Thanks,
Joe Segal

Hi Joe,

Good Question.

As an investor, you can make money on leasehold properties, but it’s not for amateurs. The price can certainly be right, but it takes a very trained eye to spot a good deal-in some ways it’s similar to dealing with a commercial property.

Investors get leasehold properties for two reasons-one is to make money off of rent, the other is to position yourself to buy the fee.

As far as the rent benefit is concerned, you have to make a lot of predictions and do a lot of math. You have to think about how the rental income, the lease rent, the cost of maintainence etc. will change over the term of the lease.

As far as buying the fee is concerned, you have to predict the behavior of the fee owner (if there is no option to buy in the contract). Is he/she likely to sell to me? When is she likely to do so?

As a home buyer (especially if this is a second home) some fee simple properties you want to live in may be unnaffordable. If your dream is to, say, live on the beach, leasehold properties may be the only affordable option. This won’t leave you richer at the end of the day, but it can make an otherwise miserable life worth living.

Bill

Post from: Hawaii Real Estate Reporter

Ask Bill Chee: Why would an investor/homeowner buy leasehold properties?

“the futures for the two companies aren’t as dire as first thought.”

Gee, you think so?

Evidently the stock for these two “dead” companies soared recently after it became apparent that they weren’t going anywhere. Perhaps the report of their death was greatly exaggerated. So what about the thousands of words written about how bad things are, and all of the conclusions made based on those words of doom and gloom? What do we do now? Oh, so sorry! We don’t even get that. The media blows something entirely out of proportion, then makes an almost-joke of saying that it wasn’t really that bad.

Is there any accountability anywhere in the media? Maybe the next time we get an ‘end of the world’ article we can look at it with a little more critical eye.

Post from: Hawaii Real Estate Reporter

Not a Crisis After All: Freddie and Fannie Stock Spring Back

Among the many reasons why Hawaii is a unique real estate market, and insulated from most of what happens on the Mainland is its status of high personal income. Personal income has a direct effect on the ability to purchase real estate. Placing number 4 in the nation is no small accomplishment.

Nationally, personal income dropped the last quarter of 2007 however Hawaii increased over that same period. Again, Hawaii is unique and does not usually follow Mainland trends.

Post from: Hawaii Real Estate Reporter

Another Reason Hawaii is a Unique Market: #4 for Personal Income Growth

Post from: Hawaii Real Estate Reporter

Hawaii Real Estate Market June 2008 Discussion

It’s time for some good old media hysteria. As mentioned in the Honolulu Star Bulletin on Wednesday, May 14, 2008

Hawaii’s foreclosure rate tripled in April, with a 218 percent increase over the year-earlier period.
The state climbed to 36th in a national foreclosure ranking last month, with 210 foreclosures filed, or one for every 2,381 households,

My god, foreclosures up 218%! It’s time to build a bomb shelter and store food. In fact, curl into a ball right now and play dead, just in case there are any bears in the area.

The article says that Hawaii is experiencing a “relatively small number” of foreclosures. This is a tremendous understatement: 1 out of 519 US homes are in foreclosure, only 1 out of 2381 Hawaii homes are in foreclosure.

We’re in good shape with regard to foreclosures. You don’t have to be a rocket scientist to figure this out. (Although a research background in non-jet propulsion can help in any situation)

The outlook on Oahu is even better than the outlook for the state as a whole: UH’s Economist says that he thinks that the 218% increase mostly represents neighbor-island foreclosures. Among those, he says, many are probably mainland second-home buyers.

Don’t let these headlines scare you. We’re OK.

Post from: Hawaii Real Estate Reporter

Foreclosures up: “Okay, on my word, everybody panic. Wait for it . . . wait for it . . . GO!”