Coffee Farms – Leasehold vs Fee Simple

So you’re thinking about joining the ranks of Kona Coffee farmers. A key consideration is the form of ownership or land tenure. The two most common forms land tenure in Kona are leasehold and fee simple. Fee simple means you own the property outright. Leasehold means you’ve purchased a lease giving you the right to use that property for the term of the lease. One of the largest land owners in Kona is Kamehameha Schools, also known as Bishop Estate. An estimated 1200 acres of the approximately 3600 acres of Kona Coffee land is owned by Kamehameha Schools. My simple math puts that at about one third of the total acreage.

Fair purchase price for a fee simple farm is dictated by most recent sales. In today’s market, productive coffee land is selling for about $150,000 per acre with no house. Obviously, some locations will drive a higher price/acre, some lower, but this should serve as a decent benchmark.

Leasehold is a different story. Because you’re only leasing the use of the land for the term of the lease, the price is dependent on the amount of time remaining on the lease. Often times the time remaining on the lease is not long enough to be financed by a lending institution. The amount of annual rent charged by the lease will also influence the value of the lease. Triggering a default clause within the lease contract can dramatically increase your lease rent payments. Needless to say, assuming a lease for leasehold property requires an extremely careful analysis to avoid paying too much.

We have many wonderful coffee properties on the market today in Kona, each with its own charm and character, both fee simple and leasehold. However, please take the time to carefully consider your desires and match them to the right farm at the right price. I’ll be happy to help.

A hui hou,

Kona Coffee Cultural Festival

I’m still adding informative text to the book on leasehold vs fee simple coffee property. In the meantime, I’ve added the link to November’s Kona Coffee Cultural Festival. It’s very well attended from all over the world. It runs from November 2nd to 11th. Be sure to check it out. Unfortunately, it’s also a very busy time for the coffee farmers who are usually in the busiest part of their picking season. My mom has been helping run the art competition for years. Needless to say, it’s about more than just drinking really good coffee. I know that in the past some coffee property owners have timed the listing of their property to coincide with the November arrival of coffee visitors. A hui hou,

Kona Coffee is Looking Good

plump-beans.jpgThis blogging stuff isn’t so tough after all. Enjoy the spectacular vista from our farm in Captain Cook looking south toward Honaunau. Perfect Mauka (uphill) elevations around 2100 ft and summer daytime tempratures averaging near 75 have plumped up and ripened our coffee cherry very nicely. Most farms have been harvesting for about a month. Our higher elevation farm just finished the first picking round. I’ll have more photos up soon. Next, I’ll have a short primer on fee simple vs leasehold land ownership. A hui hou!

Welcome to my new Blog

Aloha and welcome to my new Kona Coffee Real Estate Blog. I’m very blessed to live in an absolutely wonderful location doing the things I love most; growing some of the best coffee in the world, sharing a love for our coffee cultivaton culture, and helping others to find their niche within our market. I look forward to sharing up-to-date data on our Kona Coffee real estate market, along with coffee growing tips, and interesting local information. Bear with me as I get more proficient on the Blog technology. I’m pressing ahead full steam.

Aloha!

Aloha and welcome to my new blog, part of the Aloha Living Blog Network. I look forward to sharing with you both a professional and personal perspective on real estate in this area. Stay tuned!