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  • Ryan O.

The Power Of Fee Simple


I’m selling a fee simple commercial space at 465 Kapahulu. The owner of the property is operating a hair salon out of the unit. Here’s the MLS fact sheet:

https://propertysearch.hicentral.com/HBR/ForSale/?/201829295

What’s unique about my listing is the property is fee simple. If you are familiar with Hawaii real estate, you will know there are not many fee simple commercial (condominium) properties for sale.

Many will probably agree that fee simple is the most complete form of ownership. If you’re looking to open your own hair salon, some of the benefits of owning a fee simple commercial unit are:

(1) There are no lease terms since you are the owner of the real property and the salon. This prevents the stress of dealing with a landlord and a leasing agent. As the owner of the salon, you can be a “landlord” and charge rent to owner hair stylist who want to rent a chair.

(2) There is no lease rent because you own the real property. There have been other leasehold hair salon listings for sale. Their purchase prices are lower, but the lease rents can be high. With a monthly lease rent of approximately $3,000, it’s cheaper to own than to rent.

When it comes to my fee simple listing, you’re only responsible for making your mortgage, maintenance fee, property taxes, and utility payments. Just remember that every time you make a mortgage payment, you gain more equity in your property.

(3) There is no percentage rent. Having a hair salon in a mall can be great. However, don’t be surprised if the landlord has a percent rent clause in the lease. If you’re already paying Class A rent, a percentage rent clause could financial hurt you more.

(4) There is no reversion. Since you own the property, you can keep the unit as long as you want, or you can sell it whenever you want. If you don't want to be a hair stylist anymore, you can lease the unit to someone else.

-Roda

#ryanoda #realestate #commercialrealestate

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Ryan Oda (RB-23073) is a Real Estate Advisor with Forward Realty (RB-19423) in Honolulu, HI.