If you have been searching for condos on Maui, especially on Southside, Westside, or Maalaea, you have probably noticed something confusing:

Why does one oceanfront condo cost $1M while another similar unit costs only $500K?

Most of the time, the answer is simple:

Fee Simple vs Leasehold ownership.

Understanding the difference is one of the most important things a Maui condo buyer can learn because it affects:

• Price
• Financing
• Monthly costs
• Appreciation
• Resale value
• Long-term ownership

Here is a full breakdown of how leasehold condos work on Maui, who they are good for, and the pros and cons buyers should know before purchasing.

What Is Fee Simple?

A fee simple property means you own:

• The condo unit
• Your interest in the land underneath it
• The property indefinitely

This is the most complete form of ownership in Hawaii and throughout the United States.

Most buyers prefer fee simple because it is:

• Easier to finance
• Easier to resell
• Better for long-term appreciation
• Simpler overall

Example:
A fee simple beachfront condo in South Kihei may cost:

• $850,000–$1,500,000+
  depending on location and condition.

What Is Leasehold?

A leasehold condo means:

• You own the condo itself
• But you do NOT own the land underneath it
• Instead, you lease the land from a separate landowner for a set number of years

When the lease expires, ownership rights may revert back to the landowner unless the lease is extended or renegotiated.

Leasehold properties usually include:

• Monthly lease rent (ground rent)
• Lease expiration dates
• Possible rent renegotiation periods

This is why leasehold condos are usually much cheaper upfront.

Why Are Leasehold Condos So Much Cheaper?

Because buyers are not purchasing the land ownership.

On Maui, leasehold condos can sometimes sell:

• 25%–60% less than comparable fee simple condos depending on the remaining lease term.

Example:

• Fee simple beachfront ocean view condo in Kihei: $900,000
• Similar leasehold unit: $350,000–$750,000

The closer a lease gets to expiration:

• The lower the value tends to become
• The harder financing becomes
• The smaller the buyer pool gets

Lahaina & West Maui Leasehold Examples

Lahaina and West Maui have the largest concentration of leasehold condos on the island.

Common leasehold complexes include:

• Hale Mahina
• Kaanapali Shores (certain units)
• Maui Eldorado 

These properties became popular because they offered:

• Oceanfront locations
• Resort amenities
• Lower entry prices

Example:
A fee simple Kaanapali Shores 2 bedroom may cost:

• $1.3M

A similar 2 bedroom leasehold unit may sell:

• Under $600K depending on lease term remaining. 

What Is Lease Rent?

Lease rent (also called ground rent) is the monthly payment made to the landowner.

This payment is separate from:HOA dues

• Mortgage
• Taxes
• Insurance

Example monthly ownership costs for a leasehold condo:

• Mortgage: $2,200
• HOA: $900
• Lease rent: $700
• Taxes + insurance: additional

Total monthly costs can become significant.

Some leases also contain:

• Scheduled rent increases
• Market-based renegotiation periods
• Reappraisal clauses

This is one of the biggest risks buyers need to understand.

Who Should Buy a Leasehold Condo?

Leasehold condos are not automatically “bad.”

They can make excellent sense for certain buyers.

Leasehold May Be Great For:

Vacation Buyers

Someone who wants:

• Oceanfront Maui living
• Lower upfront cost
• Part-time ownership

Cash Buyers

Some leaseholds become difficult to finance as lease expiration approaches.

Cash buyers can sometimes negotiate incredible deals.

Shorter-Term Ownership Plans

If someone plans to own for:

• 5–10 years
  instead of forever, a leasehold can sometimes provide strong lifestyle value. ( Some leases are 30 years! )

Buyers Prioritizing Location Over Appreciation

Some buyers simply want:

• beachfront living
• whale watching
• sunsets
• Maui lifestyle

at a lower entry price.

The Downsides of Leasehold

Lease Expiration Risk

This is the biggest concern.

When the lease expires:

• ownership rights may end
• the landowner may regain control
• resale value can collapse near expiration

Financing Challenges

Many lenders require:

• long remaining lease terms
• stable lease rent structures
• acceptable lease language

Some leaseholds become:

• cash only
• difficult to refinance
• harder to insure
  
  

Why Some Maui Buyers Still Love Leaseholds

Despite the risks, many buyers still intentionally purchase leasehold condos because:

• They can buy oceanfront property for dramatically less money
• Rental income can still perform well
• Some complexes have fantastic amenities
• Maui lifestyle matters more than long-term equity for certain buyers

For example:
A retiree may happily buy a leasehold condo with 30 years remaining because:

• they save hundreds of thousands upfront
• enjoy beachfront Maui living
• and are less concerned about passing property to heirs

Maui Leasehold Buyer Checklist

Before buying a leasehold condo on Maui, always verify:

• Remaining lease term
• Current lease rent
• Future lease rent increases
• Financing eligibility
• HOA financial health
• Special assessments
• Rental restrictions
• End-of-lease terms

These details matter enormously.

Final Thoughts

Fee simple and leasehold condos can both make sense on Maui — it simply depends on the buyer’s goals.

Fee Simple Is Usually Best For:

• Long-term ownership
• Appreciation
• Easier financing
• Building generational wealth
• Simpler resale

Leasehold Can Be Great For:

• Lower purchase prices
• Oceanfront lifestyle access
• Shorter ownership horizons
• Cash buyers
• Vacation use

On Maui, especially in areas like Kihei, Kaanapali, and Maalaea, understanding the ownership structure can save buyers from major surprises and help them find incredible opportunities.

The key is simple:

Understand the lease before you buy the view.

Contact me today at.....

📞(808)444-7005

✉️Francisco@the808team.com