To Add some more positive spin to considering lease hold property, the state of Hawaii just passed legislation which provides a state captal gains exemption for any land holder that sells the fee on a leased property to the homeowners association, this inticment may prove to stimulate more conversions from lease hold to fee simple. This can also enhance the overall value of the property once converted as it now becomes appealling to a greater audiance, since many buyers are skeptical of lease hold property. This exemption is limited to just the next couple years through 2012 so look for some possible opportunity in some of the Leasehold condos in Hawaii.

Fri Feb 29 2008, 19:36

Another thing to consider on leaseholds, Derek. On the Big Island, I have noticed that as the Elders in some of the trustland property families/estates are getting older and leaving us, many times the heirs are considering selling the fees on the leaseholds to their leaseholders. There have been many coffee properties that have gone this way in Kealakekua and Honaunau in the past few years. Something to research and consider. Look up the recent fee sales on some of the estate former leasehold properties and you may be able to find out which of the estates are doing this.

Good Luck!

Wed Feb 13 2008, 12:04

Hi Derek,

Jeff is right. Depending on the location and who is doing the leasing, there may be more to it as well. Most financial institutions will loan on the remaining lease life MINUS five years (eg. 30 years remaining - loan for 25). Now we're also seeing a reservation from the banks that will not underwrite leases if there is any chance of reversion or forfiture other than non payment. Sounds simple? Some are construing the fee renegotiation time as a disqualifying event (eg - renegotiates amount of land lease in say, 7 years).

Best bet is to get a local realtor to run these down for you on an individual basis -- they all are different and not all in Hawaii are trust lands. Consequently, appreciation is still a product of supply / demand. With the possible exception to what Pele is doing on the Big Island, we aren't making any more of this land - Fee or leasehold.

Hope this helps.

Walt Berhalter, RA, Sales Manager,
Century 21 All Islands, Koloa, Kauai HI

Tue Feb 12 2008, 20:47

Aloha ha ha
leasehold is not a dirty word in Hawaii. A loan on a lease hold will want 30 years left on the lease. Many times leasehold can work to your advantage. Most of the ocean fronts are going to be leasehold. The Hawaiian leasehold land is a no brainer for the locals with 50% Hawaiian blood. The lease on the land is $1 dollar a year and the house is usually 275,000 to 350,000 thats much cheaper then any fee simple property. The lease on these run 99 years longer then most of us live and you can leave the remainder of the lease to your kids.
Ask yourself if the location is where you want? Is the price right? Can you afford the HOA and the lease payments? The resale is there, in Waikiki leasehold is very popular. A lot of the lease hold monies goes to support schools, charities and trust that have improved the state of Hawaii.

Tue Feb 12 2008, 17:08