Asked and answered: Choosing the right golf community for you

St. James Plantation near Southport, NC, features four golf courses (The Reserve by Nicklaus Design is pictured) and home site prices that begin in the low $100s.

    In the current economy, investing in anything seems something like that game at the state fair where you toss ping pong balls at a bunch of milk bottles and hope one drops.  In the wake of bailouts, bank stock prices and Madoff, even "safe" investments don't seem quite the sure things they once were.  But one thing we can safely about real estate is that prices will stabilize and trend upward again; it is just a matter of when.
    I have been looking at golf-related real estate for dozens of years and have operated the HomeOnTheCourse advisory service for five years.  In that time, I have worked with couples to help find them the golf community that best suited their lifestyles and golf game.  Along the way, I have encountered many important questions about the golf community market.  Here are a few questions -- and my responses -- that seem particularly relevant in the current market.

Q.    Is now a good time to invest in property in a golf community?

A.    It depends of course on personal circumstances.  If you have equity in your primary home, are retired or about to retire, and have planned to move to a warmer climate, there is no reason to wait for the real estate market to

recover or your home to increase in price.  Here's why:  First, you will be able to buy comparably more house for your money by selling north and buying south.  Prices in the south are still generally lower than similar northern properties.  Second, you will give yourself a cost of living "raise" by moving to a lower cost area below the Mason-Dixon Line.  Taxes and other aspects of COL are lower in the south.  Third, when the real estate market rebounds, prices in prime southern communities are likely to rise more quickly than those in your hometown (that great sucking sound will be your fellow Baby Boomers moving south).  Supply of homes in the north will increase, as will demand in the more temperate southern states.  Fourth, you cannot put a price tag on realizing your dream of a better life.  Some things are more important than saving a few dollars.

Q.    I am 10 years from retirement.  Should I consider buying now?

A.    Again, it depends on personal circumstances but one thing to consider is a hedge against price rises in warm weather areas by purchasing a home site now, while developers and over-extended private owners are hungry and prices are at their lowest in five years.  Last year I helped two customers find and purchase lots in Ocean Ridge Plantation (Sunset Beach, NC) and at the Governor's Club in Chapel Hill.  They don't expect to build a home for a few years but they were able to purchase nice home sites for excellent prices.  Just be careful about costs of ownership beyond the lot and the taxes on it (for example, some communities make golf membership mandatory at the time of purchase).

Q.    Should I buy a developer lot or a re-sale lot?

A.    You should buy the lot that best suits your vision for the home you will eventually build.  However, here are some rules of the road.  First, re-sale lots are generally lower priced than developer lots, although there are exceptions.  Developers do not like to lower their prices for fear of alienating other owners who paid more just a few months earlier.  However, those same developers are willing to add incentives to sweeten the deal, such as free or reduced-price golf membership or attractive financing terms.  Second, some community sales offices won't tell you about re-sale lots; their developers insist that they push the developer lots.  In many cases, you will need to engage a local real estate agent to inspect the re-sale lots; and in a few cases, developers make things difficult for the agents to show properties.  If a developer prevents you from seeing re-sale lots, move on to the next community.

Q.    How do I know if a development is stable?

A.  First, consider the developer's track record.  Has the organization lived up to its commitments to its property owners over a long period of time (at least more than a decade)?   Does the developer have strong financial backing?  Does the reality of their communities match the hype of their marketing materials?  (For this, contact residents of the community or check out online discussion forums to see if anyone is griping about the developer.)  Be wary of buying into any community where most or all of the amenities are not operational, or where a small percentage of homes have been built, especially if the community is at least a few years old.  That can be a strong signal that speculators own most of the properties and that they are likely to remain unimproved for a long time.  There are many stable communities to choose among; saving a few dollars to buy into one that is under-developed is risky.  One other suggestion:  Contact me.   I have excellent contacts in most areas of the southern U.S. and can help determine which communities are best suited for you, and which are best avoided.

Q.  Should I consider a vacation home instead of a lot, even if I won't relocate for some years?

A.  Some people do this, but don't expect to defray all the costs of the home by renting it.  If you rent the home a week at a time through a local or on-site rental office, you will pay fees up to 40% of the gross rentals (for maintenance, etc.).  The benefit is that you will have use of the home for up to 14 days a year (more if you are there to do some maintenance work, according to tax laws).  Even at just two weeks a year, you can get a taste of what it is like to live in the community and, over time, either assure yourselves you have made the right choice or determine that another community might suit you better.  Some couples, including one who purchased a home with my help in The Landings near Savannah, rent their home out on a long-term basis, which provides a more stable stream of rental income but prevents use of the home during the year.

Q.  Okay, let's say I identify a community with a nice golf course and all amenities in place.  What can I expect to pay for a lot or a home?

A.  Of course, that depends on what community, where it is located, the quality of the amenities, including the golf course, and many other factors.  Note below that the difference between a lot at, say, Reems Creek and The Cliffs at Walnut Cove, both featuring mountain views, is about $500,000.  The Cliffs, with amenities to beat the band, features seven private golf courses; Reems Creek features just one, and it is open to the public.  Since North Carolina includes mountain golf and coastal golf communities, I've listed a few examples from across the state.  The following are a sample of current listings for home sites in communities I have personally visited and can recommend, although they vary widely.  The prices generally reflect the lower end of the range in each community.  All properties feature a view of the golf course.  If you would like more information, please do not hesitate to contact me.

Coastal:

Brunswick Plantation, Calabash, acreage n/a, 27 holes (Willard Byrd) $94,900

St. James Plantation, Southport, 1/3 acre, 4 courses (P.B. Dye, Nicklaus Design, Tim Cate, Hale Irwin), $125,900

Albemarle Plantation, Hertford, ½ acre, Dan Maples golf, $135,000

Landfall, Wilmington, ¼ acre, 2 courses (Nicklaus & Dye), $175,000

Ocean Ridge Plantation, Sunset Beach, 1/3 acre, 4 golf courses (Byrd and Cate), $179,000

Porters Neck Plantation, Wilmington, acreage n/a, Fazio golf, $199,900

Mountain:

Reems Creek, Weaverville, 2/3 acre, Hawtree & Sons golf, $99,000

Laurel Ridge, Waynesville, ½ acre, Bob Cupp golf, $139,000

Champion Hills, Hendersonville, 1.6 acres, Fazio golf, $160,000

Cliffs at Walnut Cove, Asheville, 1¼ acres, Nicklaus golf, $595,000

Tomorrow:  Examples of homes for sale in North Carolna golf communities.