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Thursday, September 9, 2010

High times for low-priced golf properties

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        I am headed to The Manor golf resort in rural Virginia next week to watch a two-day college golf tournament hosted by Hampden-Sydney College.  Back in the heyday of planned community development, which is to say before the housing market became so overheated that it took only a few matches like Countrywide Financial’s greedy lending practices and Lehman Brothers’ bankruptcy to send everything into flames, The Manor seemed like a no-lose proposition to its developers and the banks that backed them.  Today, however, the story is too familiar:  Unable to sell enough property or to appeal to enough cash-strapped vacationers, the Manor's developers have gone bankrupt and those who remain -– bankers, other local investors, property owners, the young couple recruited just last year to open the upscale restaurant on site -- are left to sort things out.

        These disasters, though, spell opportunity for shrewd businesspeople whose deep pockets have survived the recession.  It is always instructive to remember that some people became rich -– or maybe the right term is “richer” –- during the Great Depression by

It is instructive to remember that even during the Great Depression, some people made money by buying properties on the cheap.

buying up properties at the deepest discounts.  There is always money to fill the vacuum when prices go low enough.  At the Federal Club community outside Richmond, VA, for example, a local millionaire has purchased the golf course and other amenities and the surrounding land for a little over $2 million, the total of what three homes on the property cost just three years ago.  Local news reports indicate he is more interested in burnishing the club’s operations than in making a big profit on the land; this may mean that local builders will step in, buy the lots on the cheap and build reasonably priced homes.  Anyone thinking of moving to the Richmond area might want to keep this in mind. (I am playing golf there in two weeks and hope to speak with the new owners.  I will report back here.)

        As we have reported in this space, John McConnell, a software millionaire, has taken a slightly different approach to the deep discounts in the market.  He has bought up six excellent private golf clubs in recent years in the Carolinas and transformed them into his own private “golf trail,” providing club members with a variety of golfing experiences for one membership fee.  All these clubs, especially Raleigh Country Club,

Consider calling the developer personally to cross-examine him about his financial backing.  In the current environment, he is likely to take your call.

have great “bones” with infrastructure like clubhouses and other amenities in place.  In some cases, like at The Reserve in Pawleys Island, adjacent homeowners could not be happier with McConnell and his deep pockets as the steward of the golf course they depend on to prop up their house values.  McConnell has shown zero interest in purchasing the properties adjacent to his courses, even if they were available, although his Musgrove Mill course in rural South Carolina offers some on-site lodges for members who visit.

        Rich investors are not the only ones who benefit from the tenuous nature of golf clubs.  Those of us who are ready to make the leap into a retirement living situation that involves golf will find that, with a little appetite for risk, we will pay prices for land and existing homes on golf courses that are dramatically lower than just a few years ago.  Risk, of course, is directly related to the perception of the community’s owner and his financial resources.  You can mitigate the risk by doing your homework, looking at the owner’s history and maybe even calling him or her personally (in this market, they are likely to take your call).  Or contact me, and I will call him.

        I will have more to say about financial security in golf communities in the September issue of our free newsletter, Home On The Course, which will be ready within the week.  Sign up by clicking the box at the top of this column.


Musgrove Mill is one of six private golf clubs purchased in the last few years by Raleigh businessman John McConnell.

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Larry Gavrich

This blog was conceived and is published by me, Larry Gavrich, a former corporate communications executive who founded HomeOnTheCourse, LLC, in 2005.  Our firm advises baby boomers and others seeking a lifestyle in which golf is a major component.  My wife Connie and I own a home in Connecticut (not on a golf course) and a condo at Pawleys Plantation in Pawleys Island, SC, on a Jack Nicklaus layout.  We began our search for our home on the course more than 15 years ago, and the challenges of the search inspired me to research golf communities and write objective reviews of them.