Is it smart to buy property in Hawaii | 5 Things to Consider

Thinking of buying property in Hawaii? The islands’ tropical beauty and relaxed lifestyle make them a dream destination for many. However, purchasing real estate in Hawaii comes with unique challenges that buyers should understand before making a decision. From leasehold vs. fee simple ownership to high property taxes in certain areas, here are five crucial things you need to know before buying property in Hawaii.

1. Leasehold vs. Fee Simple: You Might Not Own the Land

Buying Property in Hawaii: Key Considerations

One of the biggest surprises for buyers is that not all property in Hawaii comes with land ownership. Many properties are sold as leasehold, meaning you own the home but lease the land from the actual landowner. These leases can range from a few decades to over 100 years, but when the lease expires, ownership of the property reverts to the landowner.

• Leasehold properties are cheaper upfront, but they come with financial uncertainty and rising lease rents. If you are new to leasehold properties you really should read up more on it, you can see this guide from Realtor.com What is a Leasehold Property
• Fee simple ownership is what most mainland buyers are familiar with—where you own both the home and the land outright.
• Before buying property in Hawaii, check if the property is leasehold or fee simple, as leasehold properties can complicate financing and long-term investment plans.

2. Hawaii’s Property Taxes Can Be Higher Than Expected

While Hawaii has one of the lowest statewide property tax rates in the U.S., this doesn’t mean you’ll pay less. The tax rates vary by island and property type, and non-residents often pay more.

• Owner-occupants (primary residents) qualify for lower tax rates and exemptions.
• Non-residents and investors pay significantly higher property tax rates, particularly for vacation rentals or second homes.
• Each island has different tax rates, and areas with tourist-driven economies (like Maui and Kauai) often have higher rates for investment properties.

Before purchasing, research your specific island and property type to avoid unexpected tax bills.

3. Zoning Laws and Short-Term Rentals Are Strictly Regulated

Many buyers dream of owning a Hawaiian vacation rental, but Hawaii has some of the strictest short-term rental regulations in the U.S. Each island has different zoning laws regarding Airbnb and VRBO rentals, and many areas completely ban short-term rentals unless the property is in a designated resort zone.

• Oahu: Many new short-term rentals have been banned outside of resort districts.
• Maui: Certain areas allow short-term rentals, but new permits are limited.
• Big Island & Kauai: Only homes with a legal vacation rental permit can operate as short-term rentals.

Before buying property in Hawaii as an investment property, check the local zoning laws to ensure you can legally rent it out. Otherwise, you could be forced to rent long-term or face heavy fines.

4. Hawaii’s Climate and Maintenance Costs Are High

Hawaii’s stunning tropical environment comes with a price—homes require more maintenance due to the humid climate, salty ocean air, and heavy rains.

• Salt air corrosion affects metal fixtures, appliances, and even concrete.
• Termites are a serious issue, and regular pest control is necessary.
• Mold and mildew thrive in the humid conditions, requiring frequent cleaning and proper ventilation.

Because of these factors, home insurance and maintenance costs in Hawaii can be much higher than on the mainland. Always factor in long-term upkeep when budgeting for a property.

5. Limited Inventory and High Demand Drive Up Prices

Hawaii is a small island chain with limited land available for development, which keeps property values high. Even modest homes can cost well over $1 million, particularly in sought-after locations near the beach.

• New construction is rare due to zoning restrictions and land shortages.
• Local competition is fierce, and many properties receive multiple offers above the asking price.
• Living costs are among the highest in the U.S., making affordability a challenge even for residents.

If you’re serious about buying in Hawaii, be prepared for high prices, strong competition, and potential bidding wars, especially in popular areas like Oahu’s North Shore or Maui’s west coast. It’s a stunning and peaceful place to live, and probably a very wise profitable long term investment to pass down.

Hawaii is beautiful, known for it’s climate and wonderful clear water. While it’s not exactly similar to Florida, you may way to consider Florida for the cost alone. We have land below $10k in Florida and finding that in Hawaii is impossible at this point. You still get the great beaches and warm climate, even some iguanas. It’s not a bad spot considering the low entry land cost. See our Florida Land For Sale