What You Need To Know About Buying Leasehold

Dated: 03/25/2015

Views: 398

What to Know when Buying Leasehold property in Hawaii

  1. Check the time period remaining on the lease. Leases that started 50 years ago may be nearing the end oftheir lease terms. Leasehold property prices generally decline as their lease terms approach expiration. If you see a condo on the market for $25,000, it may have just a few years left on the lease

  2. If you anticipate needing a loan for the purchase, check with your lender to see if they will make a loan on the property. Mortgage companies usually require that the lease be at least five years longer than the loan. For example, to get a 30 year mortgage on a leasehold property, the lender would want to see at least 35 years remaining on the lease term.

  3. Find out if the lessor offering the fee simple interest.If the fee is available, what's theprice?

  4. Monthly lease rent. Find out how much it will cost per month.

  5. Lease renegotiation dates. When a property was initially built, for example a building constructed in the 1970's, the monthly lease rent may have been $25. Periodically, the lease terms can be renegotiated, based on market values. The lease rent for that same property today might be $250.

Expiration of the Lease

There are a few possible outcomes. Two common situations are:

  1. The property reverts to the lessor. The lessee must surrender the property and move out.

  2. The lessor sells the fee to the lessee and the lessee becomes the fee simple owner of the property.

Comparing Leasehold Properties

It is very difficult to compare leasehold properties, unless they are two condos in the same building or two land parcels of similar size and lease terms. There are many lessors in Hawaii and each property can have a different lease term, monthly lease rent and fee purchase price (if the fee is offered).

When viewing properties on Hawaii real estate websites, if you see a property with a price that is a lot lower than all the others, it could be leasehold.

Latest Blog Posts

Jul 10 2018 45055 1

A Realtoris not a salesperson.They're a matchmaker.They introduce people to homes, until they fall in love with one.Then they're a wedding planner

Read More

May 10 2018 45055 1

    Which subdivisions are in each lava hazard zone?Lava Zone 1•Leilani Estates •Kapoho (some areas, but not everything)Lava Zone 2•Black Sand Beach •Nanawale Estates

Read More

Feb 8 2018 45055 1

I've learned that you have to hold onto your smile everyday and free yourself of that...

Read More