Hawaii Real Estate News

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What is a "Fractional"

As introduction, “fractional” ownership has been around a long time and can include everything from vacation properties to airplanes. Obviously the focus of our article will cover some basic topics of owning property using fractional contracts and will not delve into legal advice or detailed specifics because each offering can vary greatly. However, I do believe a novice will find this helpful.

Co-ownership in the form of fractional ownership is often confused with the term timeshare. It is important to realize that timeshare and fractional ownership are completely different. The advantage of fractional ownership is the very specific difference in the definition –ownership.  Fractional owners actually own shares of the property with others and the share of ownership is equal to their investment percentage. Their usage of the property is generally tied to those shares. The agreement of usage is established by the shareowners and can be simple or complex.

Additional considerations may include:

Simply keep in mind that each ownership agreement is different and should be discussed with your Broker.

Fractional ownership has many improvements over once popular “Tenant in Common” agreements due to the very specific legal instruments governing operations, funding and dispute resolution. Rather than sharing a deed with others, as in the case of TIC agreements, fractional owners have their own deed with complete usage of the property during their allotted ownership period. This form of ownership allows for individual and independent financing of the property with clear title and complete autonomy from the other owners.

Fractional ownership is a great consideration for someone wanting to own a piece of Hawaii.

This method offers the buyer a greater say in the property’s management and operations and represents a great way to own luxury properties – affordably. Additionally, there is a greater chance that your investment is growing in value – as opposed to timeshare ownership. It should be understood that all properties can not be fractionally owned. Some condominiums and residence developments explicitly forbid this method of ownership within their Association documents. However, this exclusion is most often associated with timeshares – and not a fractional – making this form of co-ownership available. In Hawaii, fractional ownership shares are generally 60 days or longer to avoid being labeled timeshares.

The possibility of owning a vacation condo or luxury estate in Hawaii may be in your future through the vehicle of fractional ownership. Many families can’t use a vacation home 100% of the year and fractionals allow for pay for only your share of usage. Add in the benefit of historical equity increases and you have a potential vacation property that doses double duty as an investment.

For additional source information about Fractional opportunities, contact Edward Lewis, at (808) 936-7212 or email him at elewis@hawaii.rr.com.

West v. East - The Big Island debate

Not to be confused with Gangsta rap coastal wars, East versus West actually refers to a long standing Big Island debate.  Sometimes mistakenly referred to as the Hilo - Kona argument, each side has its proponents. To the outsider, just understand that this disagreement is still about the Big Island of Hawaii and is therefore debating which side of paradise is better. Tough sell.

Like all of the Hawaiian Islands, the Big Island has a flavor often different than the other islands of Kauai, Oahu, Molokai, Lanai, and Maui. Two major factors make the two “coasts” different adding fuel to the conflict.

As implied the Big Island is, well, “Big”. This larger land mass provides more opportunity for mother-nature to have variants in topography, climate and resources. Hawaii actually supports land akin to deserts, rain forests, high plains and all within 2,622,714 Total Acres.

The other factor is due to past volcanic activity. The Island of Hawaii’s land mass has a very high center range of volcanic mountains which shield the western side from much of the tropical influences of the Pacific Ocean. The lava works of Mauna Loa and Kilauea make formidable wind and rain barriers. Therefore, the Kailua-Kona side (or Kona, as locals designate) has a far more arid climate. As comparison, Kona receives an average of 24 inches per year and the more windward Hilo on the eastern coast averages approximately 130 inches per year. Kona enjoys around 53 rain days annually, while Hilo experiences nearly 278 days of rain. As imagined, with that many rain days Hilo is called the “wet side”.

Both coasts have substantial beach access and enjoy great diving, fishing, and other recreation/sports attractions. Due to less rainfall, western Hawaii is considered a better tourist destination for golf and cruise ships. Many of the large hotel resort corporations anchor the western side, particularly around the northern/central areas of Waikoloa and Kohala. Both Kona and Hilo are well served by major retailers, and have International airports.

Perhaps due to the rain, east coast real estate is generally less expensive by a small margin. Excluding some variations present in all real estate markets, costs per square foot are generally less on the Hilo side. But the east is no slum, either. There are multi-million dollar estates from Hilo all the way north to the Hamakua district famous for its scenic waterfalls, rugged coastlines and the Valley of Kings - Waipio Valley.

So the East v. West debate will continue with or without our input. With either side accessible by car within 5 hours or so, it’s easy to visit both sides. After all, it’s still PARADISE.

You may want more information, so please feel free to contact Ed directly for additional assistance. Email Ed at elewis@hawaii.rr.com

Commercial Property Opportunites

Following suit with the housing market, commercial real estate is becoming available. Once considered a tight commercial market with little inventory, especially on the Big Island – value based purchases are now available.

Attractive commercial properties in areas like Kona have generally been rare. Landlords and investor types have tended to hold properties and bargains were not always available. The new market has now made the prospect of a business owner “buying” space versus leasing a viable option.

There are deals to be had with attractive amenities in several key demographic areas of the Big Island. We suggest this may be a great time for local business owners presently leasing to consider competitive bids to purchase facilities for their ongoing ventures. Investment in their own space may make considerable tax and equity sense. In a market like Hawaii where available commercial, industrial and retail space is tightly held – this economic situation may be that proverbial silver lining.

Need information about commercial opportunities, contact Edward Lewis, at (808) 936-7212 or email him at elewis@hawaii.rr.com.