Photo by Daniel Lee on Unsplash
By Shannon Smith, REALTOR® CRS | Team Hawaii Real Estate | teamhawaii.realestate
Over the past two weeks we've covered what leasehold is and why it carries real risks. This week we're closing out the series with one of the most misunderstood phrases in Oahu real estate: 'Fee Available.' If you've seen it on a listing and wondered what it means — and whether it changes the calculus on a leasehold property — here's your answer.
What 'Fee Available' Actually Means
When a leasehold listing says 'Fee Available,' it means the landowner has indicated willingness to sell the fee interest — the underlying land — to unit owners. If you purchase that fee interest, the property converts from leasehold to fee simple. You now own the unit and the land it sits on, permanently, with no ground rent and no expiration date.
How the Purchase Works
The fee interest is a separate purchase on top of the unit price. The cost is based on the current appraised value of the underlying land. In some cases, lenders will allow you to roll the fee purchase into your mortgage. Some buildings require all owners to collectively purchase the fee together, which takes time and coordination. Others allow individual unit owners to buy the fee for their unit independently.
Buying the fee is essentially buying your way out of leasehold. It converts a depreciating asset with an expiration date into a fee simple property with full financing eligibility and long-term value.
Is the Fee Conversion Worth It?
Usually, yes — if the numbers work. Here's how to evaluate it:
• What is the current cost of the fee purchase for your specific unit?
• What does the property become worth after conversion, based on fee simple comps?
• Does the conversion unlock financing options — including VA loans — that weren't available before?
• Is the building actively converting, or has the process stalled?
• How many units have already purchased the fee? Momentum matters.
In many cases, the conversion cost is less than the value it adds. A leasehold unit at $400,000 might become a fee simple property worth $550,000–$575,000 after a fee purchase of $80,000–$100,000. That math often works in the buyer's favor — but it needs to be verified with current comps, not assumed.
What to Watch Out For
Not all 'Fee Available' situations are equal. In some buildings, the fee has been available for years but collective buy-in has stalled. In others, the landowner has priced the fee high enough to discourage conversion. Before pursuing a 'Fee Available' property, ask: how many units have already converted? Is there active momentum, or has the process been sitting dormant?
Closing Out the Series
Understanding leasehold vs. fee simple in Hawaii isn't just real estate trivia — it directly affects your financing options, monthly costs, resale potential, and the long-term value of your investment. It's one of the most uniquely Hawaii aspects of our market, and worth fully understanding before you fall in love with a listing.
Considering a leasehold or 'Fee Available' property on Oahu? Team Hawaii has navigated countless fee conversion transactions. Let's review the lease terms, the fee pricing, and the building's conversion status together. teamhawaii.realestate
