Questions for Kimo:

In Hawaii, what does "Leasehold" mean? Are these a good investment?

Now, I'm speaking from an investors perspective, and although I have never purchased leasehold properties I have researched their profit potential and have participated in the sale of such properties.

The question was gleaned from Trulia.com and here is an expounded version of what I wrote in response.

Leasehold properties are common on Oahu and many of them have or will be converting from leasehold to fee simple. Leasehold properties can be bought and sold like time shares, in a sense.  You are buying and or selling the right to use the property as opposed to owning it out right with the title in hand. This can be for residential or commercial transactions. 

Now every leasehold property is different. The terms of which can vary depending on use. The length of the lease, usually 99 years or less and how much time is left on that lease determines in part the price of the transaction. Location also calculates highly into the equation and amenities are not so important but can affect pricing, especially in investor markets like Waikiki.   

How would someone benefit from buying lease hold, especially if you don't own the property? Well, for starters lease hold properties generally cost considerably less than similar fee simple properties. Since the average time a consumer lives at any given residence is seven years it seems perfectly reasonable that the average consumer would not out live the terms of the lease and would pay substantially less money for the same type of property than if they had owned the property outright. Now a common lease hold property on Oahu would be a High Rise condo either in Waikiki or it's surrounding neighborhoods. The property as an investment would function like a fee simple transaction but your total return would include rent accrued and any real property appreciation minus the depreciation of the time left on the lease. It would be very much like buying a car, it depreciates as it ages, until it finally is worth nothing with the ending of the lease.  

On certain parts of Oahu it's not unusual to find a 20,000 sq foot parcel of raw land offered as lease hold for several million dollars. Potential lessees would of course be able to build on the property but any structure on the property at the end of the lease would transfer to the holder of the land title not the lessee. None the less, the profit potential is there for both parties to be quite satisfied with the terms. If the land offered as leasehold has a high inherent value, regardless of whether there is a structure for habitation or a commercial venue on it, than offering it as a leasehold property gives you the option to have your cake, eat it too, and then eat it again in the future.  

Leasehold can make excellent investment properties and can generate significant rental revenues from subletting (vacation rentals for instance). Many leasehold condos are on the verge of having their leases expire, which can mean one of three outcomes for the lessee: One is the loss of the property, second is the property is converted to fee simple, or three the lease is renegotiated. Often times lease hold properties are converted and sometimes the lease holders are offered first right of refusal to purchase the fee outright which in some cases can be a mere tens of thousands. Unfortunately, this information is sometimes withheld from the public for a number of reasons and it complicates the risk level and creates unhealthy speculation.

Leasehold doesn't work for everyone, but it usually saves you money and if you buy the right property it can make you money too. If your thinking of purchasing leasehold contact a REA that knows where the value is and has experience in investment real estate.

JDS Consulting- Staging Hawaii nei! Providing Real Estate Merchandising services including: Home Staging, Interior Decor, Turn Key, Landscaping, Remodeling, & Open House Hosting. Visit our Blog: Questions for Kimo: Decor Design & all things Hawaiian- www.RealEstateDesignOnLine.com  tel.+1.808.344.1264  Kimo Stowell Copyright ©2008

Here is volume IV of my blog series of nature inspired color. Both volume III and IV are featuring photos from the "Friendly Isle" of Moloka'i,  

The Photo He Manu or a bird, in this case a lovely female Hawaiian Cardinal who let me feed her by hand, gives a rich tonal palette of mauve, coffee, and coral. The white provides an excellent contrast to these deep earth tones and would make a great molding and trim color. If you were painting a living room for instance you could paint the walls sand with bright white trim, add dark coffee furniture with the coral and mauve as accent colors. If your bold you can reverse the mauve and sand for a much more modern look. 

The Pua Makalii or tiny flower palette continues with the rich earth tones but with contrasting powder blue and ipu orange as the pop factor. This makes for an excellent exterior scheme allowing the home to blend into the landscape but not entirely. The celadon green or powder blue would be the main siding color with the dark green or brown as the trim, the orange would be used on certain architectural elements like ends of rafter beams and parts of the window and railing trim. As always, feel free to use these color schemes and let us know how they worked out. 

Inspired Color, Hawaiian Style: Natures Paint Swatches Vol I

  Inspired Color, Hawaiian Style: Natures Paint Swatches Vol II 

 Inspired Color, Hawaiian Style: Natures Paint Swatches Vol III

Photos by Kimo Stowell Copyright ©2008

To continue my blog series celebrating the colorful inspiration the natural world provides-I take you to the "Friendly Isle" of Moloka'i ,considered the least developed of the main Hawaiian Islands excluding Ni'ihau which is privately owned and Kaho'olawe which is riddled with unexploded ordinance (a result of years of military bombing practice and is not accessible to the general public).  

The photo Kaiapo is of the ocean at high tide and is an example of a monocromatic scheme of varying shades of blue. Monochromatic (single color) schemes are very calming to the eye and the use of blues offers a cool and relaxing atmosphere.

Kaiemi or low tide conveys the shoreline with its array of sand, rocks, and quite pools. The palette  features contrasting earth tones and slate blues also creating a soothing and calm environment. Please feel free to use these palettes for your painting projects and if you do please send us a picture of your work.

Here's an example of how the palette could be used as an exterior paint scheme.

Inspired Color, Hawaiian Style: Natures Paint Swatches Vol I

Inspired Color, Hawaiian Style: Natures Paint Swatches Vol II

Photos by Kimo Stowell Copyright ©2008

Take Action Now to Restore the Water to East Maui Streams &
Support Traditional Taro Farmers of Hawaii!
CLICK HERE TO SEND A SUPPORT LETTER NOW!
salsa.democracyinaction.org/o/2699/campaign.jsp?campaign_KEY=25933

Water Theft in East Maui Koolau
One look at East Maui and it is plain to see that the waterfalls along the road to Hana have been drained to a trickle, the stream beds run dry, the ponds are not much more than mud puddles, and the taro patches are scorched. Ever asked why?

The answer is: EMI. 

EMI is "East Maui Irrigation Company."  A corporation that has been diverting water from the streams of East Maui for centuries to irrigate the industrial agriculture of its fellow corporations and at the expense of taro farmers and subsistence practitioners that have constitutionally protected rights (first dibs) to the water.

The small taro farming communities of East Maui have been facing a HUGE injustice by these BIG corporations. The water that should be in the streams of East Maui has been illegally diverted by sugar cane industrialists. These corporations have been taking way more water than they need at the expense of an entire watershed ecosystem, aquifer and generations of traditional taro farming- all of which depend entirely upon in-stream water flow.

Finally, after 7 years in this current chapter of the legal battle, there is an opportunity for all of the public to speak up with the taro farmers of East Maui and demand that fundamental and constitutional water rights be upheld. This seemingly isolated community case actually has MAJOR statewide legal implications that can effect all taro farming, basic human water rights and natural ecosystem protections.

Send a letter of support to the State Commission on Water Resources Management, your letter will be submitted as testimony at the hearing even if you cannot go to the hearing.  It does not matter, if you are not a Maui resident. You can still care and can definitely participate this historic event. 

CLICK HERE TO easily SEND A SUPPORT LETTER NOW!
salsa.democracyinaction.org/o/2699/campaign.jsp?campaign_KEY=25933

It is easy to get involved. JUST ONE CLICK!
Deadline to submit testimony is Tuesday Sept. 23.

If you are on Maui, come to the hearing!
Show up to demonstrated strong support for the taro farmers and Hawaii's natural resources.  Your solidarity is important to make it clear that ALL of the public cares about the health and traditions of the East Maui taro farming communities.

Water Commission Hearing on the Restoration of Water Flow to 8 East Maui Streams

WEDNESDAY, Sept. 24, 2008
Haiku Community Center
1 pm (to continue into the evening)

Please note: The commission intends to allow the opportunity for those who work during the day to appear and testify in the evening. The actual hearing start time is 11 AM, so that the commission can consider A&B/EMI's Motion to Consolidate Petitions, which should take up the first hour or two, after which it is  anticipated that they will recess for lunch until they start with the hearing on the amendment of interim instream flow standards for the 8 streams. 

Water is life.
East Maui farmers & families have been trying to get water flow restored to their streams for over a century. The state constitution is on the side of the farmers & native ecosystem, clearly stating that communities have a right to in-stream water flows necessary to maintain ecosystem health and traditional taro farming.

Unfortunately, the public officials who should be upholding the constitution have frustrated the effort by refusing to act and stalling the legal process on behalf of large corporations. These companies hardly need more help in profiting off of the destruction of Hawaiiʻs natural resources & traditional communities.

The taro farmers and community members continue to ask that their rights be enforced and at least enough water be returned to support their traditional farming and restore health to an endangered ecosystem that is habitat to native & endemic Hawaiian plants and animals.

For complete background on this important issue, please see Native Hawaiian Legal Corporationʻs informational webpage: http://nhlchi.org/highlights2.htm

For information on recent self help measures to save parched taro loi by taro farmers in East Maui, see KAHEAʻs blog: http://kahea.wordpress.com/2008/07/29/self-help-restoring-stream-flow/

The Commission Meeting Agenda for September 2008 has been posted on the CWRM Website at: http://hawaii.gov/dlnr/cwrm/newsevents_commissionmtg.htm

Mahalo a nui!
Us Guys at KAHEA: The Hawaiian-Environmental Alliance

www.kahea.org
http://blog.kahea.org
toll-free phone/fax: 888-528-6288

E ho`omalu kakou i ka pono, ke `ano o ka nohona a me ka `aina mai na kupuna mai
Protecting Native Hawaiian Traditional and Customary Rights and Our Fragile Environment

The world can be a frightful place and circumstances can cast even the most successful businesses and people into a downward spiral. It sometimes seems that one horrible situation follows another pulling it's unwitting participants downward into the dark abyss of hopelessness as one catastrophe piles upon another; fueled by negativity.  

I was recently asked by a newly hired business associate to organize and redesign his office. The firm that hired him had been beset by a number of unfortunate and untimely circumstances. The fateful events began with the unexpected passing of it's principle broker, followed by the illnesses and retirement of several of it's employees. The succession of death and illness quickly contributed to the unraveling of a once vibrant and successful business. Although, the dwindling staff had done it's best to recoup from these extenuating events, the atmosphere within the  organization was palatable and heavy like the caustic Hawaiian vog the seeps over the mountains into the valleys when the trade winds have disappeared.  

The newly hired associate immediately recognized that the office needed a face lift desperately and called JDS Consulting to help get things organized. The simple act of cleaning and organizing his new office had an instantaneous effect on everyone working there. Almost overnight the office transformed from drab to fab. The phones started ringing again, clients started coming in and the gloom lifted.

Sometimes saving a sinking ship starts with rearranging the deck chairs.

Ms. Noelani Kalipi, of First Wind, LLC. will be a featured speaker at the upcoming 7th Annual Native Hawaiian Convention on October 1, 2008 at 9:00 am. Kalipi will discuss how our community can reduce our dependence on fossil fuels with the hopes of achieving energy independence. As fuel costs and shipping costs rise, Hawaii's need to incorporate sustainable resource measures is more important then ever. Don't miss this opportunity to find out how wind energy can help meet Hawaii's energy needs. 

For additional information, contact 800.709.2642 or visit www.hawaiiancouncil.org.     

Great news for those of you who enjoy Hawaiian music. The nominees of the 2008 Best Hawaiian Music Album Category at the GRAMMY Awards will be performing along  with the featured performers on the Treasures of Hawaiian Slack Key Guitar compilation at the opening night gala of the 7th Annual Native Hawaiian Convention on Sept. 30th 5:30 - 7:30 pm at the Hawaiian Convention Center. Featured performers will include: Keola Beamer, Raiatea Helm, Cyril Pahinui, and Tia Carrere, 

For more info call 800.709.2642 or visit www.hawaiiancouncil.org.

Real Estate Merchandising, it's more than just staging?

The majority of my clients are Real Estate Investors, who for one reason or another want to sell their investment properties and need someone to prepare their properties for sale. Sometimes staging is involved, especially in turn key investments, but most of the time it is simply painting and replacing dated fixtures and carpet.

Sometimes investors have a small budget for improvements and they are anxious to sell but the property is unfinished or in very poor condition. The sellers agent knows it's going to be a difficult sell but with a small budget there are only so many improvements that can be made. Here is where a Real Estate Merchandising expert can make a huge difference for the seller, allowing them to maintain comparable equity that might have otherwise been dickered away by underwhelmed buyers, over the unfinished elements of the property.  

Decidedly, there are many factors that affect the sale of a property. Here are the top three.

The Price:

Pricing factors highly, but how do you know what to price an investment property when it is comparably unfinished or in poor condition. Pricing it poorly can cost the investor thousands of dollars.

The Condition:

The condition of any property is crucial in a down market since there is greater inventory to choose from, affording buyers the opportunity to shop. Unfinished properties usually don't sell except at a substantial price reduction. A mere few hundred dollars spent improving a property to move-in status can potentially save you thousands

The Location:

Location is a major contributor to price and some locations will command high prices regardless of condition, where others are swamped in inventory, undifferential and hard to sell.

Inevitably, the question arises "why should anyone purchase a property in poor condition when there are many move-in ready properties available". Now the key word is move-in ready, yes there may be issues here and there but if a buyer can move-in immediately it pushes your property into a bigger pool of potential buyers. Obviously some buyers look for savings in fixer-uppers but that is a minority. Most buyers do not look at unfinished properties and for many investors, being able to rent the property immediately can be a prerequisite for a sale.

The previous contractor had under bid the remodel leaving the cash strapped seller with an unfinished unit. With exposed concrete floors, old linoleum and a haggard bathroom vanity the general impression was gloom and doom for this studio.

We resurfaced the old heavily worn linoleum with an epoxy garage floor coating and topped the bare concrete with carpeting. We refurbished the haggard vanity with fresh paint and new lights brightening what was once a dismal cave of a bathroom.

With a mere $500 up front and $200 in contingency to be paid at closing, we addressed the paint, lighting and flooring and created a move-in ready unit that would appeal to a broader base of potential buyers. The original bid was for $1300 more and the sellers were ready to put the property on the market unfinished.

Here are the most important areas to address when preparing investment properties for sale. Addressing these areas can help get an unfinished property to move-in status and open it up to a broader buyer base with better offers.

Paint: the easiest, most cost effective, face lift you can give a property. If the walls are dirty and scuffed, buyers get a dingy impression. Fresh paint can liven-up a space dramatically and economically.

Flooring: it doesn't matter if it's tile or linoleum, hardwood or laminate; whatever your budget replace it if you can't get it spotless or resurface it at a fraction of the price.

Fixtures: faucets, switch plates, door and kitchen hardware should be spotless and polished or replaced. what's important is that it is spotless or new, preferably both.

Lighting: replace old and dated light fixtures. Lighting can transform a room dramatically, If you don't have the budget for new fixtures purchase higher wattage bulbs for more light. 

Please visit our website: http://www.RealEstateDesignOnLine.com

Photos by Kimo Stowell Copyright ©2008