Fee Simple Condos vs. Leasehold Condos in Hawaii: What Buyers Need to Know

When purchasing a property in Hawaii, it's important to understand the different types of ownership structures that exist. Two common forms of property ownership here are fee simple and leasehold. In this post, we’ll break down what each means—and which is better for your long-term goals.

What Is a Fee Simple Property?

Fee simple is the most common—and preferred—form of property ownership in Hawaii. It means you own the land and the structure outright, with full rights to use, sell, or transfer the property as you see fit.

Key Features:

  • You own both the land and the improvements.

  • You’re responsible for all maintenance, repairs, and property taxes.

  • Offers the highest level of control and flexibility.

What Is a Leasehold Condo?

In a leasehold arrangement, you are buying the right to use the condo for a set period—typically 30 to 99 years. The land is owned by a separate entity, such as a trust, government agency, or private landowner.

When the lease expires, ownership reverts to the landowner unless an extension or fee purchase is available.

Key Considerations:

  • You pay monthly or annual lease rent to the landowner.

  • You are responsible for upkeep and maintenance, but do not own the land.

  • Terms vary, but some leases offer the option to buy the land (known as “fee available”).

Downsides of Leasehold Ownership

While leasehold properties may appear more affordable, they come with added risk—especially for off-island or first-time buyers. Here are some of the major considerations:

  1. Limited Control: You don’t own the land or unit, which restricts your ability to make major changes or redevelop the property.

  2. Uncertain Future: When the lease ends, you may have to vacate or renegotiate. That uncertainty can affect resale value.

  3. Rising Lease Rent: Lease payments can increase over time. Always read the lease rent schedule.

  4. Resale Restrictions: Some leases include clauses like the landowner’s right of first refusal.

  5. Financing Challenges: Leasehold properties are harder to finance. Lenders may require higher down payments or shorter loan terms.

Do Fee Simple Properties Appreciate Faster?

In general, fee simple properties appreciate faster than leasehold ones. The market sees them as more secure and easier to finance, which increases buyer demand.

That said, leaseholds in highly desirable areas (like oceanfront resort zones) may still appreciate over time—especially if priced well below fee simple comparables. But for long-term investment or full-time residence, fee simple is usually the better choice.

Summary of Big Island Leasehold Condo Complexes

If you're considering a leasehold condo in Kailua-Kona, here’s a summary of the major complexes currently available and their lease terms:

Alii Villas

  • Leasehold Expiration: 2029

  • Fee Simple Purchase Option: Yes

  • Lease Renewal Planned: No

Kona Kai

  • Leasehold Expiration: 2034

  • Fee Simple Purchase Option: No

  • Lease Renewal Planned: Not stated

Honalo Plaza

  • Leasehold Expiration: 2039

  • Fee Simple Purchase Option: Not specified

  • Lease Renewal Planned: Not stated

Kona West

  • Leasehold Expiration: Primarily 2030, one unit shows 2036

  • Fee Simple Purchase Option: Not consistently available

  • Lease Renewal Planned: Not stated

Kona Islander Inn

  • Leasehold Expiration: 2079

  • Fee Simple Purchase Option: No

  • Lease Renewal Planned: Possible but not confirmed

Still Have Questions?

Whether you’re looking for fee simple ownership or evaluating a leasehold opportunity, the key is to make sure it aligns with your financial goals, timeline, and intended use of the property.

 

📞 Contact Jeff Gaughan, REALTOR® — eXp Realty | Kona, Hawaii (808-491-8115)
Let’s break down your options and make sure you’re protected—now and long term.