Maui needs housing more than almost anywhere in the state, and the August 2023 Lahaina fire made the shortage worse. Building is slower and costlier here than on the mainland, which is exactly why lenders look hard at plans, permits and the builder before they fund.
In short: LendingStreet finances ground-up construction of 1-8 unit investor properties on Maui, including spec homes, build-to-rent homes, a main house with an ohana, infill duplexes and fourplexes, and small 5-8 unit buildings. Loans are sized on loan-to-cost with terms set per project, and funds are released through a draw schedule after inspections. Approved plans or permits in process, a detailed budget and an experienced builder are expected.
In Central Maui, the most common investor build is a main house plus an accessory dwelling on a single lot in Kahului, Wailuku or Waikapu, which gives two rent streams on one parcel. Newer subdivisions such as Kehalani and Maui Lani have lots where covenants allow it; older neighborhoods offer teardown and infill opportunities.
In West Maui, owners of fire-affected lots are rebuilding. Some sell to investors who will build and hold. Kihei and Upcountry lots come with their own questions about water, wastewater and setbacks.
Maui County permitting is the biggest timeline variable. Lahaina rebuild permits have been handled through dedicated county processes, but elsewhere expect careful review, and projects inside the Special Management Area near the coast need additional approvals.
Water and wastewater can decide whether a lot is buildable. Upcountry water meters have long been allocated through a county priority list, and Hawaii law requires cesspools to be upgraded or converted by 2050, so new construction on unsewered lots needs an approved septic system. Kahului and most of Wailuku are on county sewer, which simplifies infill.
Construction loans are sized on loan-to-cost, meaning land plus hard and soft costs. Terms are set per project based on the plans, budget, builder and your experience. Maui hard costs run higher than mainland averages because materials ship in by barge and labor is tight, so budgets that look thin will be questioned.
Projects without plans or permits, or a borrower with no build history and no experienced general contractor, usually do not qualify.
Plan draw timing around inspection availability as well, which can tighten when rebuild activity is high.
This example is illustrative and not a quote. An investor buys a Waikapu lot for $525,000 and plans a three-bedroom main house plus a two-bedroom ohana for long-term rent. Hard costs are budgeted at $1,150,000 and soft costs (design, engineering, permits, impact fees, insurance) at $160,000, for a total project cost of $1,835,000.
At an assumed 80% loan-to-cost for this example, the loan is $1,468,000 and the investor's equity, including the lot, is $367,000. Hard-cost funds are released in stages after inspections, as shown below.
| Draw stage | Share of hard costs | Amount |
|---|---|---|
| Foundation and slab | 15% | $172,500 |
| Framing and roof | 25% | $287,500 |
| Rough mechanical, electrical, plumbing | 20% | $230,000 |
| Drywall, cabinets, finishes | 25% | $287,500 |
| Final and certificate of occupancy | 15% | $172,500 |
Each draw is released after an inspector confirms the stage is complete. On Maui, inspection scheduling and material deliveries can stretch the time between draws, so keep enough cash on hand to keep subcontractors paid. Our draw schedule calculator at /construction-draw-schedule-calculator.html helps you map payments to your build timeline.
Once the certificate of occupancy is issued, most investors either sell or refinance into a DSCR loan. A new main house with a legal ohana leased year-round in Central Maui can produce a strong ratio. Budget property taxes on the class you will qualify for; a long-term rental classification is generally lower than the non-owner-occupied class.
New vacation rental permits are very limited, so do not plan a construction exit around nightly rental income unless the property already holds the right permit.
Plans and permit status, a line-item budget, your general contractor's license and history, the construction schedule, land purchase documents or deed, entity documents and proof of equity and reserves. A geotechnical report and utility will-serve letters help on lots outside Kahului and Wailuku.
Investors used to building on the mainland are often caught off guard by Maui soft costs and site work. Engineering for wind loads, termite-resistant framing or treated lumber, longer utility runs and county impact or facility fees all add up. Rock and slope on hillside lots in Wailuku Heights or Upcountry can raise excavation costs well beyond a flat Kahului lot.
Shipping is the other variable. Materials arrive by barge from the mainland or through Honolulu, so a delayed container can stall a framing crew for weeks. Builders who work on Maui regularly order early and keep a buffer in the schedule, and lenders look for that in the budget.
Finally, plan for carrying costs during the build. Interest on drawn funds, builder's risk insurance and property taxes on the lot continue while you wait for inspections and the certificate of occupancy.
Choose a general contractor who has built on Maui recently and can show completed projects, references and a current license. Lenders look at the builder's record as closely as the borrower's, and an experienced local builder usually knows which inspectors, suppliers and subcontractors keep a job moving.
If you are new to ground-up work, partnering with a seasoned builder on your first project can be the difference between an approval and a decline.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the lot address, plans, budget and timeline through the form below or call (877) 298-1001. See our Hawaii construction page for statewide guidance.
We can review investor rebuilds of 1-8 unit properties with plans, permits and an experienced builder. Owner-occupied rebuilds are outside our programs.
Yes, when zoning and covenants allow both dwellings and the plans show both units.
Construction loans are sized on loan-to-cost, with terms set per project based on plans, budget, builder and experience.
Approved plans or permits well along in review are expected. Projects without plans or permits usually do not qualify.
Funds are released after inspections confirm each stage is complete, following a draw schedule agreed at closing.
Possibly, if the lot has water service and an approved wastewater plan. Confirm both before you buy.
Most investors sell or refinance into a DSCR loan based on the new rents.
Materials ship by barge, labor is tight and permits can take time, so thin budgets and schedules are a common reason projects run over.
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