Aloha from Maui - the Hunter
Now every leasehold property is different. The length of the lease, usually 99 years or less and how much time is left on that lease determines in part the price of the transaction. Location also calculates highly into the equation and amenities are not so important but can affect pricing.
How would someone benefit from buying lease hold, especially if you don't own the property? Well for starters lease hold properties generally cost considerably less than similar fee simple properties. Since the average time a consumer lives at any given residence is seven years it seems perfectly reasonable that the average consumer would not out live the terms of the lease and would pay substantially less money for the same type of property, local, and amenities than they would if they owned the properties outright.
On certain parts of Oahu it's not unusual to find a 10,000sq foot parcel of raw land offered as lease hold for several million dollars. Potential lessees would of course be able to build on the property but any structure on the property at the end of the lease would transfer to the holder of the land title not the lessee. None the less the profit potential is there for both parties to be quite satisfied with the terms.
Leasehold make excellent investment properties and can generate significant rental revenues from subleting but as time goes buy the real value of the property is affected by the time left on the lease. Many leasehold condos are on the verge of having their leases expire, which can mean one of three outcomes for the lessee: One is the loss of the property, two the lease is extended or three, the property is converted to fee simple and sold. Often times the lease holders are offered first right of refusal to purchase the property outright which in some cases is offered below market value. Unfortunately, this information is often withheld from the public for a number of reasons and it complicates the risk level of a leasehold property in the twilight of it's lease.
Regardless of whether you own a property or not, profit can be made from it's use.
Call me at 808 723 0900. The home can be sold with or without the lease. That is, you can sell the home itself, but of course the lease (land) belongs to someone else. Whoever buys the home will have to pay the lease rent unless it (the land) is offered for sale (most are offered for sale eventually, over 90% in Honolulu).
Call me at 808 723 0900 if you have any questions.
A total of 23,754 single family leased fee conversions were identified in Hawaii. Most of these conversions occurred during two time periods - 1979 - 1982 and 1986-1990. All but 295 of these leased fee conversions have been on Oahu.
The five largest sellers of leased fee interests have been: Bishop Estate with 13,616 (57.3%), Castle Estate with 3,996 (16.8%), Robinson Estate with 2,256 (9.5%), Campbell Estate with 1,583 (6.7%), and Queen's Hospital with 834 (3.5%).
Please feel free to email me: firstname.lastname@example.org if you'd like any further information or advice.
Katie Minkus, R(BIC)
It Takes Courage to Live on a Rock!!
Generally, your costs are lower when buying this type of property, but the lease rent renegotiates or adjust at set intervals and you have to leave at the end of the leasehold term. It is possible to buy the land and in most cases the land becomes available for sale. When you purchase it, it is now called fee simple.
Lease rent can vary from $100 per month to $10,000 per month depending on the land value.
Call 808 723 0900 or email me if you have more questions. I can send you examples of properties for sale.
The most well known one is probably 4999 Kahala, the townhome complex next to the Kahala Hotel.