Second home and Investment properties in Hawaii-Leasehold vs. Fee Simple
One of the first issues a Mainland buyer is going to encounter in the Hawaiian real estate market is the fact that some properties are offered ‘Fee Simple’ and some properties are offered ‘Leasehold’.  Fee Simple means the purchaser buys both the land and the buildings on the property while Leasehold means the building portion of an estate is purchased and the land is owned by a leaseholder. This duality will be familiar to many European buyers, but is not so common to mainland United States buyers. The two tiered land holding system began long ago when the Hawaiian Islands were under a monarchy some believe it was an effort to preserve and protect the rights of the native Hawaiians while others will argue it was a system devised to protect the power and holdings of the original Missionary families, who had acquired vast tracks of the Hawaiian Islands. In 1991, a leasehold repeal law was passed that applied specifically to condominium owners. The law, known as Chapter 38, lets the city force landowners to sell to qualified condominium owners the fee interest in the land under their units. The law is popular with many people who want full ownership of the condos they live in, but is staunchly opposed by some landowners and has continues to be a political football in Hawaii. If you purchase a leasehold property there are some conditions to be aware of, including; -Length of lease remaining, the price of the leasehold often reflects the length of the lease remaining. -The dollar amount of the lease rent which is usually fixed for 25-35 year periods and is governed by Hawaii Revised Statutes Section 519-2 which sets a maximum on lease rents. -Is there an option for the lessee to purchase the leased fee interest in the land from the leaseholder? -Are there any restrictions on resale of the leasehold property? This is governed by the Reassignment of Lease, Hawaii Revised Statutes Section 516-63. A real estate agent licensed in Hawaii will be able to guide you through the intricacies of these two types of property ownership. The second home and investment property buyer in Hawaii today will recognize the upward pressure on property values caused by the limits of land availability on an island. For this very reason, the Leasehold form of ownership presents some of the most affordable and easily accessible forms of property ownership available today. Currently the lowest priced Fee Simple unit available in the popular Waikiki Beach area of Honolulu is priced $99,000 for a 199 square foot studio in a high rise building near the Ala Wai canal. The lowest priced Leasehold unit in the Waikiki Beach area is priced at $44,000 for a 475 square foot unit located in a mid rise building a block and a half from the beach, this same unit currently rents for $1,200 a month which makes this an attractive investment opportunity as well as second home option.