Buying a House in Hawaii from the Mainland (2024)

If you are considering buying a house in Hawaii from the mainland, there are a few things you need to know first.

Keep reading for 5 things you need to be aware of before buying a property in Hawaii from the mainland.

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1. Fee Simple vs. Leasehold

There are two types of property ownership: fee simple and leasehold. If you currently own property on the mainland, it is almost certain that you were a fee simple buyer. Fee simple ownership means you own the property, including the land it is on. When you are given the title for the property, it includes the structure, the land, and any improvements made to the land or structure in perpetuity. You as the owner have the right to use, possess, and dispose of the land in any way you wish (within the bounds of a local HOA and local laws).

In Hawaii, there are some properties that are sold as leasehold. Much of the land on the islands is owned by either the State of Hawaii or the Federal Government. Some of this land is leased out to homeowners, called a leasehold. In this scenario, residents own the structure (house), but lease the land from the government. Buying property with a leasehold requires a full understanding of the conditions, as they are totally different from fee simple ownership.

The conditions of the lease will likely include stipulations about how the land can be used and for how long. If the homeowner would like to sell before that period of time is over, the new owner will be subject to the current land lease agreement. At the end of the predetermined period, the land will be returned to the lessor (the government), and in some cases this includes the buildings and improvements on the land.

When buying a house in Hawaii from the mainland, be aware of prices that are far below market value as they may indicate a lease that is about to end and will need to be renegotiated.

2. Mortgage Funding from Mainland Banks vs. Local Banks

Hawaii is a Good Funds State, which means all funds have to be in the hands of the title company before closing on the sale. Mainland banks often have the policy of not wiring funds until closing day, which can cause delays because a Hawaii bank will have to wait up to five business days to receive the funds.

Working with a local bank will allow the process to be streamlined, with funds in the title company's account at least two days before closing to ensure a seamless process.

3. Lava Zones

Something you likely haven't taken into consideration when shopping for real estate on the mainland is lava. When buying a house in Hawaii, however, you need to find out whether the property is in a lava zone. Check out the Lava Zones Table to find out if the area you are considering is at risk, and determine what level of risk you are comfortable with.

4. Square Footage Expectations

Moving from the mainland to Hawaii, many people overestimate the amount of square footage they need, or want. With a climate as perfect as ours, locals live outside. We dine and entertain on our lanais, we spend our weekends at the beach or on a hike, and all year round we have the whole island to enjoy.

You are not likely to find a large home within your price range, unless you have a substantial budget, but this doesn't mean you won't be able to have the lifestyle you want with a smaller house. As you think about buying a house in Hawaii from the mainland, keep in mind that your lifestyle will likely shift to include way more time outside than it does right now.

5. How Elevation Affects Energy Costs

One of the major differences between vacationing in Hawaii and living here is energy costs. That hotel air conditioning didn't factor into your vacation budget at all, but energy costs as a resident are substantial. Buying a house with the right airflow will allow you maximize on the tropical breeze and minimize your energy costs, but this requires the right elevation and orientation of doors and windows.

Keep these factors in mind when buying a house in Hawaii from the mainland, especially if you are considering buying something sight unseen. Ask your agent to tell you about the airflow and elevation of the home.Homes at a higher elevation in Hawaii are often priced higher, but this cost is generally balanced by the decrease in energy costs to cool the home.

To learn more about buying a house in Hawaii from the mainland, contact us anytime. We have the team you need to make your plans a reality.