one you're in right now.

D: Yeah, 8 years ago.

B: And then they did, of course, what we all like to do, you go in and start fixing it up and before you know it, you've spend a fortune on it. But, you know, you live with it day by day by day and over the years we've seen people that they buy a house and they live with it just the way it is, then they get ready to sell it and fix it up to sell it. But they never have the opportunity to enjoy all those fix ups. You guys did a fabulous job.

D: Yes, thank you, and because one of the situations where I think we ended up spending 3 times as much as we planned. But, again, I think for me, I was really happy about not compromising since I had the opportunity to be able to do it, I was really appreciative of the fact that I didn't compromise and I did it right and my family's going to have a great life in this home and we'll appreciate it everyday.

B: And the kids are. One's gone on to college and the other's just 8th?7th grade.

D: 13 going on 21.

B: She is really. But anyway, those are all great reasons and I think whether you're purchasing for an investment or primary residence, that I'm with you, Dean: You're home. What you really want to buy first is your home. You want a place to live and to raise your family, and then you can buy another property.

D: Correct. I mean, just the point of saving money, again going back to the New Year's resolution. Saving money is not easy when you earn a salary, pay taxes, and you live your life and then try to save money. It's really hard to do that. But home ownership really is the ideal way to accumulate wealth.

B: There are right now, loan programs available with relatively low downpayments which a couple of years ago, following the mortgage crisis, that was not happening. But right now, for primary residents there are really great loan packages and you have to have some cash available. We're finding this last year, some of the people that get into a primary residence will get a little bit of help from a family member. But, again, it's one of these things, we'll have you, if you call us, Sakamoto Properties 808-669-0070 or check out SakamotoProperties.com or DeanOtto.com.

D: Thank you.

B: And you can get a lot of information from there. But let us?talk to one of us and we'll get you a lot of information about who to talk to because we've got some great mortgage people. When you're going to your bank talk to your banker and sit down with someone and tell them what you've got in mind. But a lot of times it's your local real estate broker who will be able to educate you the best and direct you. And then figure out with your loan agent or with your bank, how much you should be borrowing, how much you can do, how much you have down, and we can help you end up with a home.

D: Yeah, and I think it's important to match an individual with the right lender. I mean, not everyone has perfect credit, and is as flush with cash in the bank. It's easier if you're a perfect borrower. But if you're not a perfect borrower, like a lot of us, there are options for you as well and that's typically where the mortgage brokers come into the picture. You know, most people believe it's extremely difficult to get a loan right now, but I've found, in my transactions, that it's actually quite easy. And it's the matter of finding the right program for the right borrower. So, the rates are incredible right now, it's never been easier to own a property. You know, theres never been a better time to get a mortagage that's equal to or less than your rent when you consider how low the rates are right now. 30 year rates are still good, they've inched up a bit but they're still around 4.5%. But you can get a 15 year loan for 3.5%, you can get a 5 year fixed 30 year loan with the first 5 years fixed for 3%. Those are incredible rates and they are going to go up but those are rates you can get really good deals on and you know, as I said, you could end up paying the same amount on a mortgage as you are rent and that, to me, would be an absolute no brainer.

B: One of the things, over the last few years, a lot of people have developed this fear that they won't be able to qualify for a loan, aren't loans available, you can't get a mortgage, and they aren't even looking. But I think that they're wrong because it's changed. It's changed over a couple of years now. But you can get a mortgage. The odds are pretty good. And if you talk with one of us and we have you talk to a lender, it is available so this fear doesn't exisit anymore. There was a point, a few years back, again following the mortgage crisis, that it was impossible. I mean, if you didn't have a huge amount of cash, it wasn't going to happen. But not true now, I mean, there are loans available. And Dean's point is well taken, which is, we can help to place you with the right person. Or have you talk to a couple of lenders until you get comfortable. It's important that you become comfortable.

D: Yeah, and you can be creative these days and say, as Betty was just mentioning, people haven't quite realized that the lending industry has changed and there's all kinds of interesting programs out there. And we're willing to bet that we could find something for you if you saw what was out there and are considering to get a loan as well.

B: We happen to specialize, pretty much, in West Maui homes. Kapalua has been one of our primary areas. We do a lot of second homes, etcetera. Kaanapali?all of West Maui. Right now, though, for the person that wants to live in West Maui, whether you're going to be right in Lahaina in some of the older subdivisions, there's some new condos down there that, I think, are still some great values. I think whether you're going to be in Mahinahina, Honokowai, Lahaina, Kahana, Napili, I think there's really still great values there whether it's a condominium or a single family home. And in another 2 years, I think, maybe even in less than a year, we're going to be back to where it's almost impossible from this standpoint of price, because things are starting to escalade again, so it's now. It's now.

D: Absolutely, I agree with that. I mean, I wouldn't wait much longer. There's clearly been a pretty substantial pick up in the market at the same time of the inventory declining. I had a person looking for a Napilihau Villages unit in Napili. One came in the market listed for $250,000 that same day we submitted an offer of $255,000, and that night they received 5 other offers and we got aced out by someone else by next morning. So, you know, the market is changing. No question about it. Where particularly evident, is in the lower price ranges the $250,000 to $750,000. It's just non-existent on the west side. If you're contemplating buying, I would not wait. This, clearly, this is a trend and it's only going to get harder, rates are going to up, and I think right now, we're in a perfect scenario where market's just starting to inch up, and rates are still low. So I can't imagine it's going to be any better this year. I would encourage you to at least get in the game, call your realtor and see what's out there. See if there's anything that makes sense for you.

B: We know a lot of you have someone you've known in the real estate business for a long time?call them. But we're here and we're available anytime so if you call our office 808-669-0070 one of us will be available to help you. Check out our websites, SakamotoProperties.com, DeanOtto.com, and in each one of those you can get to the multiple listings service. So you can then go through and look at any property, whether it's our listing, someone else's listing, but we're able to show you any property on Maui and work with you and find the agent in our office that's the best suited to the property you want. You know, Dean, we are actually at the 2 minute warning.

D: Uh, oh, that's right.

B: I can't believe we can talk this fast.

D: I know, it flies by, doesn't it?

B: Any properties you can think of, we always try to have that little?those properties that either are new or they that think are a great value for now.

D: One of the hard properties on the west side, that Napili Kai property. You know, it really has units coming into the market, and Betty and I just listed a Puna II unit, which is a beautiful one-bedroom condo right on, probably, what's the most prestine locations of West Maui?right on Napili Bay. And we listed that just a few days ago, it's getting a lot of attention. That's listed at $1,325,000. That's?as far as location, location, and location, that would have to be one of the best.

B: And one of the best rental programs that you're ever going to find anywhere in Hawaii. So it's amazing to me how great that one really is. There's a couple of great Laniapoko listings, you know, just listings in Lahaina, tons of great Kapalua listings, Napili, it goes on and on.

D: Yup, the inventory is changing. It's been declining at about 20% a year for the last three years. That, with the pick up in the market the last few months, we've started to see new inventory coming in the market. As the sales prices have picked up, a new crop of inventory is coming on, so I encourage you to get out there.

B: Okay, they're racing us out now. A special "Aloha" to everybody, Happy New Year?

D: Aloha.

B: It's been great to be with you. Thank you, Danny Couch again. I Love Hawaii.