Fee Simple vs Leasehold Ownership

Most people only know of one type of real estate ownership; fee simple, also known as freehold. Hawaii and a few other states have another form of ownership known as leasehold. The difference in these two types of land tenure is very different and affects the value of the real estate. It is important to know the difference, especially if you’re buying real estate in a leasehold state.
FEE SIMPLE: Fee simple ownership is probably the most familiar form of ownership to buyers of residential real estate. A fee simple buyer is given title to the property, which includes the land and any improvements to the land in perpetuity. In the case of a condominium the purchaser would own a pro-rata share of the land. Aside from a few exceptions, no one can legally take that real estate from an owner with fee simple title. The fee simple owner has the right to possess, use the land and dispose of the land as he wishes–sell it, give it away, trade it for other things, lease it to others, or pass it to others upon death.

LEASEHOLD: A leasehold interest is created when a fee simple land-owner (Lessor) enters into an agreement or contract called a ground lease with a person or entity (Lessee). A Lessee rents the land from the Lessor for the rights of use and enjoyment of the land much as one buys fee simple rights; however, the leasehold interest differs from the fee simple interest in several important respects. First, the buyer of leasehold real estate does not own the land; they only have a right to use the land for a pre-determined amount of time. Second, if leasehold real estate is transfered to a new owner, use of the land is limited to the remaining years covered by the original lease. At the end of the pre-determined period, the land may legally revert back to the Lessor, and is called reversion. At the end of the lease term many lessors and lessees have agreed on either a new lease or the Lessor may agree to sell the land to the Lessee. In the case of a condominium Depending on the provisions of any surrender clause in the lease, the buildings and other improvements on the land may also revert to the lessor. Finally, the use, maintenance, and alteration of the leased premises are subject to any restrictions contained in the lease.

FREE Homebuyer Seminar

Date: Saturday, August 6, 2011

Time: 9:00am – 10:00am
Location: Good Shepherd Church Parish Hall, Wailuku
(Below McDonald’s at 2140 Main Street)
RSVP: by August 5, 2011 to Na Hale O Maui
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Email: Info@nahaleomaui.org

Tourist arrivals down 2.9% in June, but spending increased

By Alan Yonan Jr.
Article from: Star-Advertiser

The number of visitors traveling to Hawaii declined in June for the first time in nearly two years amid rising airfares, but visitor spending continued to rise at a near-record pace, the Hawaii Tourism Authority reported Tuesday.

The 607,264 tourists who came to the state in June represented a 2.9 percent decline from June 2010, HTA said. It was the first drop since November 2009 when arrivals fell by 1.8 percent. Visitor spending totaled $1.04 billion in June, $120 million more than the same month a year earlier.

At the current pace, spending is on track to hit $12.6 billion this year, just shy of the record $12.8 billion visitors pumped ino the Hawaii economy in 2007, said Mike McCartney, HTA president and chief executive officer. HTA also is projecting visitor arrivals to reach 7.3 million in 2011, which would be the fourth highest on record.

MONEY TALKS
The monthly visitor expenditures of visitors to Hawaii and the percentage change from the year-ago period.
2011
MONTH SPENT CHANGE
June $1.04B +13.1%
May $912.3M +5.9%
April $920.7M +20.2%
March $980.7M +11.8%
February $1.01B +18.7%
January $1.18B +19.8%
Total $6.04B +18.4%
2010
MONTH SPENT CHANGE
December $1.11B +17.9%
November $976.0M +30.4%
October $961.5M +24.7%
September $880.2M +22.2%
August $1.08B +30.0%
July $1.11B +23.3%
June $948.9M +16.1%
May $861.4M +15.9%
April $765.8M -0.7%
March $877.3M +12.0%
February $853.5M +0.8%
January $985.8M +4.1%
Total $11.4B +16.2%
Source: Hawaii Tourism Authority

Business is brisk at many Hawaii enterprises that cater to tourists. Thomas Kafsack, who owns Surfing Goat Dairy on Maui with his wife, Eva Maria, said sales at the popular tourist attraction were up 41 percent in June from the same month last year.

“The last two years have been pretty good, but things really took off this year when we added goat cheese truffles to our selection. People have been buying them like crazy in our shop and on the Internet,” Kafsack said.

He also said several companies that are hosting APEC-related events on Maui have booked Surfing Goat Dairy to provide food for their events this fall.

Maui was the only major island with an increase in visitors in June, with arrivals rising by 2.2 percent. June arrivals were down 6.3 percent on Hawaii island, 4.5 percent on Oahu and 0.4 percent on Kauai.

June’s statewide decline in tourist arrivals followed a meager 0.6 percent increase in May, both months in which airfares from the mainland to Hawaii were up by double digits over year-earlier levels. Airfares were 27 percent higher in June and 17 percent higher in May, according to HTA. Another factor that could be suppressing arrivals is rising hotel room rates.

The average daily room rate in Hawaii rose 10 percent to $175.92 in May and is expected to increase again in June.

Arrivals from all major tourist markets declined in June, except for Canada. The biggest drop was from Japan, which is still recovering from an earthquake, tsunami and nuclear plant breach in March. The 84,950 visitors who traveled to Hawaii from Japan in June was about 16,000 fewer than in June 2010. Through the first six months of the year, arrivals from Japan are down 9 percent from the same period in 2010.

Cliff Tai, who owns Hawaii Beach Bums luggage and surfboard storage in Honolulu, said his business picked up when several airlines added flights to Hawaii this spring.

Tai said he still has not fully recovered from the closing of Aloha and ATA airlines in 2008 and the subsequent downturn in tourism. Hawaii Beach Bums relies on tourists for its luggage storage business, while many of its surfboard storage customers are pilots and flight attendants who want to get in a quick surfing session during a layover in Honolulu, he said.

“I’m glad to see that Alaska Airlines is adding a flight from San Diego this fall. I’d like to see more direct flights from the mainland,” Tai said.

Don’t fall for real-estate myths in this market

You’re not going to get 50% off the asking price on a home, and the good houses in the good neighborhoods go fast.

Posted by Teresa at MSN Real Estate
Article from: RealEstate.MSN.Com

It’s easy to think that because we’re in a buyers market, buyers can call all the shots: Wait weeks before deciding whether to make an offer on a particular house, find grateful acceptance of lowball offers or scoop up homes for 50% of the asking price.

Your worst real-estate enemy? You
Good luck with that. Clinging to those and other popular myths may keep you from getting the house you want.

I’m always amused to see how unrealistic some of the would-be buyers are on the TV house-hunting shows. But when I was 25, I knew everything, too — even if I didn’t realize my life would never be complete without granite countertops and stainless-steel appliances.

Syndicated columnist Lew Sichelman had a column in last weekend’s Los Angeles Times about some of the real-estate myths that can keep buyers from getting the homes they want.

“… many people believe they can make any bid they want, no matter how ridiculous, because it’s a buyers market. False,” he wrote. “Even foreclosures and short sales are never priced at half their value ‘or anything even close to that type of fire-sale discount,’ says Christina Rordam of Exit Real Estate Results in Longwood, Fla.”

Is the buyers market a mirage?
No one can predict how a particular seller will respond to an offer, whether the seller is an individual or a bank. If the seller doesn’t like you, you run the risk that he will refuse to deal with you.

Here are some other myths that could doom your purchase:

If the house has been on the market a long time, the seller will take a low offer. Wrong. The house could be on the market a long time because the seller not only won’t take a low offer but also won’t take a reasonable offer.

A distressed property is always cheaper. Maybe it is and maybe it isn’t. Lenders aren’t always logical in their negotiations, so you may get as good a deal or better from a realistic homeowner.

If you look long enough, you’ll find your perfect house. Afraid not. The perfect house doesn’t exist, at least not in your price range. And that’s true no matter what your price range.

Your family and friends will give you good advice about real estate. They’ll give you advice, all right. But it is unlikely to be as good as the advice you’ll get from a professional.

We’ll offer one more piece of advice: All real estate is local. Very local.

Don’t fall victim to a lying seller
That means that while it may be a buyers market nationwide, or even in your city, it could easily be a sellers market in your first-choice neighborhood. Do your homework.

Look at houses for sale in your desired neighborhood
If you’re thinking of buying a home, we suggest you dig into the articles in in the homebuyer’s section of MSN Real Estate. That should save you from a few misconceptions and a lot of wasted time.

**Thank you to Teresa at MSN Real Estate for this important insight on knowing your local real estate market and consulting a real estate professional. If you have questions about a particular property or a particular area please call The Hansen Ohana directly at (808)879-3667**

Bank of Hawaii net income down 24.5% due to lawsuit settlement

By Dave Segal
Article from: Star- Advertiser

Bank of Hawaii Corp.’s earnings fell 24.5 percent in the second quarter amid a $9 million lawsuit settlement and a large investment securities gain a year earlier that didn’t occur in the most recent period.

The state’s second-largest bank said today that net income was $35.1 million, or 74 cents a share, compared with $46.6 million, or 96 cents a share, a year ago.

Revenue fell 15 percent to $147 million from $172.8 million.

Analysts were forecasting earnings per share of 78 cents, but excluding the tentative settlement arising from claims that the bank improperly charged overdraft fees on debit card transactions, the bank’s earnings per share would have easily beat forecasts at 86 cents, according to Sterne Agee analyst Brett Rabatin.

The bank also had a lower-than-normal tax rate of 29.1 percent last quarter compared with 34.4 percent a year ago. Had the tax rate been a more traditional 34 percent, the bank’s earnings per share would have been 81 cents, still above forecasts, Rabatin said.

Bank of Hawaii’s earnings also were affected by a net gain of $15 million in the second quarter of 2010 from the sale of investment securities. There were no investment securities sales last quarter.

“I’m very pleased with the operational direction of the company,” said Peter Ho, Bank of Hawaii’s chairman, president and CEO. “Unfortunately, this quarter in particular, there was so much noise in the numbers with the $9 million settlement and we’re (comparing) with last quarter and the second quarter of a year ago which had significant one-time securities gains.”

Ho cited solid loan growth, an increase in core loan deposits and improved credit quality among the highlights for the quarter.

Bankoh’s stock fell 21 cents, or 0.5 percent, to $46.14 on the New York Stock Exchange.