NEVER Buy These Types of Homes on Maui

I made a video walking through all five of these in detail, but I wanted to write it out too because this is the kind of information that needs to be easy to reference and share.

The pattern I've seen repeat itself over 11 years of working with buyers on Maui: people do solid research on the island, fall in love with a property, and miss a handful of things that are specific to Hawaii real estate — things that don't come up on the mainland, that aren't highlighted on listing pages, and that agents working primarily with locals don't always think to explain because they assume you already know. Off-island buyers rarely do. By the time they find out, they've already closed.

These are the five I walk through most often.

Leasehold properties

Hawaii has a significant inventory of leasehold properties, which means you're buying the structure but not the land underneath it. You're leasing the land from a landowner — often a large estate or a trust — for a set term, typically 50 to 65 years from the original lease date, not from when you buy.

The problems:

When the lease is in its final decades, financing becomes nearly impossible. Most lenders won't touch a property with fewer than 30 years remaining on the lease, which means your exit requires a cash buyer. Your pool of potential purchasers shrinks dramatically, and your negotiating position shrinks with it.

Lease rent is also subject to renegotiation, often at intervals specified in the original lease document. Buyers who didn't read carefully have been caught by lease rent that jumped by multiples at renewal — sometimes enough to make the property financially unworkable.

Always confirm fee simple vs. leasehold before you fall in love with a property. It's on the listing, but it's easy to scroll past.

Oceanfront — what the photos don't show

Oceanfront and ocean-adjacent properties on Maui carry a set of risks that aren't visible in listing photos and aren't always front-of-mind for buyers who've only experienced the property on a sunny afternoon.

The big ones: shoreline setback requirements restrict how close to the water you can build or rebuild. Coastal erosion is active and measurable in some areas. Flood insurance, when it's required, can cost more annually than buyers budget for, and in some cases it's difficult to obtain at all. Hurricane coverage is its own conversation.

The due diligence step most buyers skip: pull the property's flood zone designation from FEMA's map service center, and request a history of any erosion or shoreline change studies for that parcel. Your inspector can flag structural concerns; this is the paperwork layer that runs parallel to the physical inspection.

Cesspool properties and the 2050 law

Hawaii law requires all cesspools in the state to be upgraded or converted to a compliant system by 2050. The state has over 80,000 cesspools. Maui has a lot of them, disproportionately in Upcountry and rural areas.

What this means for buyers: if you purchase a property on a cesspool, the conversion cost eventually lands on you. Estimates vary widely by site — topography, soil conditions, proximity to utilities, and permit complexity all affect the number — but it's not unusual for conversion to run $20,000 to $50,000 or more for properties where a standard system isn't a straightforward install.

Ask directly whether the property is on a cesspool. If it is, get a quote from a licensed contractor before you finalize your offer, not after.

Aging condo buildings

Maui's condo inventory includes a significant number of buildings constructed in the 1970s and 1980s. Age alone isn't disqualifying — some of those buildings are well-maintained and have healthy reserves. But age combined with deferred maintenance and underfunded reserves is a real problem, and it's one that's become more visible nationally after the Surfside collapse in Florida prompted stricter reserve study requirements across many states.

Hawaii has its own reserve funding requirements, but compliance and enforcement are imperfect. The question to ask isn't just "is there a reserve study" but "what does the study say about funding adequacy" — and then verify that the association is actually hitting the funding targets the study recommends.

Request the last two years of board minutes along with the reserve study. Board minutes often surface the conversations about deferred maintenance and funding shortfalls that don't make it into the official documents.

Special assessments and cash-only buildings

Two things that stop buyers cold and rarely appear on listing pages:

Special assessments are one-time charges levied by an HOA when the reserve fund isn't sufficient to cover a major repair or replacement. They can be substantial — I've seen six-figure assessments per unit for roof replacements, plumbing overhauls, or structural repairs. Ask whether any special assessments are pending or anticipated. A good listing agent will tell you; ask anyway.

Cash-only buildings are condos that no longer meet Fannie Mae or FHA lending guidelines — typically because of owner-occupancy ratios, litigation history, pending special assessments over a certain threshold, or other factors. When a building is blacklisted by major lenders, you're limited to cash buyers or portfolio lenders, which reduces your buyer pool significantly when you eventually sell and tends to suppress price.

Before you make an offer on a condo, have your agent or lender run a condo approval check. It takes a day and it's worth doing before you fall in love with the unit.

The short-term rental assumption trap

This is probably the most common mistake I see buyers make, especially investors and buyers who plan to offset carrying costs with rental income.

Not all condos on Maui can be legally rented on a short-term basis. Zoning and county permitting rules govern which properties can operate as vacation rentals, and even within areas that allow it, individual associations may prohibit short-term rentals in their CC&Rs. The situation has also shifted — Maui County has tightened enforcement and reduced the number of active permits in recent years.

The trap: a buyer purchases a property assuming they can rent it on Airbnb or VRBO based on what similar units are doing, without confirming that their specific unit has either a grandfathered permit or the right zoning and association approval to do so. The financial model doesn't work without the rental income. The permit isn't transferable. The math falls apart.

If rental income is part of how you're underwriting a purchase, confirm the legal short-term rental status of the specific unit — not the building, the unit — before you make an offer. I can help you run that down.

What ties all five together

Every one of these is findable with the right questions asked at the right time. None of them require you to be an expert on Hawaii real estate law. They require you to have someone in your corner who knows to look for them and who will tell you what they find clearly, not bury the concern in boilerplate.

If you're seriously considering a purchase on Maui and want to work through the due diligence checklist on a specific property or neighborhood, reach out. No pitch. Just a straight conversation.