Downsides of buying affordable land and doing nothing with it for 20 years?

[CyberCity]

Originally Posted by terracore

Yes. Also beware of a realtor favorite "possible ocean view from second story" when no second story exists.

And "partial ocean view", a hint to get your binoculars and ladder.

[HiloDiver]

LOL, I remember when I was buying a home on another island, looking for 2/2 or 3/2 homes and our realtor took us to an alleged 3/2. As it turns out, the third "bedroom" was actually where they put some drywall and spackle and windows up to enclose part of the porch...small, tacky, and they lost use of the porch. We wanted to see the second bathroom but they couldn't show it to us because it was an illegal addition. The home was actually a 2/1. Our realtor blasted the seller's realtor up one side and down the other for wasting our time like that. I wonder if that happens in HI too.

[terracore]

Originally Posted by DebbyDiver

LOL, I remember when I was buying a home on another island, looking for 2/2 or 3/2 homes and our realtor took us to an alleged 3/2. As it turns out, the third "bedroom" was actually where they put some drywall and spackle and windows up to enclose part of the porch...small, tacky, and they lost use of the porch. We wanted to see the second bathroom but they couldn't show it to us because it was an illegal addition. The home was actually a 2/1. Our realtor blasted the seller's realtor up one side and down the other for wasting our time like that. I wonder if that happens in HI too.

Happens ALL THE TIME. And the big problem is that if there is anything other than the slightest deviation from what is permitted, the bank won't loan on it. (unpermitted additions are uninsurable, maybe even a fire risk, and the bank isn't going to loan money on an uninsured anything) So to buy the place you either need cash or a vacant land loan. This leaves a lot of stuff available with "seller financing" which really means "stay away, banks consider the structure to have no value".

People do these things because they think its saving them money but in the long run it will eventually come to bite them. I've seen the argument "I'm going to die here, so I don't care if its permitted". Then they get sick or need to leave for some other reason and have a property that they can't sell.

We recently looked at a property with an unpermitted pool. It looked like it was probably built to code by a professional- the owner just didn't want to "bother" with the permits. Well, the bank said the only way they would close on the loan is if the pool was demolished first. The other option would be to get it permitted, but that would take months- if it was possible. Turns out that the Ohana on the property was actually an "enclosed porch" on the permit so same thing- demo, return it to an enclosed porch, or get permit issued for ohana or no loan. At this point, two of the most desireable traits of the structures on the property instantly became worthless and the owner is now stuck with an otherwise 200k property that they can only sell to cash buyers. Good luck. They might be able to sell it as is for 100-120k. I don't think the permits would have cost the $80,000.00 they lost in the value of their home.

[CyberCity]

We previously bought a house on Oahu that had two areas of un-permitted additions. Our lender was aware of it (they do send out an appraiser who measures the house, so the SF discrepancies were obvious).

The bank did not disqualify the house from the mortgage process, but they did restrict the amount they would lend to the value of the house that was built WITH PERMITS. The SF of the un-permitted areas were NOT calculated into the value of the house.

Years later, we took care of getting permits ourselves on those areas, to make the resale easier. It was not a big deal, since the additions were up to code.

[OpenD]

Originally Posted by CyberCity

Years later, we took care of getting permits ourselves on those areas, to make the resale easier. It was not a big deal, since the additions were up to code.

But that is the tricky part... how can you be sure additions are up to code? As Terracore said, on the Big Island, at least, illegal add-ons are everywhere, not to mention that many, many houses were built without a permit. The county estimates there are more than 1,000 in Puna district alone. And now that the county has just adopted more comprehensive codes, it becomes trickier still.

I think a good home inspection is essential before committing to anything.

[leilaniguy]

Another wrench being thrown into the works: Hawaii County is thinking of buying all the lots and houses within one mile of the Geothermal plant in Puna, tearing down or moving the houses and banning building in the area. There was recently a proposal to do the same (for different reasons) in the upper part of Oceanview.

[CyberCity]

Sunday's paper had an article where the county has been buying the land, then auctioning some of it off (of course for less than what they paid for it). There is an effort to try to prohibit that through legislation.

[hawaiianvice]

Thanks for the responses all, especially OpenD. We have since heard from a friend that moved to the Big Island that Fern Forest is kind of sketchy so we are looking around at other options. We will definitely spend some time there before making any decisions but are feeling the pressure to get something now before prices go up so these forums are really helpful. But we'll definitely go visit, at a minimum. Good luck to all of you!

[terracore]

Originally Posted by hawaiianvice

Thanks for the responses all, especially OpenD. We have since heard from a friend that moved to the Big Island that Fern Forest is kind of sketchy so we are looking around at other options. We will definitely spend some time there before making any decisions but are feeling the pressure to get something now before prices go up so these forums are really helpful. But we'll definitely go visit, at a minimum. Good luck to all of you!

Saying "Fern Forest is kind of sketchy" is like saying "New York City is kind of sketchy". There are million dollar homes and there are people living under tarps in both.

I have driven in places in FF where I wouldn't unlock my car doors. And I also have property in FF where I've left stuff out unattended for months and it's never been stolen. Anybody who calls ALL of FF "sketchy" has probably not actually been through most of it.