Buying a Honolulu Condo as an Investment: Fees, Leasehold and Financing

Condos are the most common investment property in urban Honolulu, from Waikiki condotels to high-rises in Kakaako and Ala Moana. They are also where the details that decide a loan are easiest to miss.

Maintenance fees and special assessments

Association (AOAO) fees in Honolulu cover building insurance, maintenance, reserves and often utilities, and they can be high. Several older buildings have raised fees or levied special assessments for insurance increases, plumbing replacements and fire-safety upgrades. The full fee counts in the monthly payment used for a DSCR loan, so a high fee can decide the deal.

• Ask for the association budget, the reserve study and the last year of board minutes.
• Ask whether any special assessment is approved or under discussion.
• Check what the fee includes before you compare buildings.

Fee simple or leasehold

Some Honolulu condos sit on land that is leased, not owned. A leasehold buyer pays monthly lease rent and owns the unit only until the lease ends. Leasehold units sell for less, but the lease rent counts in the payment, and the remaining lease term must run well past the end of any loan. Tell your lender early if a unit is leasehold.

Building rules

House rules can set minimum lease terms, limit rentals or ban them. In Waikiki, check whether the building is resort-zoned, where short stays may be allowed, or apartment-zoned, where they are not.

Non-warrantable condos and condotels

Many Honolulu buildings do not meet conventional lending guidelines because of commercial space, a high share of rentals, pending litigation or a hotel program. We lend on non-warrantable condos and condotels through our rental programs.

Common questions

See terms on the DSCR rental loans page.