Knowing the Hawaii Market Specifics

There's no shortage of great information out there on how to be a real estate investor. This site, Bigger Pockets, is widely known as one of the best and with good reason. And while you can find a ton of guidance and info on how to be successful in this business, at the end of the day the advice you'll get will be applicable to most markets across the country.

But there also a lot to be said about understanding what makes YOUR market different. Here in Hawaii, we definitely have some factors that separate it from the mainland markets. Let's list a few:

1. Fee simple vs leasehold property. While they're largely disappearing, there are still a fair amount of "leasehold" properties out there in Hawaii. Consider these like a 99-year lease with a landlord. You can pass the leasehold rights down to your children, treat it like your own home, but you don't own the land underneath. That's for the fee simple owner. So when shopping for a new home, don't buy anything that's leasehold with a few years left on the lease or you'll find yourself pounding pavement again looking for a home. I have only ever bought one leasehold and only because the fee (rights to outright ownership) was available to purchase at the same time.

2. Coastal hazards. As I write this, Hawaiian residents everywhere are stocking up on toilet paper and rice because of Hurricane Iselle and Tropical Storm Julio which seem to have the islands right in their path. From more episodic hazards like hurricanes and tsunamis to longer-term issues like beach erosion, seaspray and sea level rise, there's another layer of concerns for homeowners living near -- or on -- the beach. Know the risks and mitigate them, if possible.

3. Pacific melting pot. While diversity is always a great thing, it can mean different things in different cities. Here in Hawaii, our diversity is evident largely in the mix of Pacific-Asian-Polynesian cultures that are well represented. So if you're doing any renovations, it's a good idea to understand the strong demographics of your neighborhood and design accordingly as each culture has its own unique design preferences.

I'm sure I could expand this list to 10 or more, but you get the idea. You need an extra set of eyes when analyzing properties to buy in Hawaii (and an extra job to pay for them!). Learn the neighborhoods, learn the comps, learn the risks and, above all, Take Action!

Michael Borger

Oahu Home Buyers, Inc.