Buying a home, renovating it and then selling it for less is not a good business model for flipping residential real estate.

A Hawaii nonprofit, however, is doing this in an effort to produce affordable housing.

Recently, an affiliate of the Hawaii HomeOwnership Center sold a one-bedroom townhouse in Ewa Beach for $299,500 after buying it for $330,600 and putting in white shaker cabinets, Calacatta quartz countertops, stainless-steel appliances, a washer and dryer, vinyl plank flooring, an air conditioner and a refinished tub and shower.

Pono Suganuma, a 24-year-old local public relations account manager who had been living with her parents on Oahu and saving money over the past few years since returning from college on the mainland, now calls the unit at Palm Villas II home.

“It’s amazing,” she said. “There’s nothing in this price range that looks like this unit does.”

Suganuma is one of four first-time homeowners to benefit from the fledgling program run by HHOC Housing &Land Trust.

The program is open to first-time homebuyers with household incomes up to 120% of a county’s median income, which for Honolulu equates to $101,520 for a single person, $116,040 for a couple and $144,960 for a family of four.

The HHOC trust uses donated funding and a bank line of credit to make purchases, then relies on supporters who provide discounted or donated labor and materials for renovations. Service providers including a title insurance firm and real estate broker also discount costs.

Keith Kato, president of the trust’s board, said even volunteer board members have dedicated countless hours to making the program work, from its operational design to cleaning homes before they are listed for sale.

“To offer a below-market- priced unit takes a significant amount of investment by our community, and it has been encouraging to see the number of local businesses that have contributed to making our program possible,” he said in a statement.

Reina Miyamoto, executive director of the trust, said many improvements can be made at no cost to buyers because a lot of people and companies pitch in.

“It gives us an opportunity to benefit the buyers,” she said.

Proceeds from each sale allow the trust to invest in another property and continue the cycle with support from donors. The program also contains an element designed to preserve every residence sold as perpetual affordable housing even if an initial buyer decides to sell their home.

As a condition to buying from the trust, a new owner must agree that if they ever decide to sell, they must give the nonprofit a first option to buy it for a below-market price set by a formula that allows the seller to retain a limited amount of appreciation while allowing the nonprofit to resell the unit to someone else with the same conditions.

Suganuma said she’s grateful that the program exists, especially in the current market where many homebuyers are overbidding asking prices.

“I had a limited budget, and with the competitive market where people go over the asking price, I’m out of the game,” she said.

HHOC conceived of the program originally with an aim to buy homes in place of city and state agencies that have buyback rights on residences that private developers built to satisfy affordable-housing requirements. Essentially, the nonprofit wanted to take the place of the agencies in instances where the agencies pass up buyback opportunities.

“If the government wasn’t going to do it, maybe we could do it instead,” Miyamoto explained.

Taking on a role that local government agencies pass up was a novel idea for HHOC, which was established nearly 18 years ago to help lower-income households become first-time homeowners through education services.

The nonprofit’s envisioned government partnership hasn’t panned out yet, but HHOC decided to move ahead in 2019 with its first home purchase on the open market after receiving a $600,000 grant-in-aid from the state Legislature, a line of credit and seed funding from national nonprofit NeighborWorks America.

HHOC’s first purchase, a two-bedroom unit in the Waipahu high-rise condominium Plantation Town Apartments, was for $298,000. After making extensive renovations, the trust sold the condo for $285,000.

Similar units in the building at the time had been selling for $300,000 to $320,000, and asking prices on active listings ranged from $325,000 to $350,000.

Last year the nonprofit bought, renovated and sold its second home, and two more sales including the one to Suganuma followed earlier this year.

Currently, one HHOC home is in escrow with a buyer, and one is available for purchase.

“See it. Love it. Own it,” reads the listing for the two-bedroom unit at Palm Villas in Ewa Beach offered for $395,000, which is $43,000 less than the trust paid in June.