In Hawaii: Opinion on Investing in Leasehold properties ...

[Michael Gayer Jr]

Aloha Hawaii Property Investors,

In your opinion, what do you think of Investing in Leasehold properties?  Specifically condo's in Honolulu?  Any experiences?  Pro's & Cons ...

Also, when a seller is marketing his leasehold (stock certificate), how would you verify the value of it?  If a seller says "I'll sell you my my stock certificate for $50,000 and there's 25 years still on the lease", how can I tell if that asking price is too high or too low?

Thank you in advance,

Mike

[Jordan Sunshine]

First off whats your ROI on that property? If you're only making 300$ a month after covering mortgage, 1-2/12 months vacancy included in your math, 100$ on a property manager, and 5% deductions for possible repairs needed and your initial investment is 20% of 50k thats 10k. (300x 12months) divided by 10,000 = an ROI of 36% that means you wont see a return on your 10k for 3 years but after that the rest is profit. Just dont forget to get your monthly cashflow theres a lot of extra numbers to consider than just the ones above.

Now as for the price of the certificate, whats the comps in the area or more specifically the building in the past 3 years? That will give you a general idea of if hes selling it at a fair price.

Hope that helps.