Cheap studios in Honolulu. What's the catch?

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I agree with the other answers. I live on Oahu, Looked up the building and got some info. There are HOA fees, but in Hawaii they are called monthly maintenance fees. And the studio is leasehold, which means you own the condo but not the land it sits on, and you pay an additional monthly "lease rent", which could be pricey. Also, many of these studios are former hotel rooms, or " condotel", around 3-400 sq ft, with no kitchen. This makes them difficult to finance because mortgage companies don't consider them a permanent residence (although many people in Hawaii do live in them).IN your particular example that you listed, the maintenance fees, lease rent, and taxes come out to just over $1000/mo, and the monthly maintenance fee does not include electricity ( Hawaii has the highest electric rates in the US). Yur example listed is also a cash-only deal, which means banks probably won't lend on units in that building.If you are looking for a cheap place to crash in Hawaii for vacations, and you have the cash, it may be a great idea for you. If you are thinking you might be able to cash in on Airbnb/ vacation rental income, be very careful to check for the zoning, only certain areas are zoned for legal short term vacation rentals. This particular building only allows rentals of 30 days or longer.

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Though this is an older thread, I'd like to point out that if conditions are right, a leasehold property can still cash flow very well. If you have 10-20 years left on the lease and it is a property that is permitted to do nightly STR or even minimum 30-day rental, you can still make a lot of money with cash flow. If the property is only $50,000 and HOA & lease pmt is low, you can still cash flow.I am not afraid of those leaseholds and in fact welcome the opportunity to rent it out for daily or 30+ days where permitted, then get out at the end of the lease.The big risk is if Honolulu decides to impose even stricter STR restrictions such as 60 or 90 day minimum rentals.

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@Tyler D'Alessandro like these guys have said land tenure vs fee simple. In the rest of the world (US Mainland), when you buy a house, the land that the house sits on is part of the sale and purchase agreement. HI is a little crazy because many of the more reasonably priced houses are sold as land tenure; meaning you own the house/condo, but not the land it rests on. This causes some issues. If the lease term for the land (typically made in 100 year increments) has less than 30 years on, a mortgage lender won’t do a 30 year loan. Also, if you did have a loan for 30 years, the lease expires on year 31 and is not renewed, that newly paid off condo becomes property of the leaser... not a good situation. On top of all that, you could be stuck with the condo if you own it but there is less than 30 years on the lease because other potential buyers don’t want or can’t get financing because of the short amount of time remaining on the lease; probably feels like holding a ticking time bomb! Land leases not being renewed is not common, but it happens... if it is renewed though, prices for that condo will probably go back up quickly.

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Leaseholds are a throw back to the British system used by wealthy land owners to retain property rights and control. It is still widely used in the UK, although new laws now allow leaseholders to buy the freehold (fee simple). It is one of the biggest rip-offs in real estate and best avoided. Earlier this year, it was suggested by a Honolulu official that the city would benefit from a Singapore (former UK colony) style leasehold arrangement to improve affordability. Myself and several others wrote to the Star Advertiser voicing our strong objections. Leasehold needs to be phased out.

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There is likely a HOA fee just not being mentioned. They're typically not cheap but it's primarily due to it being a leasehold as others have mentioned. What I've noticed in Oahu is prices tend to drop lower as the lease comes closer to maturity.

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Check the land tenure. I bet it’s a leasehold property.

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The catch is that the Hawaiian and Japanese families down there have a monopoly on everything or it's someone selling swampland to outside investors.

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@Victor SaumarezI agree. The leasehold situation over here in Singapore is not appealing. I’m seeing more and more freehold properties available but....it’s primarily new construction. Not for me.

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You generally want to stay away from HOA's

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Yes, there are a lot of these "Too good to be true" properties. Then when you look closely its a leasehold. The Zillow page that you linked to shows it on the bottom. That's why it's so cheap...