A Complete Guide for Mainland Buyers Looking at Hawaii Real Estate Leasehold Properties

A Complete Guide for Mainland Buyers Looking at Hawaii Real Estate

July 2026

A leasehold property means you purchase the home or condominium, but you do not own the land underneath it.

Instead, the land is owned by another party (called the lessor), and you purchase the right to use that land for a specific number of years under a long-term ground lease. During that time, you are the lessee, and you’ll typically pay a monthly or periodic ground lease rent in addition to your mortgage (if financing), maintenance fees, property taxes, and insurance.

Have you been searching Zillow and suddenly found a beautiful Hawaii condo priced far below everything else?

You’re not alone.

One of the most common questions I receive from mainland buyers is:

“Why is this ocean-view condo only $250,000 when everything around it is selling for $700,000?”

The answer is usually one word:

Leasehold.

If you’ve never purchased property in Hawaii, the concept can feel confusing—or even concerning. In most parts of the continental United States, nearly every home is sold as fee simple, meaning you own both the home and the land beneath it.

Hawaii is different.

Understanding the difference between leasehold and fee simple ownership can help you avoid expensive surprises and determine whether a leasehold property is actually a smart financial opportunity for your situation.

Let’s break it down.

Leasehold vs. Fee Simple at a Glance

Feature	Leasehold	Fee Simple
Own the land?	No	Yes
Own the building?	Yes	Yes
Monthly ground rent	Usually	No
Ownership expiration	Yes (per lease)	No
Lower purchase price	Often	Usually higher
Long-term appreciation	May be limited	Typically stronger
Financing	May have restrictions	Generally easier

Why Does Hawaii Have Leasehold Properties?

Many mainland buyers wonder why Hawaii has this unique ownership structure.

The answer lies in Hawaii’s history.

Following the Great Māhele in 1848, large portions of land remained under the ownership of significant landholders, trusts, estates, religious organizations, and government entities. Rather than selling the land outright, many chose to lease it for long periods of time. That system continues today, particularly in certain condominium developments and communities across Oahu, Maui, Kauai, and the Big Island.

Why Are Leasehold Properties So Much Cheaper?

This is usually the first thing buyers notice.

Two nearly identical condos may have dramatically different asking prices.

For example:

Fee Simple Condo: $725,000
Leasehold Condo: $315,000

The lower purchase price reflects the fact that you’re not purchasing the land, and your ownership rights are limited by the remaining lease term. Buyers must also factor in ongoing ground lease payments and future lease considerations.

What Costs Should Buyers Expect?

Depending on the specific lease, you may be responsible for:

Mortgage payment (if financed)
Ground lease rent
HOA or maintenance fees
Property taxes
Homeowners insurance
Utilities

Every leasehold property is different, which is why reviewing the lease documents during due diligence is essential.

What Happens When the Lease Expires?

This is one of the most important questions to ask.

The answer depends on the individual lease agreement.

Possible outcomes include:

The lease is extended.
The lease is renegotiated.
The landowner offers owners the opportunity to purchase the land (convert to fee simple).
Ownership rights may end according to the lease terms, with rights to the improvements governed by the lease agreement.

When Does Buying Leasehold Can Make Sense?

For the right buyer, it can be an excellent opportunity if:

You’re buying a second home.

Many buyers simply want an affordable place to enjoy Hawaii several months each year.

You don’t plan on owning the property forever.

If your ownership timeline fits comfortably within the remaining lease term, leasehold may provide substantial savings.

You’re looking for a lower entry price.

Some buyers can purchase in neighborhoods they otherwise couldn’t afford.

You’re purchasing primarily for lifestyle.

Many retirees or part-time residents value enjoying Hawaii today rather than waiting years to save for a fee simple property.

You’re purchasing with a clear exit strategy.

If you understand the lease and have realistic expectations about resale, leasehold may fit your financial goals.

When Leasehold May NOT Be the Right Choice?

You want to pass the property down for generations.
You expect significant long-term appreciation comparable to fee simple ownership.
You’re uncomfortable with ground lease payments.
The lease expires relatively soon.
Financing is difficult because of the remaining lease term.
You don’t fully understand the lease documents.

As lease terms become shorter, financing options may become more limited, and resale can become more challenging.

Questions Every Buyer Should Ask Before Purchasing a Leasehold Property

Before making an offer, ask:

How many years remain on the lease?
How much is the monthly ground lease rent?
When can the lease rent increase?
Is there a fee conversion opportunity?
Are lenders financing this property?
What happens at lease expiration?
Has the association discussed purchasing the land?
Have there been previous lease renegotiations?

These questions can significantly affect the property’s value and your future options.

Final Thoughts

Leasehold properties are one of the most misunderstood aspects of Hawaii real estate.

For some buyers, they provide an affordable path into neighborhoods and lifestyles that might otherwise be out of reach. For others, the limitations of leasehold ownership make fee simple the better long-term choice.

The key is understanding exactly what you’re buying—not just the home itself, but the ownership structure behind it.

Every leasehold property is different. The remaining lease term, ground rent, financing options, and lease provisions all deserve careful review before making a decision.

If you’re searching for homes on Zillow or another national real estate website and come across a leasehold listing, don’t immediately dismiss it—or assume it’s a bargain. Ask questions, review the details, and work with a Hawaii real estate professional who understands the nuances of leasehold ownership.

A well-informed decision is always the best investment.

Frequently Asked Questions (FAQ)

Is buying a leasehold property in Hawaii a bad investment?

Not necessarily. It depends on your goals, the remaining lease term, financing options, and the property’s total cost of ownership. For some buyers, leasehold provides an affordable lifestyle purchase, while others may be better served by fee simple ownership.

Can I get a mortgage on a leasehold property?

Sometimes. Financing availability depends on lender requirements and factors such as the remaining lease term and lease provisions. Some properties qualify for conventional financing, while others may have more limited lending options.

Can a leasehold property become fee simple?

In some developments, yes. Certain landowners or programs allow eligible owners to purchase the land and convert to fee simple ownership, but this is not available for every property.

Why are so many leasehold properties located in Hawaii?

Hawaii’s unique land ownership history led to long-term ground leases that remain in place today. While leasehold exists elsewhere, it is much more common in Hawaii than in most mainland real estate markets.