Author Topic: Cheap tropical property! With free lava, tsunami, hurricanes, and earthquakes.  (Read 5038 times)

Nords

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(Note:  I'm going to do some keyword stuffing here for potential real estate investors.)

I get a lot of e-mails and PMs from forum posters (on the Mainland) with Hawaii real estate questions.  Most of them have been attracted to the advertised lure of "cheap Hawaii real estate", and that usually means the Puna district of the Big Island (Hawaii Island).

There are a number of reasons that (some) Puna land is cheap.  For example, isolated parts of the Big Island still lack electricity, water, and sewage utilities.  You live from photovoltaic panels, propane tanks, generators, and water catchment tanks.  It works great until it's too cloudy/rainy or there's a drought, and then the utility costs get expensive.  Frankly I'm still a little confused on how a septic system with a leach field works when it has to be dug out of solid lava.  (Up until a couple of years ago, the EPA was still chasing down homeowners who refused to stop using cesspools.)  If I was going to buy cheap land on the Big Island, I'd be sure to rent in the area for at least six months to get familiar with the zoning and utility issues.

As rural as it may be, the Puna area offers some of Hawaii's most beautiful vistas.  The developed parts of Pahoa and Kapoho are even nicer, with some of the beach homes having shallow tidepool channels right up into their backyards.  Lava flows under the channels (deep underground, or at least that's the hope) so the water actually gets warmer as you go deeper.  The temperature in an eight-foot-deep channel rises from 80 degrees at the surface to nearly 90 degrees at the bottom.  I wonder how many children have been conceived in those Kapoho tidepools, but I digress.

I've mentioned that pesky "lava" word again, and it's all coming from Kilauea.  The volcano has been oozing lava continuously since 1983 (over 30 years!) and shows no sign of stopping.  (In the 1990s, my spouse and I drove on Puna roads and laid on beaches that are now under six feet of lava.)  If anything, this year Kilauea has been seeking new outlets.  The latest is on the east ridge of the volcano, and the flow is actually moving northeast toward Pahoa.  The town itself is not threatened, but one of the outlying neighborhoods is already nervously considering their evacuation plan.

Here's a recent newspaper story:
http://www.staradvertiser.com/news/breaking/20140906_Hawaii_residents_still_on_alert_as_lava_flow_slows.html?id=274231081

Here's the most recent USGS survey map of the homes... and the lava:
http://hvo.wr.usgs.gov/maps/uploads/image-109.jpg

Homeowner's insurance?  Well, on the Big Island there are both tsunami zones and lava zones.  Good luck.  Did I mention the 2006 earthquake which caused property damage on the Big Island, and the mild 2014 temblor?  What about this summer's Hurricane Iselle, the only hurricane in recorded human history to run straight into the Big Island-- right on top of Puna?

USAA has not insured Hawaii homeowners during this millennium.  They'll insure first-time homebuyers, but their premiums seem ridiculously high until you consider their exposure to Hawaii's "black swan" natural disasters.  If one of America's strongest property insurance companies fears to tread in these islands, even with ridiculously high premiums, then there just might be a reason for it.  Which, considering that a natural disaster happens every decade or two, is not so "black swan" after all.

Don't get me wrong-- there's plenty of expensive Hawaii real estate around here, and even some moderately-priced real estate (if you know where to look and can contribute sweat equity).  But be very cautious with the cheap stuff. 

I'll just leave these keywords here for readers who are searching for cheap Hawaii real estate.  Hopefully they also search for the keywords lava, tsunami, hurricane, and earthquake...

arebelspy

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Good to know, Nords.

Another great example of "If something seems too good to be true..."
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Johnny Aloha

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Don't forget about the allure of low priced condos in the state, and especially on Oahu. 

The reason some condos are priced very low ($80-$120k) is because they can be lease-hold, rather than fee simple.  Put simply, this means you own the building but not the land underneath, which requires and additional rental payment.  The land lease terms are generally long term, but one might come across a listing that only has a few years left on the lease.

As the lease end date draws closer, the value of the condo tends to decrease.  Sometimes dramatically.  There might be options to purchase the lease, or extend it, but this is typically negotiated through an HOA.

The median fee simple condo price on Oahu is around $330k right now.

Another example of "too good to be true"...

clarkfan1979

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One of my friends from high school bought 2-3 acres in the area you are talking about. He is an artist and carpenter and creating somewhat of a sustainability vacation retreat. He is building a series of huts, an outdoor solar shower from collected rain water and 6-8 garden beds for vegetables. I'm not sure what he is doing about plumbing. It is somewhat of an art project because the living grounds are supposed to be very low carbon impact. He gives tours of the lava flow for extra cash. I told him that when the shower is finished I will be there. Hopefully that will happen within the next 6-12 months.   

Nords

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In the last seven weeks, the situation has turned serious and made national news.

Here's a rare set of overhead shots by a local photographer who obtained Civil Defense permission to overfly the lava flow in a helicopter.  (Pahoa is also filling up with visitors and drones.)  In an ironic twist of small-island syndrome, Marco Garcia is the same photographer who did my photo shoot for a USAA Magazine article.  He's also well-known for living on Kailua Beach for several days in 2008 to catch a casual photo of then-Senator Obama walking with his daughters on the sand.  The Secret Service was not happy, but they were not fast enough.

In one of these shots you can see an excavator next to the lava.  One homeowner has been digging a 20-foot-wide trench with a seven-foot-tall berm around his property to divert the lava flow.  This is controversial for two reasons:  Civil Defense says it just doesn't work (the lava fills in and keeps on going) and the operator may damage adjacent property in the process.  The other reason:  native Hawaiian belief says that Madame Pele is directing the lave flow for a reason, and he's messing with the wrong version of Mother Nature.

http://blogs.reuters.com/photographers-blog/2014/10/31/lava-a-painfully-slow-death/

Roland of Gilead

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So how long is it before you can build on top of a lava flow?  Years?  Decades? Centuries?

gimp

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Diverting lava has historically been a fool's errand, even with government resources. Sucks, of course.

Nords

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So how long is it before you can build on top of a lava flow?  Years?  Decades? Centuries?
Would you like an extended warranty with that?

Kapoho Beach (east/southeast of Pahoa) has several communities on top of a 1960s lava flow.  One area was built in the 1980s by digging extensive tidepool channels (6-10 feet deep, 30-40 feet wide) into the lava field to bring the seawater from the surf all the way around the homes so that everyone's backyard has a tidepool.  (A tremendous amount of topsoil was also trucked in to provide for lawns and coconut trees.)  Honu, tako, moray, and tropical fish frolic in the channels, and it's a magical place for the kids to snorkel while you're running the grill on the back lanai.  Sounds great, right?

The bonus with those channels is that the lava is still flowing deep (we hope) underground and creates an impressive thermal gradient.  Water temperatures at the surface of the channel are 75-80 degrees F, but by the time you snorkel down to the bottom it's over 90 degrees F and uncomfortably warm.  You can also see hotter water plumes rising from rocky clefts, although (so far) there's no sulfur-dioxide-tainted gas bubbling up with it.  As far as we can tell without a pH meter.

So maybe it's at least 20-30 years before people will be ready to build again.  Keep in mind that Kilauea has been erupting continuously since early 1983-- nearly 32 years. 

I guess people could build as long as they're confident that there won't be another lava flow into their backyards before construction is finished...

Roland of Gilead

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I guess what I meant and what I am curious about is what happens to your property when it is inundated by a lava flow?   Can you just wait a decade and then rebuild on top  of the flow (sounds like maybe yes after a few decades).

I wonder if Hawaii would cut you a tax break on the property during the period while it is cooling :-)