Leaseholds In Hawaii
When I first arrived on Oahu I was surprised to learn that a lot of realestate property was sold as leasehold and not fee simple. That and the price of property here initially had me convinced that as a neophyte REI I would be better off just building my grubstake and investing back on the mainland. I realize now that I am just waiting for the "perfect" conditions and I need to get started, so with that in mind Here goes a couple of questions.
Anyone here familiar with the leasehold agreements in place here in Hawaii? It seems Kamehameha schools owns much of the land and has giving leases to folks to put bldgs on it for periods of up to 100 yrs, sometimes less.
And second, I belive detached single family homes are outside of my reach right now, so looks like condos and apartments are were I will be focusing my search for properties. Any advice or experiance that anyone might care to pass along from other metro areas?
Thanks,
Kiowadriver
[ Edited by kiowadriver on Date 03/27/2005 ][ Edited by kiowadriver on Date 03/27/2005 ]
bump
anyone?
Hi Kiowadiver
We have relocated from the mainland, live on the Big Island and experienced pretty much the same impressions as you! (darn neophytes we are! LOL)
Ive decided to myself that I need to learn more about leaseholds, the realtors dont want to give information first without prequalifying or seeing a $$ return, and other individuals or locals, when asked do not seem to know much about it!
Im signing on to go to realtor school, because I believe the Hawaii specific laws will cover (or at least point to) more information regarding leasehold tenures.
I think once we understand the parameters of leasehold tenure, we can find the opportunity. At this point, I am trying to figure out who the lenders for leaseholds are, and the terms of a leasehold that are good enough for a lender will deal with. Im kinda leaning toward looking for the following parameters in a leasehold property, and would appreciate your feedback on this:
Locate a leasehold property at a price that can rent for positive cash flow
Locate a good lender, or pay cash (using some investor sources) and be able to refinance out at a favourable rate
The leasehold must have 40+ years remaining, the more years the better, because cash flow is spread across the life of the leasehold based on the price of the leasehold
or
Locate a motivated leasehold seller and repeat the above (while avoiding stringent lender requirements)
My idea is to treat the leasehold as a cash/income producing unit, almost like the peculiarities of a regular business without too much focus on appreciation, although leaseholds do appreciate in their own weird ways, there will be a day when they are without value due to no time left. I essentially will be looking for a buy & hold strategy.
Whats your thoughts on this? Feel free to keep me updated on your progress. I feel much the same way about just getting started instead of waiting for great luck to happen - im sure great fortune only happens to those who are prepared for it.
Mahalo, Veronica