Understanding Leasehold Property on Oahu

Understanding Leasehold Property on Oahu

Leasehold means you do not own the land.

Someone else owns the land and you pay a fee/rent each month to that owner to be on their land.

The problem with leasehold is at the end of the lease you no longer have the right to be on that land, so the value in your leasehold unit would be zero.

Sometimes you can change a leasehold property to fee simple, and it in that case it becomes a normal property where you own the land and the value will continue to increase.

If you can’t change it to fee simple the leasehold property value will decrease each year as it heads towards a zero value.

So, for leasehold you must pay rent to the land owner each month plus Home Owner’s Association fees plus taxes. It can add up to a big expense each month.

So, for most situations, we do not recommend leasehold because you lose not only the rent you pay but each year you are there you lose the value in the unit. You are better off renting because at least you know exactly how much money you will spend each month and at the end of the rental period you simply walk away, you do not have to sell a property and take a loss on it.

One situation where leasehold could work is for seniors who will most likely die before the lease is up and are not worried about leaving more money in their estate.

Another option could be for an investor, but you must make sure you are not expecting to get your money back if you must sell the unit.