Hawaii Homebuyer Guide

Top 10 Most Frequently Asked Real Estate Questions in Hawaii

Your Local Cheat Sheet for Buying a Home or Condo in the Islands

1. What’s the difference between fee simple and leasehold?

Historically, large trusts and estates owned most of Waikiki land. Developers built condo towers on long-term leases instead of selling the land.

Over time, some leaseholds converted to fee simple, but many didn’t. That’s why buyers still see lots of leasehold listings in Waikiki, Ala Moana, and Kapiolani.

Fee simple means you own the land and the building forever (unless you sell).
Leasehold means you own the unit, but someone else (usually an estate or trust) owns the land. Your rights last only until the lease expires.

In Hawaii, leaseholds are more common than on the mainland, especially in Waikiki and older urban areas. Many buyers ask how leasehold affects resale, financing, and long-term stability. These are fair questions since your ownership eventually ends unless the lease is renewed. Make sure to do your research, especially if you're considering a leasehold condo. The pricing may seem more affordable up front, but that may be because there isn't much longer on the lease. 

2. Why are condo maintenance fees so high?

Hawaii condo fees often cover much more than mainland HOAs:

• Central AC or electricity

• Hot water (common in older towers)

• Sewer, trash, basic cable/internet

• Building insurance

• Parking/garage maintenance

• Staff, security, amenities

Older buildings tend to have higher fees. Think of it as shared upkeep for high-rise living in a salty, humid climate. Maintenance fees can affect your monthly cost of living greatly, so be sure to look out for these fees, and check if there will be any upcoming increases or assessments planned with the condo budget and financials.

3. Are short-term rentals legal?

Depends on zoning—this is a huge FAQ.
On Oahu, rentals under 30 days are only allowed in certain Waikiki, Ko Olina, and Turtle Bay zones, plus a handful of designated condo-hotel buildings.

Every island has its own rules. Many condo buyers assume they can Airbnb their unit but find out later it's not allowed. Always verify before offering. Smart investors should check the listing for a Hawaii Tax ID (Certificate of Registration) and a county-specific short-term rental (STR) permit number, which are required by state and local laws. For more detailed verification, search the property's address on the respective county's planning and permitting department website or use public records to confirm zoning and permit status. 

4. Why are Hawaii property taxes so low?

Owner-occupants get some of the best tax exemptions in the country. If the home is your primary residence, your tax rate is significantly lower. Vacation homes, investment properties, and hotels pay much more.

This is why many locals file a “Homeowner Exemption” right after closing. We normally send a reminder to our clients after closing to file for this exemption.

5. What are typical closing costs?

Buyers usually pay for:

• Loan fees, down payment

• Appraisal

• Inspection fee

• Escrow & title insurance, Private Mortgage Insurance (PMI, if applicable)

• Home insurance

• Buyer agent commissions (negotiable)

Sellers usually pay:

• Seller agent commissions and a portion of Buyer agent commissions (negotiable)

• Conveyance tax, prorated property tax

• Termite inspection fees

• Survey fees

• Escrow and title fees

Costs are similar to the mainland, but insurance and maintenance upfront fees can vary by island.

6. Is it harder to get a mortgage in Hawaii?

Not harder—but some properties need special lenders.
Examples:

• Condotels (hotel-like condos with nightly rentals)

• Leasehold units

• Older buildings with plumbing or insurance issues

• Buildings with high rental ratios

Local lenders are familiar with these quirks and often approve loans mainland banks won’t touch.

7. What inspections do I need?

Most buyers order:

• General home inspection (overall condition)

• Termite inspection (a big one in Hawaii’s climate)

• Roof inspection (especially older homes)

• Sewer line scope (older neighborhoods like Kaimukī or Manoa)

• Condo document review (AOAO budgets, reserves, litigation)

Inspections help catch big repair costs before you commit. Check with our team for recommended inspectors, as well as condo document review companies. We have a trusted network of professionals ready to assist in your transaction. 

8. Is multigenerational living really that common?

Very common. Local families often live together or nearby, and many homes are designed with:

• Ohana units

• Extra kitchens/wet bars

• Separate entrances

• Split levels

Buyers should confirm permits if they plan to rent or expand these areas. These types of homes are extremely desirable in Hawaii due to their flexibility and financial benefits. High housing costs and a cultural emphasis on family make these homes very sought-after for multi-generational living. In addition, rental income potential (both long-term and short-term, where legal), and the ability to use an ohana unit as a flexible space for various needs like a home office, increases property value. 

9. Are oceanfront homes risky to buy?

Oceanfront properties are beautiful, but buyers should be aware of:

• Erosion and shifting shorelines

• Flood zone insurance costs (especially VE zones)

• Salt exposure, which wears down roofs, windows, railings

• Setback rules that affect future renovations

These homes can appreciate well, but they require smart due diligence and long-term maintenance budgeting.

10. Should I buy now or wait?

Because island supply is so limited, Hawaii rarely sees major long-term price drops. Even during national downturns, prices often dip briefly and rebound quickly.

The best time to buy is usually when:, isn

• You can comfortably afford the payment

• You plan to stay long enough to build equity

• You find a property that fits your needs

Waiting “for the market to crash” often means paying more later.

Ready to Make a Move?

Buying in Hawaii is different from anywhere else in the world. Local knowledge matters.

If you want a personal plan for finding the right home, avoiding common pitfalls, and navigating Hawaii’s unique market, connect with Diane Ito for a complimentary homebuyer consultation.