For many people, having their own home in the beautiful island of Hawaii is like a dream come true. Just imagine enjoying warm climate all year round, surrounded by the sparkling ocean waters with smell of fresh flowers in the air. These dream-like qualities are all found in Hawaii.
However, before you buy your first property on the Islands, there are several things you should keep in mind.
1. Difference between Leasehold and Fee Simple Properties
Trusts own most land in Hawaii that dates back to the times when the place was still a monarchy, with the land under the ownership of some large estates. These trusts continue to retain land ownership. The trusts lease the land to the buyer through leasehold interest, with the buyer being the one to pay property taxes and make regular lease payments. There is limited private ownership of land that has been zoned for residential purposes compared to leasehold property. The fee simple land is often pricier as the owner holds the property’s title and can choose to pass this along to the heirs. But the cost is worth it for a Fee Simple for many reasons. One of the most important is passing it down in your family. Another is once the Leasehold is up, you may have to move out. This would be tragic if you already started building your life there. Plus you just paid a good $100k or more. The attractive price of a Leasehold brings up some wild ideas of easy living in Hawaii but think it over and see if it works for you.
2. Lava Zones
The hazard zones from the lava flows are primarily based on the frequency and location of prehistoric and historic eruptions. The town of East Hawaii and Puna is threatened by the Kilauea that continues to erupt, making it an active lava zone so it may be harder to find funding. Always ensure that you check the lava zones for areas you are considering. Lava Zones go by a rank of 1 to 6 with 1 being the most common area to get Lava. Volcano flow is quite predictable so being in zone 1 can be very risky. Zones in 3 and above haven't been affected for ages and more than likely won't be hit in the near future. Also, you can't get any insurance in the 1 zone so you basically risk everything.
3. Use Local Bank Instead of Mainland Bank for Mortgage
Being a Good Funds state means that in Hawaii, the money should be in the hands of the title company before the transaction gets completed. Sometimes, mainland banks don’t wire funds until closing dates that can lead to a delayed transaction. Before you get a mortgage, it is best that you talk to a local realtor and discuss your available financing options. When buying raw land with plans to build, look for companies that offer owner financing. This can allow you to make payments on the land and once it's paid you can build away. Unless you have the full cash amount for the land, this is your best option because banks probably won't help you.
4. Effect of Elevation on Comfort and Energy Costs
When buying a property in Hawaii, elevation and airflow are the secrets to long-term energy cost control and comfort. Most Hawaiian homes don’t have forced air ventilation because of the big expenses associated with running AC units. Due to high energy costs in the nation, it is best to find a natural cooling process. The rule of thumb is that every 200 ft elevation equates to 1 degree cooler in the temperature level. Some areas are wet and cool, while others can be quite hot. Also, look into the way the home or land needs to be running off the city. Will a catchment tank work, does it have power, and what type of sewer is required or used.
5. Expectations of Square Footage
During your search for a property, don’t just rely on the home’s square footage. Check photos and determine the available outdoor space. There are homes with more recreation, entertaining, and space outdoors than indoors. This is part of the perk of Hawaii though. Unless you just want some tract home in a subdivision, then you should be looking at the home size. But if you want to have a garden, banana trees, mango trees, or animals, then you should be looking at the total size of the land you can use.
Living in Hawaii is truly a dream for many people, with its stunning natural beauty, warm tropical climate, and unique culture. However, before making the decision to move to the Aloha State, it is crucial to thoroughly understand the real estate situation there. Hawaii's real estate market is known for being competitive and expensive, with limited inventory and high demand driving up prices. Homebuyers should be prepared for the higher cost of living in Hawaii, which extends beyond just housing prices to include groceries, utilities, and other everyday expenses. It is important to research the different regions of Hawaii to find the best fit for your lifestyle and budget, as each island and even each neighborhood can offer a different experience and price point. Additionally, working with a local real estate agent who understands the intricacies of the Hawaii market can be invaluable in navigating the buying or renting process. Despite the challenges, the unparalleled beauty and lifestyle that Hawaii offers make it a truly special place to call home for those who are willing to invest the time and effort to understand and adapt to its unique real estate landscape.
