Punaluu beachfront house for sale

Here's an interesting property on the windward side of Oahu.  A small house sits on this 3/4 acre beachfront lot.  The house is definitely a fixer, although habitable.  The current owners have lived in the house for several years. 

This listing will attract a lot of attention because of its price.  Originally listed at $175,000, the owners have dropped the price all the way down to $99,000.   Normally, a sandy beachfront lot of 1/4 acre and larger on Oahu would start at a minimum of $1,500,000 and higher. The reason for the difference?   This property is sold leasehold - that is, the current "owners" are actually lessees. 

The lessor is the Bishop Estate, a large charitable trust established to educate native Hawaiian children.  The estate charges lease rent amounting to $3,000 per month to the lessee of this property.  The lease expires on September 30, 2027.

This property is not for everyone.  The average buyer is shocked that leasehold residential property even exists!  Leasehold residences became popular back on the 1950's and 1960's.  At that time, lessors offered leasehold properties as a less expensive way for home buyers to get in the market.  Leases were commonly 40 or 50 years in duration and the lease rents were affordable.  Click here to read more about Hawaii leasehold property.

Decades later, lease terms have shorter remaining terms and some leases have expired.   In many cases, lessors have offered the "Fee Simple" interest to lessees.  For other properties such as this one, the lessor has other plans and has chosen not to offer the fee. 

What type of buyer will be attracted to a property like this? 

1) People with cash.  Lenders will write mortgages for leasehold properties, though the lease term must go at least five years beyond the mortgage.  This particular property has 18 years remaining on the lease.  An allowable mortgage loan term would probably be 10 years. 

2) Someone who really wants to live on the beach in a quiet neighborhood.  Punalu'u is out in the country, it takes about 45 minutes to drive to Honolulu when traffic is light.  During rush hour it will take a bit longer.

3) Buyers who are satisfied with using their property for 18 years and a few months.  Once the lease expires, it's probably time to move somewhere else.  The lessors might change their minds and decide to sell the fee simple interest.   

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Want to find out more?  Call Mike Bates (RA) at (808) 548-1220.

Hawaii realtor

MLS 2908871

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