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Yes, it's possible to buy an inexpensive lot and build a small cottage on a budget. There are lumber companies like Honsador and HPM that sell construction kits for small houses starting around 500 sq ft, as I recall. You can look up their floor plans online.
Some areas have HOAs (Homeowner Associations) which restrict construction in various ways, like requiring an 880 sq ft minimum, or whatever.
In addition, you do need to get county permits for the building and septic system, and while you can do as much of the construction yourself as you like, you will be required to use a licensed electrician and plumber.
There are many previous threads here discussing various aspects of this that you can easily access using the Search function.
You could do it even cheaper by buying a lot that someone else has already put a small house on. Houses in Puna tend to be selling for less than construction cost. Plus someone else has already paid for all that lot development.
What you are missing is that some of those really cheap lots are cheap for a reason. But if you shop carefully, you can probably find a decent enough lot for a reasonable price. Seller has to move so must sell sort of situation.
1. Is the property leasehold or fee simple? Leasehold means that someone else owns the land, and you pay them an annual "rent" to have your house on it. When the lease expires, you have to renegotiate the lease (i.e., the amount goes up), or remove your house. Fee simple means that you own the land as well as the house.
2. A lot of properties are on catchment. This means that you rely on rainwater to fill your tank so that you have water. Some people do not drink the catchment water. You need to maintain the filter system, and when there's not enough rain you need to pay to have water delivered.
3. Some houses are in lava zone 2, which means a higher risk of being covered with lava. Also insurance is higher.
4. You ALWAYS want to see the property so that you can scope out your neighbors.
1. Is the property leasehold or fee simple? Leasehold means that someone else owns the land, and you pay them an annual "rent" to have your house on it. When the lease expires, you have to renegotiate the lease (i.e., the amount goes up), or remove your house. Fee simple means that you own the land as well as the house.
2. A lot of properties are on catchment. This means that you rely on rainwater to fill your tank so that you have water. Some people do not drink the catchment water. You need to maintain the filter system, and when there's not enough rain you need to pay to have water delivered.
3. Some houses are in lava zone 2, which means a higher risk of being covered with lava. Also insurance is higher.
4. You ALWAYS want to see the property so that you can scope out your neighbors.
(1) What would you suggest are things consumers should be cautious of before purchasing?
Seriously, no offense meant, but please do some basic homework by using Search to dig into the archives. All this has been discussed at great length already. That's why the "search first, ask later" approach is suggested in the sign-up materials. You did read them, right?
But here are the most important things to be cautious of before purchasing:
1. Don't buy anything sight unseen.
2. Don't buy anything until you have spent some time living in the area. There are 1,001 things to consider that you won't even understand until you've spent some time in the vicinity.
And for that matter, the same thing goes for any long term commitment, like leases. There are just too many factors you simply cannot evaluate properly from a distance.
BTW, here's a book many people thinking about living in Hawai'i find valuable to help sort out fact from fantasy...
Also, is there an agent that could help me navigate the system not knowing the area well?
Probably not.
Real estate agents work on commission and if you are looking for a cheap place, they are not going to make enough to make it worth their while. Let's say the listing fee is 6% of selling price. The seller's agent is going to get half so the agent you work with only gets 3%. But wait, they don't...they have a lot of overhead, like office rent/fees etc. Then there is their time and their gas money...They might get to keep 1.5% of the sales price. And I don't even know if that's the going listing rate in HI! It was in Florida.
People selling places cheap usually avoid being listed anyway because they are making so little on the sale (or perhaps losing a lot on the sale) that they don't want to pay commission.
Realtors will take sellers' listings for pretty much any sales price because they don't have to do a lot of work for it. However, working with buyers is usually very time consuming. They could spend as much time with someone looking for a $50K home as someone buying a $500K home.
I was a realtor at one time, and a successful one, too...but I didn't like working that hard, lol!
Real estate agents work on commission and if you are looking for a cheap place, they are not going to make enough to make it worth their while.
All good advice, and in addition, Hawai'i real estate agents get a LOT of dead end calls from mainlanders caught up in the fantasy who may never even wind up taking a vacation here, so don't expect to get a lot of attention until you have boots on the ground and have some clarity about what you're looking for and have pre-qualified for financing.
And for another thing, since the market has been so bad for so long, they'll probably have to take time off from their day job in order to deal with you, so you need to do your homework and not waste their time.
You can probably answer most of your questions by poking around right here on these forums.
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