Warning signs: Troubled golf communities show their flaws

    Golf Digest/Index is just out with a short piece about troubled golf communities, including the huge headache called Yellowstone Club in Montana, which declared bankruptcy in November.  Yellowstone features a private ski area and Tom Weiskopf golf course that plays at elevations up to 8,000 feet.  The club's promise began to unravel, as such empires sometimes do, during the divorce proceedings of its co-owners.  The complicated case of Yellowstone is now in the hands of the courts.
    The thin air at Yellowstone can add as much as 50 yards to well-struck tee shots but Yellowstone has not added much to the expectations of its elite residents, many of them recognizable names, like Bill Gates, Dan Quayle, Greg Lemond and Jack Kemp, who dropped deposits of $1.5 million on the promise of an ultra-private, ultra-luxe lifestyle.  Such a rarified lifestyle may be beyond the grasp of most of us, but lessons learned in high-end bankrupt communities can be applied even to purchasing a $300,000 property in a Carolinas golf community.  Golf Digest/Index includes some obvious ones, including:  Sales appear to have stopped dead before ¾ of the community properties are sold; the golf club has stopped charging for new memberships; construction has stopped on the promised amenities; and the neighborhoods and golf course have started to look a little rundown.
    In the current environment, there is no reason for a buyer to take a chance on a community that has not sold all or almost all of its properties.  There are just too many bargains in re-sale properties throughout the southern U.S. to take a chance on one that has not reached its point of maturity.  I have seen lots with good views of the golf course for well under $100,000 in communities that are well managed (by the residents) and clubs that are well maintained and reasonably priced (again, by the resident members).  Members who own property in the community have a much more vested interest in the long-term health of the club and community than do developers who are fighting for every last nickel, and for their survival.  Prices in unproven communities cannot be so low as to justify the extra risks.  
    If the price of a lot or home in an in-development community seems too good to be true, it very likely is.