Leasehold Hawaii Explained from a Hawaii Real Estate Broker
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Leasehold Hawaii Explained from a Hawaii Real Estate Broker


(instrumental music) – Aloha. My name is Eric West with
Hawaiirealestate.org. If you’re thinking about buying
or selling a condo in Hawaii I’d love to help. You know I decided to come
up here into the clouds just let’s take a top-level view of the most important things to consider when you’re buying a condominium
in the state of Hawaii. A few years ago I wrote a blog post and received over 16,000 views so I thought I’d shoot a video just to kinda clarify what I think are really the most important things. So number one let’s discuss the difference between
leasehold and fee simple. This is the first division that you’re gonna find in condominiums. Some are leasehold, some are fee simple. What’s the difference? Very simple. Leasehold, you don’t own the land and there’s an additional fee that you have to pay to the landowner on top of your HOA fees and that lease is also renegotiated about every 10 years and
those fees typically go up. Sometimes they do go down
but usually like all things with inflation, they go up
as land values increase. The other type is a fee simple. This is probably what you’re
most commonly familiar with on the mainland where you own the land that the condominium sits on
and there’s no additional fees. The second breakdown is
as a long term vacation rental property or is it a short-term vacation rental property in terms of what you’re allowed to do as the condominium owner. Long-term rental properties
are typically occupied by people that live on the island. The short term vacation
rental rentable properties are people that come on vacation and stay for a short period of time. The good news is if you own a short term vacation rental property, you can of course live in it long term and you can rent it long term. But if it’s a long term
rentable condominium then you’re not allowed to rent that out for less than a six-month time period and therefore it’s tougher
to earn those higher incomes and you don’t have the
flexibility of using that unit throughout the year because you’ve got someone
in there long term. So the first decision you have to make is do you wanna buy a
fee simple or a leasehold and then do you wanna have
a vacation rental condo or one that’s long term only. My personal recommendation is to buy one that is a fee simple and also you can vacation rent it out short term. (high beat music)

4 Comments

  • Simon Cai

    Hey HRE org, looking to invest in the great state of HI. Owning under an LLC requires the IRS to recognize it only as property if the leasehold is longer than 30 years if I am not mistaken. Through online research there isn't much data on LH in that time frame, might you suggest an online portal or something like that? thanks! great vid!

  • dunkindan1

    My wife and I are looking to buy. We are trying to get a cheap condo to rent for airbnb/homeaway. we also want to stay in it 2-3 weeks per year and maybe just eventually move. We are in Oakland california. Willing to put down $25k on something. Is it a wise move at this point in time? I feel like things are high and going to eventually dip. I still have 208 in my mind. I was only 23 in '08 though so I grew up in the recession as a maturing adult.

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