Mainland Investors Buying Property in Hawaiʻi: A Guide

Mainland investors are drawn to Hawaiʻi for obvious reasons, limited land supply, enduring demand, and a real diversification play outside mainland markets, but the state’s real estate rules and physical realities catch first-time out-of-state buyers off guard more often than almost anywhere else in the country. This guide covers the surprises that come up most often and how to work around them.

Leasehold Land Catches People Off Guard

Perhaps the single biggest surprise for mainland buyers is discovering that not every property in Hawaiʻi conveys the land underneath it. Leasehold property means you’re purchasing the structure and a lease on the land it sits on, often with decades remaining but sometimes with a shorter horizon, and the terms of that lease, including any rent renegotiation schedule, materially affect the property’s value and financing. Fee simple, where you own the land outright, is the more familiar structure to mainland buyers and generally the safer default if you’re not deeply familiar with how to evaluate a lease. Both structures can be financed, Pac I G Capital lends on fee simple and leasehold property across all islands, but you should know which one you’re buying and have the lease terms reviewed before you commit. See our leasehold loans page for more detail on how this financing works.

Lava Zones Are a Real Underwriting Factor

Mainland investors who haven’t spent time on Hawaiʻi Island are frequently unaware that the island is divided into lava flow hazard zones, with some areas, particularly parts of Puna, carrying meaningfully higher risk designations than others. This affects insurance availability and how a lender evaluates the property, and it’s not something a standard mainland title report or inspection will flag clearly. If you’re considering a Hawaiʻi Island property, confirm its specific lava zone number and current insurance availability early, ideally before you go under contract, not after.

Short-Term Rental Rules Have Tightened Everywhere

Many mainland investors approach Hawaiʻi with a vacation rental business model in mind, based on how the market operated a decade ago, and are surprised to learn how much county-level regulation has tightened. Oʻahu now restricts short-term rentals largely to resort zones, Maui has moved to phase out short-term rentals in apartment-zoned buildings, Kauaʻi concentrates legal nightly rental use in defined Visitor Destination Areas, and Hawaiʻi County requires registration with active enforcement. None of this means short-term rental investment is impossible, but it means the zoning and permitted use of a specific property needs to be verified with the county before you build a return projection around nightly rates, not assumed from how a similar-looking property operates elsewhere.

Agricultural Zoning Isn’t Just a Label

A significant share of land, especially on Maui, Hawaiʻi Island, and Kauaʻi, carries agricultural zoning, which restricts how it can be used and what can legally be built on it. Mainland buyers sometimes assume agricultural zoning is a formality that doesn’t meaningfully limit a residential purchase, but it can restrict dwelling size, require an actual agricultural use component, and complicate financing if the existing structures aren’t properly permitted. If a property you’re considering is zoned agricultural, confirm the legal status of any existing dwelling and the specific use restrictions with the county before assuming it functions like standard residential property.

The Closing Process Looks Different

Hawaiʻi closings run through escrow much like many mainland states, but a few things differ. The state’s General Excise Tax and Transient Accommodations Tax apply to rental income in ways that surprise out-of-state landlords unfamiliar with Hawaiʻi’s tax structure, and property tax rates and classifications (owner-occupant versus investment versus short-term rental use) vary by county with real financial consequences for misclassification. It’s worth engaging a Hawaiʻi-based CPA or tax professional early if you’re planning to hold rental property, rather than assuming your mainland tax approach transfers directly.

Remote Closing Is Normal, and It Works

The good news for mainland investors is that Hawaiʻi real estate transactions are very accustomed to remote buyers. Mobile notaries and remote online notarization are widely used, escrow companies routinely handle out-of-state and international clients, and wire transfers move funds regardless of where your bank sits. Many investors complete an entire purchase, renovation, and resale cycle without being physically present for every step. That said, visiting the property and neighborhood at least once before committing significant capital remains a good practice, since photos and video can’t fully convey site conditions like slope, access, noise, or neighboring land use.

Why Mainland Investors Need a Local Lender

This is where mainland investors most often get tripped up. A lender without Hawaiʻi-specific underwriting experience may not know how to evaluate a leasehold structure, may apply a blanket decline to any property in a higher lava zone regardless of its specific merits, may not understand catchment water systems, or may not have realistic expectations for county permitting timelines, any of which can sink a deal that a locally experienced lender would approve. Pac I G Capital has been lending in Hawaiʻi for over 20 years, and underwriting is done by people who know the difference between Kailua and Kailua-Kona, understand what a nonconforming vacation rental certificate is, and can evaluate a property on its actual merits rather than a generic checklist built for mainland real estate.

Wire Transfers and Timing

International and mainland wire transfers into Hawaiʻi escrow accounts are routine, but timing matters more than out-of-state buyers sometimes expect, since banks can hold or delay large international wires for fraud review, and a delayed wire can jeopardize a closing date on a competitive purchase. If you’re funding from overseas or moving funds between multiple accounts, start the process several business days before your closing deadline, and confirm wire instructions directly with your escrow company by phone rather than relying solely on email, since wire fraud targeting real estate closings is a real and ongoing risk nationally, not unique to Hawaiʻi.

A Worked Example: Mainland Investor Buying in Kāneʻohe

Line Item	Amount
Purchase price	$950,000
Renovation budget	$80,000
Estimated ARV	$1,250,000
Loan at 70% LTV of purchase	$665,000
Rehab funded at 80% of rehab costs	$64,000
Interest-only carry (about 1% per month, 6 months)	roughly $44,000
Retainer to start paperwork (Oʻahu)	$1,000

This example illustrates typical loan structure at an Oʻahu price point and does not represent a guaranteed quote for any specific property or borrower.

Financing Without W-2s or Bank Statements

One advantage for mainland investors specifically: hard money underwriting in Hawaiʻi doesn’t require W-2s or bank statements to get a quote, which sidesteps a common friction point for out-of-state, self-employed, or entity-based buyers whose income documentation doesn’t fit a conventional mainland bank’s format. Pac I G Capital lends up to 70% LTV, up to 75% of ARV, and up to 80% of rehab costs, at about 1% per month interest-only, with terms of 6 to 24 months, and a bridge loan structure works well for investors who need to move quickly on a purchase while arranging longer-term plans. Explore our dedicated resource for mainland investors for more on how this works.

Working With a Property Manager From Afar

If your plan involves holding property as a long-term rental rather than flipping it, a good local property manager becomes one of the most important relationships you’ll build as an out-of-state owner. A manager familiar with the specific island and neighborhood can handle tenant screening, maintenance coordination, and the practical realities of scheduling repairs with a limited local contractor pool, all of which are much harder to manage remotely without local representation. Interview more than one property management company before you close, ask specifically about their experience with investment property (as opposed to primarily managing owner-occupant HOAs), and confirm their fee structure and how they handle emergency repairs before you need one handled.

Building Your Local Team

Beyond a lender and a property manager, most successful mainland investors in Hawaiʻi build a small team over their first one or two transactions: a real estate agent who specializes in investment property on the specific island, a Hawaiʻi-licensed CPA familiar with General Excise Tax and Transient Accommodations Tax, and a contractor relationship for ongoing maintenance or renovation work. Having these relationships in place before you need them, rather than assembling a team under the pressure of a closing deadline, makes the entire process of owning property from a distance considerably smoother.

Next Step

If you’re evaluating a Hawaiʻi property from out of state, get the lease status, zoning, and (on Hawaiʻi Island) lava zone confirmed early, then apply to see what financing terms are available. Our team works with mainland investors regularly and can walk you through what’s specific to the island you’re considering.