Best Big Island Areas for Vacation Rental Investment (And Where to Avoid)

The Big Island of Hawaiʻi is one of the most diverse vacation rental markets in the state. From resort-style beachfront condos to cooler upcountry retreats, the island offers opportunities for investors — if you choose the right location. But not all areas are created equal, and zoning, demand, and guest expectations can make or break your returns.

Here’s a breakdown of the best Big Island areas for vacation rental investment, along with places where investors should proceed carefully.

Top Areas for Vacation Rental Investment

Kailua-Kona

Kailua-Kona remains one of the most reliable vacation rental markets on the island. Visitors love its walkability, ocean access, restaurants, and proximity to snorkeling, manta ray dives, and coffee country. Condos along Aliʻi Drive are especially popular for short-term rentals.

Why it works:

• Year-round tourist demand

• Strong nightly rates

• High occupancy in legal STVR zones

Best investments here are condos in well-managed HOAs that already allow short-term rentals.

Waikoloa Beach Resort

Waikoloa Beach Resort is a favorite for investors seeking consistency. This master-planned resort area offers shopping, golf, walkable beaches, and strong brand recognition with repeat visitors.

Why it works:

• Resort zoning supports vacation rentals

• High-end clientele and longer average stays

• Strong HOA infrastructure and amenities

Condos here tend to perform well even in slower seasons due to loyal repeat guests.

Mauna Lani

Mauna Lani is a luxury-driven market with exceptional beaches and premium amenities. While entry prices are higher, so are nightly rates.

Why it works:

• Upscale travelers seeking luxury experiences

• Access to private beach clubs

• Excellent long-term appreciation

This area is ideal for investors focused on quality over quantity and premium branding.

Waikoloa Village

While not beachfront, Waikoloa Village offers more affordable entry points and attracts budget-conscious travelers who still want resort access nearby.

Why it works:

• Lower purchase prices

• Steady demand for longer stays

• Cooler temperatures than the coast

Areas to Approach With Caution (or Avoid)

Hilo

Hilo is a wonderful local community — but it’s not ideal for traditional vacation rental investment.

Why to be cautious:

• Wetter climate

• Shorter visitor stays

• Lower nightly rates

Hilo performs better for long-term rentals or traveling professionals rather than tourists.

Captain Cook

South Kona areas like Captain Cook can be tricky. While beautiful, zoning and permitting vary widely.

Why to be cautious:

• Limited legal STVR zones

• Inconsistent demand

• Access and parking challenges

Always verify zoning and existing use permits before purchasing here.

Rural & Agricultural Zones

Scenic does not always mean profitable. Many rural or agricultural areas restrict short-term rentals entirely.

Common pitfalls:

• STVR restrictions or outright bans

• Infrastructure limitations

• Difficulty marketing to visitors

Buying in these areas without proper due diligence can result in a property you cannot legally rent short-term.

Final Thoughts

Vacation rental success on the Big Island comes down to location, zoning, and guest experience. Resort areas and established visitor hubs offer the strongest returns, while rural or poorly zoned areas can carry significant risk.

Before buying, always confirm legal rental status, HOA rules, and county regulations. With the right guidance and a smart location choice, a Big Island vacation rental can be both profitable and enjoyable for years to come.