I've met many a buyer who obtain their ‘information' from unreliable sources (i.e. friends, family etc. who claim to know everything about Hawaii Land because they've read something somewhere). Most recently, a potential tenant who just Moved to Hawaii told me that he would never buy here because our land is ALL leasehold.

HUH? That is just NOT true. We have just so much buildable land here (obviously) and there are many areas that are protected (preservation, conservation) as well as MANY..MOST... areas that are fee simple (outright own the land or an interest in the condo land)

Before spreading rumors, please consult with an experienced Realtor®

What's Leasehold Land?  Leasehold Land is land owned by someone else (the fee holder).  The land owner earns monthly income from rent paid by the homeowner and the leases usually run for 55 -60 years.  This rent is usually fixed for 30 years and adjusted at fixed intervals over the remaining length of the lease.

Leasehold land is affordable as you're not paying for the land...you're renting the land under your abode.

**The fee holder may give the opportunity to purchase the fee interest (the land) and it's usually advisable to avoid the risks involved with leasehold land.**

The risks ......

• Lenders will finance the purchase for a period 5 years less than the remaining term on the lease.  (i.e.  If there's  25 years left on the lease, the lender will finance for only 20 of those years.)  And....your monthly mortgage payments are higher.
• It's harder to sell the lease on the land when the expiration is closer to expiring. At this point it is not known if the fee holder is renewing the lease.
• When it's time to renegotiate the lease the lease holder may increase the rent as has been the case in the recent past with the market prices rising.
• You may end up paying more (in monthly mortgage payments & the lease) than a like kind property that is fee simple.
• The landowner may not renew the lease at the expiration date and then the "reversionary clause" takes over.
• Obviously, this means the landowner is not under any obligation to renew the lease. And means that the leaseholder HAS TO LEAVE THE PROPERTY and is entitled to nothing. And means that the ownership of the structure reverts to the landowner. PERIOD.

Bottom line is that today there are very few leasehold houses remaining on Oahu. I took my own survey for the last six months (MLS data) and only 5 properties that were single family and listed as leasehold land sold on ALL of Oahu. One hundred thirty condo/townhouse units that were listed as leasehold sold on ALL of Oahu.  There are approximately 20,000 condo units of 135,000 that are leasehold on Oahu and less than 20% of all Oahu land is leasehold.

Ask your HAWAII Realtor® about land ownership.

~~~~~~~~~~~~~~~~~~