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2010 Newsletters

December 2010

 
    December 2010

        Happy Holidays

            & New Year

thumb_wreathondoor

May your blessings be many and your golf strokes few in 2011.  Best wishes for a happy and healthy new year.


 

Reader Feedback

     We want to make this newsletter as useful as possible for you. If you have comments, suggestions or observations about the newsletter, please email them to: This email address is being protected from spambots. You need JavaScript enabled to view it..
      I promise to respond quickly. Thanks.
-- Larry Gavrich, Editor

Rediscovering Florida:  Warm winters and ridiculously low property prices may put shine back in the Sunshine State

      My grandparents moved permanently from the Bronx, NY, to a small home in Miami in the 1950s. Fifty-five years later, I have vague memories of that house, which had a canal running along the back edge of the small property.  (I caught my first fish there, an eel.)  My late parents spent three months of each winter in the 1970s and ‘80s in a condo they had purchased in Lauderdale Lakes.  So too did virtually all my friends’ parents from New Jersey, where I grew up.  The attraction of “Flahda” has always been its warm winter days, its ocean and beaches, although my parents never spent a single day on the sand in the 20 years they wintered in the Sunshine State (they preferred lolling around the pool with friends in their condo complex).
      For half a century, Florida grew like crazy -– emphasis on “crazy” since many besotted town planners mismanaged the explosive growth.  In the years from 2000 to 2006 alone, the state’s population grew by almost 400,000 annually, according to a University of Florida study.  Yet a host of factors caused a reversal of fortune for the state, culminating in a net population decrease in 2008, the first in more than 60 years.  The threats of hurricanes, increases in property taxes, insurance rate increases in the wake of Katrina and other storms, congested roadways, and an infrastructure that could not keep up with the population explosion all were factors in Florida hitting the skids.  What goes up must come down, and price charts for Florida real estate, especially Miami condos, for the last decade look like an inverted ‘V’ -– quick up and quick down.  
     Retiring northerners still covet warm winters, but in recent years, the comparably lower costs of real estate and taxes in Georgia and the Carolinas have caught the eye of snowbirds and permanent retirees.  A few cold days on Hilton Head or the occasional dusting of snow in Asheville are more than made up by a lower cost of living and fewer threats.  The “halfbacks” leaving Florida, those who originally fled New York and other northern cities and now are relocating halfway back, have been targeting North Carolina especially.  During my visit to Asheville a couple of summers ago, it seemed as if every other vehicle had a Florida license plate on it.  And real estate agents from Norfolk to Jacksonville tell me customers from Florida are as numerous as those from New England.

The Case for Florida

Real estate price drops of as much as 80% off peak are too much to ignore.

     Over-speculation kills housing markets eventually.  Speculation in land and condos in Florida was as intense over the last decade as it was in Arizona and Las Vegas, the other poster children for real estate crashes.  No golf community was more symptomatic of the fever of speculation than The Conservatory at Hammock Beach, the former Bobby Ginn developed property whose lots originally sold for as much as $500,000.  After the Ginn company loan defaults, lenders dumped some of the properties for what was owed in taxes – in some cases, the low five figures.  The property owners association at the Conservatory recently made the reasoned decision to downscale plans for the community and its homes; houses in the $300s will now rise where million dollar homes had originally been planned.  Plans for the Fred Couples designed golf course have been shelved in favor of more modest amenties.
     Over more than a half century, the arc of the pendulum of Florida’s fortunes swung so far to the positive end that a swing the other way was inevitable.  No one could have anticipated just how wildly, and quickly, the pendulum would swing back, but overbuilding, over-speculation and a drop in real estate prices in Miami, Naples and elsewhere of as much as 80% signaled the end of Florida’s boom.  Yet although the threat of hurricanes and oil spills may scare some people away, memories tend to fade in the face of deeply discounted water-view properties.  Prices in Florida today are simply too low to ignore, and those looking for bargain properties in a warm weather climate are already looking to Florida again.  The “re-migration” will only intensify as the economy improves.
      Florida’s fortunes may be boosted for other reasons too.  Its economy could suffer a big shot in the arm once the nation sorts out an immigration policy.  According to some 2010 census data recently released, Hispanic youth accounted for all of the U.S. population growth since 2000 in the under-20 age group.  Hispanics now make up nearly 25% of that population, up from 17% just 10 years ago.  As I write this, the U.S. Congress has voted not to consider the so-called Dream Act, which would grant a path to citizenship for college age (and younger) currently illegal immigrants, as well as for those who serve in our armed forces.  Long a magnet for Cuban, Caribbean and Latino American Hispanic immigrants, Florida’s economy would benefit as much as any other state from an ending to the uncertain status of tens of thousands of its youngest citizens if and when the Congress settles the issue.

Golf, golf and more golf

Florida boasts more than 1,000 golf courses, more per square mile than any other southern state.

     Even with the closure of many hard-pressed golf courses over the last couple of years, Florida still offers more golf than any other state, and by a wide margin.  At the beginning of 2010, according to research conducted by the Golf Channel, Florida’s 1,044 courses outpaced the much larger California (940), New York (833) and Michigan (824).  Florida ranked 7th in the survey in terms of courses per square mile, trailing half a dozen northern states in that category.  (Florida has .016 golf courses per square mile, which means you don’t have to drive far to find a one.)  But in January, would you rather play in Florida or Rhode Island, #1 on the per-square-mile rankings?  And because the growing season in most parts of Florida is virtually year round, conditions are certainly better than in the rest of the country.
     Florida’s supporters also make a comparative case by citing that other southeastern states could, like the Sunshine State, fall victim to their own attractiveness.  For example, many Floridians fleeing the state complain about traffic problems on their clogged highways; but anyone trading Naples for, say, Bluffton, SC, may be surprised to wait, as I did earlier this year, for more than five minutes to make a simple left turn onto Highway 278, just off Hilton Head Island.  And as more and more northerners and Floridians flock to the mountains of North Carolina, traffic is already building there.  One wonders how road engineers will figure out how to expand the two-lanes built into the sides of mountains and what western Carolina environmentalists -– a passionate and vociferous bunch -– will have to say about new roads being cut through unspoiled land. (Rockslides are common in some of the area’s golf communities.)
     The latest unemployment figures and the recently passed tax bill the U.S. Congress passed may spur a faster turnaround in the nation’s overall economy.  This will encourage baby boomers with the optimism and confidence to come off the sidelines, sell their primary homes, and follow their deferred dreams to retire in the southern U.S.  A drop in unemployment numbers and a little more investment by corporations will inspire the employed with enough confidence to consider the purchase of a vacation home.  Florida has always had warm winter weather going for it, but now it has added bargain basement real estate prices to its list of charms.  Although the state still faces its share of issues, the sun will shine again on the Sunshine State and on those retirees and second-home bargain hunters who do their research and scarf up the best Florida properties.

 

 

 
 

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© 2010 Golf Community Reviews
 
    December 2010

        Happy Holidays

            & New Year

thumb_wreathondoor

May your blessings be many and your golf strokes few in 2011.  Best wishes for a happy and healthy new year.


 

Reader Feedback

     We want to make this newsletter as useful as possible for you. If you have comments, suggestions or observations about the newsletter, please email them to: This email address is being protected from spambots. You need JavaScript enabled to view it..
      I promise to respond quickly. Thanks.
-- Larry Gavrich, Editor

Rediscovering Florida:  Warm winters and ridiculously low property prices may put shine back in the Sunshine State

      My grandparents moved permanently from the Bronx, NY, to a small home in Miami in the 1950s. Fifty-five years later, I have vague memories of that house, which had a canal running along the back edge of the small property.  (I caught my first fish there, an eel.)  My late parents spent three months of each winter in the 1970s and ‘80s in a condo they had purchased in Lauderdale Lakes.  So too did virtually all my friends’ parents from New Jersey, where I grew up.  The attraction of “Flahda” has always been its warm winter days, its ocean and beaches, although my parents never spent a single day on the sand in the 20 years they wintered in the Sunshine State (they preferred lolling around the pool with friends in their condo complex).
      For half a century, Florida grew like crazy -– emphasis on “crazy” since many besotted town planners mismanaged the explosive growth.  In the years from 2000 to 2006 alone, the state’s population grew by almost 400,000 annually, according to a University of Florida study.  Yet a host of factors caused a reversal of fortune for the state, culminating in a net population decrease in 2008, the first in more than 60 years.  The threats of hurricanes, increases in property taxes, insurance rate increases in the wake of Katrina and other storms, congested roadways, and an infrastructure that could not keep up with the population explosion all were factors in Florida hitting the skids.  What goes up must come down, and price charts for Florida real estate, especially Miami condos, for the last decade look like an inverted ‘V’ -– quick up and quick down.  
     Retiring northerners still covet warm winters, but in recent years, the comparably lower costs of real estate and taxes in Georgia and the Carolinas have caught the eye of snowbirds and permanent retirees.  A few cold days on Hilton Head or the occasional dusting of snow in Asheville are more than made up by a lower cost of living and fewer threats.  The “halfbacks” leaving Florida, those who originally fled New York and other northern cities and now are relocating halfway back, have been targeting North Carolina especially.  During my visit to Asheville a couple of summers ago, it seemed as if every other vehicle had a Florida license plate on it.  And real estate agents from Norfolk to Jacksonville tell me customers from Florida are as numerous as those from New England.

The Case for Florida

Real estate price drops of as much as 80% off peak are too much to ignore.

     Over-speculation kills housing markets eventually.  Speculation in land and condos in Florida was as intense over the last decade as it was in Arizona and Las Vegas, the other poster children for real estate crashes.  No golf community was more symptomatic of the fever of speculation than The Conservatory at Hammock Beach, the former Bobby Ginn developed property whose lots originally sold for as much as $500,000.  After the Ginn company loan defaults, lenders dumped some of the properties for what was owed in taxes – in some cases, the low five figures.  The property owners association at the Conservatory recently made the reasoned decision to downscale plans for the community and its homes; houses in the $300s will now rise where million dollar homes had originally been planned.  Plans for the Fred Couples designed golf course have been shelved in favor of more modest amenties.
     Over more than a half century, the arc of the pendulum of Florida’s fortunes swung so far to the positive end that a swing the other way was inevitable.  No one could have anticipated just how wildly, and quickly, the pendulum would swing back, but overbuilding, over-speculation and a drop in real estate prices in Miami, Naples and elsewhere of as much as 80% signaled the end of Florida’s boom.  Yet although the threat of hurricanes and oil spills may scare some people away, memories tend to fade in the face of deeply discounted water-view properties.  Prices in Florida today are simply too low to ignore, and those looking for bargain properties in a warm weather climate are already looking to Florida again.  The “re-migration” will only intensify as the economy improves.
      Florida’s fortunes may be boosted for other reasons too.  Its economy could suffer a big shot in the arm once the nation sorts out an immigration policy.  According to some 2010 census data recently released, Hispanic youth accounted for all of the U.S. population growth since 2000 in the under-20 age group.  Hispanics now make up nearly 25% of that population, up from 17% just 10 years ago.  As I write this, the U.S. Congress has voted not to consider the so-called Dream Act, which would grant a path to citizenship for college age (and younger) currently illegal immigrants, as well as for those who serve in our armed forces.  Long a magnet for Cuban, Caribbean and Latino American Hispanic immigrants, Florida’s economy would benefit as much as any other state from an ending to the uncertain status of tens of thousands of its youngest citizens if and when the Congress settles the issue.

Golf, golf and more golf

Florida boasts more than 1,000 golf courses, more per square mile than any other southern state.

     Even with the closure of many hard-pressed golf courses over the last couple of years, Florida still offers more golf than any other state, and by a wide margin.  At the beginning of 2010, according to research conducted by the Golf Channel, Florida’s 1,044 courses outpaced the much larger California (940), New York (833) and Michigan (824).  Florida ranked 7th in the survey in terms of courses per square mile, trailing half a dozen northern states in that category.  (Florida has .016 golf courses per square mile, which means you don’t have to drive far to find a one.)  But in January, would you rather play in Florida or Rhode Island, #1 on the per-square-mile rankings?  And because the growing season in most parts of Florida is virtually year round, conditions are certainly better than in the rest of the country.
     Florida’s supporters also make a comparative case by citing that other southeastern states could, like the Sunshine State, fall victim to their own attractiveness.  For example, many Floridians fleeing the state complain about traffic problems on their clogged highways; but anyone trading Naples for, say, Bluffton, SC, may be surprised to wait, as I did earlier this year, for more than five minutes to make a simple left turn onto Highway 278, just off Hilton Head Island.  And as more and more northerners and Floridians flock to the mountains of North Carolina, traffic is already building there.  One wonders how road engineers will figure out how to expand the two-lanes built into the sides of mountains and what western Carolina environmentalists -– a passionate and vociferous bunch -– will have to say about new roads being cut through unspoiled land. (Rockslides are common in some of the area’s golf communities.)
     The latest unemployment figures and the recently passed tax bill the U.S. Congress passed may spur a faster turnaround in the nation’s overall economy.  This will encourage baby boomers with the optimism and confidence to come off the sidelines, sell their primary homes, and follow their deferred dreams to retire in the southern U.S.  A drop in unemployment numbers and a little more investment by corporations will inspire the employed with enough confidence to consider the purchase of a vacation home.  Florida has always had warm winter weather going for it, but now it has added bargain basement real estate prices to its list of charms.  Although the state still faces its share of issues, the sun will shine again on the Sunshine State and on those retirees and second-home bargain hunters who do their research and scarf up the best Florida properties.

 

 

 
 

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© 2010 Golf Community Reviews
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December 2010

November 2010

 
    November 2010

Dataw Island celebrates its Silver Anniversary 

thumb_DSC_0047

     Dataw Island, the Low Country golf community about 20 minutes from quintessential southern town, Beaufort, SC, celebrated its 25th anniversary on November 13.  The community features two excellent golf courses by Arthur Hills and Tom Fazio.  Included in the celebration were 25-year awards presented to residents and employees.
      Dataw Island features mostly resale homes that range in price from two-bedroom condos around $200,000 to estates into the millions, with plenty of choices in between.  The sweet spot is in the mid-six figures.  If you are interested in a visit to Dataw Island or in additional information, contact me and I will be happy to get it to you or help you connect with a local real estate professional.

 

Tough to Digest
     With just 42 new public and private courses opened in the U.S. since mid 2009, it seemed silly for Golf Digest to assign its panel of 950 golfers to go out and assess the best new courses.  Instead, the venerable magazine assigned one writer, Ron Whitten, to the task.  In his survey of the best, Whitten cited a couple we played last year, including Ballyhack in Roanoke, VA, and Cape Fear National in Leland, NC, near Wilmington, two communities (and courses) that could not be more different. 
      Brunswick Forest, which surrounds Cape Fear National is master planned down to most exacting detail and backed by the deep pockets of Lord Baltimore Capital.  The community, which sprawls across an essentially flat piece of coastal lowland, is reported to be the fastest selling golf development on the east coast.  The land surrounding Ballyhack, on the other hand, is hilly, as is the course, and provides dramatic views of the Lester George layout.  Land sales have been a little slow but Roanoke could very well suit retirees looking for a small but interesting city in the beautiful Shenandoah Mountains.  Contact me if you would like more information on either of these excellent, but different, golf courses and communities.

 

Educated missteps
My only question is why isn't this a criminal case rather than a civil case. Someone needs to go to Jail for a long, long, long time. –- comment posted at GoToby.com
      Tempted though you may be to think the above was directed toward some dealer in credit default swaps or former Countrywide Financial CEO Angelo Mozillo, who got off with a fine rather than jail sentence for his alleged complicity in the fraudulent mortgage loan scandals, the commenter was actually referring to developer Bobby Ginn and his partners.  Two of Ginn’s communities, Quail West and Tesoro, are in bankruptcy proceedings in the wake of Ginn’s default on a mega-loan from Credit Suisse.
      Ginn and his lawyers recently tried to block discovery of documents relating to the Credit Suisse loan.  The juiciest part of the allegations by the trustee trying to get some homeowners’ money back is that Ginn and company saw the market tanking before it was common knowledge and stripped equity from their communities as well as pocketed almost $150 million from the proceeds of the loan.  Another allegation is that a Ginn partner, Lubert-Adler, paid off investors with the supposedly ill-gotten gains.  The list of pension funds, which are now co-defendants in the trustee’s suit, reads like U.S. News and World Report’s top colleges in America, including Harvard, Princeton, Johns Hopkins, Duke, Vanderbilt, Washington University, University of Virginia, Yale and Williams College, perennially the best liberal arts school in USN&WR’s rankings.
 

Reader Feedback

      We want to make this newsletter as useful as possible for you. If you have comments, suggestions or observations about the newsletter, please email them to: This email address is being protected from spambots. You need JavaScript enabled to view it..
      I promise to respond quickly. Thanks.
-- Larry Gavrich, Editor

 

Rites of Initiation:  Country clubs cut their joining fees, but will that stop the bleeding?

      In the new movie 127 Hours, climber Aron Ralston is pinned between rocks, facing starvation and forced to cut off his arm to save his life.  That is an apt metaphor for what many golf clubs face in the current market, offering deep discounts to attract a shrinking universe of new dues-paying members.  These clubs may survive by severing their initiation fees and cutting their dues, but whether that will stop the financial bleeding is a source of some debate in the industry.    
     The traditional business model for country club membership has been done in by a perfect storm of demographics and market dynamics.  We won’t replay here the legacy of credit default swaps, lack of legislative oversight and bogus mortgage loans, but suffice to say that after the Lehman Brothers bankruptcy set off a wave of badness in the stock and credit markets, that giant sucking sound country clubs heard was members leaving in substantial numbers.  Discretionary spending is always the first to go in a recession, and golf club membership is among the most discretionary of personal expenditures.

When the going gets tough, clubs slash prices

The membership rolls at country clubs are graying unnaturally, and the path to refreshing the breed is uncertain.

      Today, the stock market has returned to pre-Lehman levels, but for many clubs, their members haven’t.  Some of this reticence to rejoin may be reaction to how much money was lost after 2008, angst about the uncertain future or simply that these former club members have found other ways to spend five or six hours on a Saturday or Sunday.  Regardless, membership rolls at country clubs are graying unnaturally, and the path to refreshing the breed is uncertain.  Today’s 30-somethings do not connect socially the way their parents did; I actually liked spending four or five hours face to face with fellow golfers when I was in my 30s and 40s, but my college-age children and their friends seem quite content connecting electronically most of the time, even if their friends are across town (or across the room).  Private golf clubs will need to find a way to overcome these new modes of communication and social interaction in the coming years to entice new, younger members.
     Veteran golf club managers, however, generally don’t understand the new social media, and some younger golf pros and general managers lack the creative temperament necessary to attract the relatively few younger members who actually are interested enough in golf to commit to a club.  Most of today’s golf operators just weren’t trained to invent the new solutions necessary to address the uniquely 21st Century problems they face.  They have reacted to the market crisis in predictable fashion -– by slashing initiation fees to salvage their streams of dues income, the lifeblood of private clubs.  Across the nation, six-figure initiation fees are now five figures, and five figures are now four or lower.  In many cases, initiation fees have been waived altogether.

Give away the razor, cut the price of the blades

One Connecticut club waived its initiation fee in 2010 and gained 65 new members.

      That is what the board of the private Farmington Woods did in 2010, putting in place a kind of Gillette Strategy:  Give away membership (the razor) in order to generate dues (the blades).  Opened in 1970, Farmington Woods, about 20 minutes west of Hartford, CT, was one of the first planned golf and residential communities in the nation, and since then it has been a magnet for retirees and empty nesters who previously lived elsewhere in the area. Yet despite a relatively captive audience, Farmington Woods began to bleed members in the middle of the decade.
     This year it decided to attack the problem head on; the club waived all initiation fees and, by the end of the season, had attracted an impressive 65 new members.  Director of Golf Ed Jarrett says the complimentary initiation fees caused the new members to figure they could have private club privileges for no more than their cumulative green fees at local public courses.
     “We advertise that we are ‘The Best Private Club Value in the [Farmington] Valley,’” says Jarrett.  Designed by Desmond Muirhead, the hilly 18 holes at Farmington Woods thread their way through a community of mostly condominiums.  The average age of the club’s members is 57, which Jarrett says did not change after the current promotion.  
     “We attracted a bunch of junior members,” he says, although plenty of local seniors signed up as well.  Substantially reliant on its older members for ongoing revenue, Farmington Woods’ monthly charges of $317 are discounted for members above the age of 69; there are currently 11 in this category.  Seventy year olds, for example, receive a 5% discount, and the three current members over the age of 85 receive a 20% discount. (Note:  Although dues seem low compared with courses in the southeast, keep in mind that members of northeast clubs continue to pay during the five months or so when their golf courses are closed.)

 

You're not getting older; you're getting a discount

     At Reynolds Plantation, the lush community abutting Lake Oconee in upstate Georgia, a new “Legacy” program provides seniors age 72 and older with a deep discount on dues, just $140 per month compared with other levels as high as $664.  However, those participating in the Legacy program still are required to pay the regular initiation fee, which ranges from $30,000 to $110,000, depending on how many of Reynolds’ 6 ½ top-designer courses they opt to play without paying green fees.
     Glenmore Country Club near Charlottesville, VA, has one of the lowest-age senior programs we’ve encountered, with eligibility beginning at age 67.  Seniors receive a 25% discount on initiation fees (the regular full-family golf fee is $20,000), with their monthly dues reduced by about 16%.  The only “sacrifice” the seniors must make is that they can’t play on weekend mornings, but that is not an issue for retirees, who generally prefer the less hectic weekdays anyway.
     As popular as the senior discounts appear to be, some golf community developers take as dim a view of the off-pricing as Tea Partyers do of deficits.
     “Senior programs can be the death of a course,” says Ken Kirkman, an industry veteran who is developing Carolina Colours and its newly opened Bill Love course in New Bern, NC.  “I know of one club, when I last looked, with 74% of its members paying senior dues (at about a 60% discount), and the club was dying, its condition deteriorating and, therefore, its ability to attract new and younger members non-existent.”  Kirkman contends that seniors are going to quit anyway once their rounds (and health) decrease, and discounting will not prevent that.  Carolina Colours charges an initiation fee of $10,000 to resident and non-resident members regardless of age, 75% of which is refundable after resignation from the club.  The main attraction for Carolina Colours members is that dues are among the most reasonable in the south, just $170 per month for full-family golf.  (Note:  Carolina Colours does not offer meal service for its members but, therefore, neither does it demand a food minimum.)   

Youth will be served

“Senior programs can be the death of a course,” says one developer, citing a club with ¾ of its members receiving 60% discounts.

     Younger members, of course, are the Holy Grail for country clubs, and an ever-increasing number of clubs are courting aggressively that relatively small cluster of potential members.  The upscale Governors Club in Chapel Hill, NC, for example, recently introduced a program to entice young families to the community and the golf club.  If you are under 40, your initiation fee is assessed at $18,000, compared with $33,000 for other members.  The customary dues of $700 per month are lowered for younger members and are a function of age; the younger you are, the less you pay -- until you reach the ripe young age of 40.  By that time, the club hopes you will be thoroughly invested in the life of Governors Club, figuratively and literally speaking.
     Like Carolina Colours and Governors Club, Wilmington, NC’s Country Club of Landfall is resisting the temptation to reduce prices for seniors by, instead, targeting the younger crowd.  The club recently introduced a full membership “junior program” aimed at members between 20 and 39.  New members under 30 pay no initiation fee; when they turn 30, they pay a $30,000 non-refundable fee in equal installments over 10 years, with no interest charges.  Landfall is counting on that pro-rated fee of $3,000 per year for 45 holes of Jack Nicklaus and Pete Dye golf to appeal to Wilmington’s young professionals.
     That $30,000 fee at Landfall represents almost half off the club’s equity membership of $55,000.  Such reductions are typical of what is happening around the country.  This “buyer’s” market is saturated with country clubs, and competition for the smaller population of potential new members is driving initiation fees lower and lower.  That certainly is good news for new members, at least in the short term.  But whether or not the hard-pressed country clubs choose to give away the razors to sell the blades, survival for all but the most creative clubs is bound to be a close shave.  

 

 
 

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© 2010 Golf Community Reviews
 
    November 2010

Dataw Island celebrates its Silver Anniversary 

thumb_DSC_0047

     Dataw Island, the Low Country golf community about 20 minutes from quintessential southern town, Beaufort, SC, celebrated its 25th anniversary on November 13.  The community features two excellent golf courses by Arthur Hills and Tom Fazio.  Included in the celebration were 25-year awards presented to residents and employees.
      Dataw Island features mostly resale homes that range in price from two-bedroom condos around $200,000 to estates into the millions, with plenty of choices in between.  The sweet spot is in the mid-six figures.  If you are interested in a visit to Dataw Island or in additional information, contact me and I will be happy to get it to you or help you connect with a local real estate professional.

 

Tough to Digest
     With just 42 new public and private courses opened in the U.S. since mid 2009, it seemed silly for Golf Digest to assign its panel of 950 golfers to go out and assess the best new courses.  Instead, the venerable magazine assigned one writer, Ron Whitten, to the task.  In his survey of the best, Whitten cited a couple we played last year, including Ballyhack in Roanoke, VA, and Cape Fear National in Leland, NC, near Wilmington, two communities (and courses) that could not be more different. 
      Brunswick Forest, which surrounds Cape Fear National is master planned down to most exacting detail and backed by the deep pockets of Lord Baltimore Capital.  The community, which sprawls across an essentially flat piece of coastal lowland, is reported to be the fastest selling golf development on the east coast.  The land surrounding Ballyhack, on the other hand, is hilly, as is the course, and provides dramatic views of the Lester George layout.  Land sales have been a little slow but Roanoke could very well suit retirees looking for a small but interesting city in the beautiful Shenandoah Mountains.  Contact me if you would like more information on either of these excellent, but different, golf courses and communities.

 

Educated missteps
My only question is why isn't this a criminal case rather than a civil case. Someone needs to go to Jail for a long, long, long time. –- comment posted at GoToby.com
      Tempted though you may be to think the above was directed toward some dealer in credit default swaps or former Countrywide Financial CEO Angelo Mozillo, who got off with a fine rather than jail sentence for his alleged complicity in the fraudulent mortgage loan scandals, the commenter was actually referring to developer Bobby Ginn and his partners.  Two of Ginn’s communities, Quail West and Tesoro, are in bankruptcy proceedings in the wake of Ginn’s default on a mega-loan from Credit Suisse.
      Ginn and his lawyers recently tried to block discovery of documents relating to the Credit Suisse loan.  The juiciest part of the allegations by the trustee trying to get some homeowners’ money back is that Ginn and company saw the market tanking before it was common knowledge and stripped equity from their communities as well as pocketed almost $150 million from the proceeds of the loan.  Another allegation is that a Ginn partner, Lubert-Adler, paid off investors with the supposedly ill-gotten gains.  The list of pension funds, which are now co-defendants in the trustee’s suit, reads like U.S. News and World Report’s top colleges in America, including Harvard, Princeton, Johns Hopkins, Duke, Vanderbilt, Washington University, University of Virginia, Yale and Williams College, perennially the best liberal arts school in USN&WR’s rankings.
 

Reader Feedback

      We want to make this newsletter as useful as possible for you. If you have comments, suggestions or observations about the newsletter, please email them to: This email address is being protected from spambots. You need JavaScript enabled to view it..
      I promise to respond quickly. Thanks.
-- Larry Gavrich, Editor

 

Rites of Initiation:  Country clubs cut their joining fees, but will that stop the bleeding?

      In the new movie 127 Hours, climber Aron Ralston is pinned between rocks, facing starvation and forced to cut off his arm to save his life.  That is an apt metaphor for what many golf clubs face in the current market, offering deep discounts to attract a shrinking universe of new dues-paying members.  These clubs may survive by severing their initiation fees and cutting their dues, but whether that will stop the financial bleeding is a source of some debate in the industry.    
     The traditional business model for country club membership has been done in by a perfect storm of demographics and market dynamics.  We won’t replay here the legacy of credit default swaps, lack of legislative oversight and bogus mortgage loans, but suffice to say that after the Lehman Brothers bankruptcy set off a wave of badness in the stock and credit markets, that giant sucking sound country clubs heard was members leaving in substantial numbers.  Discretionary spending is always the first to go in a recession, and golf club membership is among the most discretionary of personal expenditures.

When the going gets tough, clubs slash prices

The membership rolls at country clubs are graying unnaturally, and the path to refreshing the breed is uncertain.

      Today, the stock market has returned to pre-Lehman levels, but for many clubs, their members haven’t.  Some of this reticence to rejoin may be reaction to how much money was lost after 2008, angst about the uncertain future or simply that these former club members have found other ways to spend five or six hours on a Saturday or Sunday.  Regardless, membership rolls at country clubs are graying unnaturally, and the path to refreshing the breed is uncertain.  Today’s 30-somethings do not connect socially the way their parents did; I actually liked spending four or five hours face to face with fellow golfers when I was in my 30s and 40s, but my college-age children and their friends seem quite content connecting electronically most of the time, even if their friends are across town (or across the room).  Private golf clubs will need to find a way to overcome these new modes of communication and social interaction in the coming years to entice new, younger members.
     Veteran golf club managers, however, generally don’t understand the new social media, and some younger golf pros and general managers lack the creative temperament necessary to attract the relatively few younger members who actually are interested enough in golf to commit to a club.  Most of today’s golf operators just weren’t trained to invent the new solutions necessary to address the uniquely 21st Century problems they face.  They have reacted to the market crisis in predictable fashion -– by slashing initiation fees to salvage their streams of dues income, the lifeblood of private clubs.  Across the nation, six-figure initiation fees are now five figures, and five figures are now four or lower.  In many cases, initiation fees have been waived altogether.

Give away the razor, cut the price of the blades

One Connecticut club waived its initiation fee in 2010 and gained 65 new members.

      That is what the board of the private Farmington Woods did in 2010, putting in place a kind of Gillette Strategy:  Give away membership (the razor) in order to generate dues (the blades).  Opened in 1970, Farmington Woods, about 20 minutes west of Hartford, CT, was one of the first planned golf and residential communities in the nation, and since then it has been a magnet for retirees and empty nesters who previously lived elsewhere in the area. Yet despite a relatively captive audience, Farmington Woods began to bleed members in the middle of the decade.
     This year it decided to attack the problem head on; the club waived all initiation fees and, by the end of the season, had attracted an impressive 65 new members.  Director of Golf Ed Jarrett says the complimentary initiation fees caused the new members to figure they could have private club privileges for no more than their cumulative green fees at local public courses.
     “We advertise that we are ‘The Best Private Club Value in the [Farmington] Valley,’” says Jarrett.  Designed by Desmond Muirhead, the hilly 18 holes at Farmington Woods thread their way through a community of mostly condominiums.  The average age of the club’s members is 57, which Jarrett says did not change after the current promotion.  
     “We attracted a bunch of junior members,” he says, although plenty of local seniors signed up as well.  Substantially reliant on its older members for ongoing revenue, Farmington Woods’ monthly charges of $317 are discounted for members above the age of 69; there are currently 11 in this category.  Seventy year olds, for example, receive a 5% discount, and the three current members over the age of 85 receive a 20% discount. (Note:  Although dues seem low compared with courses in the southeast, keep in mind that members of northeast clubs continue to pay during the five months or so when their golf courses are closed.)

 

You're not getting older; you're getting a discount

     At Reynolds Plantation, the lush community abutting Lake Oconee in upstate Georgia, a new “Legacy” program provides seniors age 72 and older with a deep discount on dues, just $140 per month compared with other levels as high as $664.  However, those participating in the Legacy program still are required to pay the regular initiation fee, which ranges from $30,000 to $110,000, depending on how many of Reynolds’ 6 ½ top-designer courses they opt to play without paying green fees.
     Glenmore Country Club near Charlottesville, VA, has one of the lowest-age senior programs we’ve encountered, with eligibility beginning at age 67.  Seniors receive a 25% discount on initiation fees (the regular full-family golf fee is $20,000), with their monthly dues reduced by about 16%.  The only “sacrifice” the seniors must make is that they can’t play on weekend mornings, but that is not an issue for retirees, who generally prefer the less hectic weekdays anyway.
     As popular as the senior discounts appear to be, some golf community developers take as dim a view of the off-pricing as Tea Partyers do of deficits.
     “Senior programs can be the death of a course,” says Ken Kirkman, an industry veteran who is developing Carolina Colours and its newly opened Bill Love course in New Bern, NC.  “I know of one club, when I last looked, with 74% of its members paying senior dues (at about a 60% discount), and the club was dying, its condition deteriorating and, therefore, its ability to attract new and younger members non-existent.”  Kirkman contends that seniors are going to quit anyway once their rounds (and health) decrease, and discounting will not prevent that.  Carolina Colours charges an initiation fee of $10,000 to resident and non-resident members regardless of age, 75% of which is refundable after resignation from the club.  The main attraction for Carolina Colours members is that dues are among the most reasonable in the south, just $170 per month for full-family golf.  (Note:  Carolina Colours does not offer meal service for its members but, therefore, neither does it demand a food minimum.)   

Youth will be served

“Senior programs can be the death of a course,” says one developer, citing a club with ¾ of its members receiving 60% discounts.

     Younger members, of course, are the Holy Grail for country clubs, and an ever-increasing number of clubs are courting aggressively that relatively small cluster of potential members.  The upscale Governors Club in Chapel Hill, NC, for example, recently introduced a program to entice young families to the community and the golf club.  If you are under 40, your initiation fee is assessed at $18,000, compared with $33,000 for other members.  The customary dues of $700 per month are lowered for younger members and are a function of age; the younger you are, the less you pay -- until you reach the ripe young age of 40.  By that time, the club hopes you will be thoroughly invested in the life of Governors Club, figuratively and literally speaking.
     Like Carolina Colours and Governors Club, Wilmington, NC’s Country Club of Landfall is resisting the temptation to reduce prices for seniors by, instead, targeting the younger crowd.  The club recently introduced a full membership “junior program” aimed at members between 20 and 39.  New members under 30 pay no initiation fee; when they turn 30, they pay a $30,000 non-refundable fee in equal installments over 10 years, with no interest charges.  Landfall is counting on that pro-rated fee of $3,000 per year for 45 holes of Jack Nicklaus and Pete Dye golf to appeal to Wilmington’s young professionals.
     That $30,000 fee at Landfall represents almost half off the club’s equity membership of $55,000.  Such reductions are typical of what is happening around the country.  This “buyer’s” market is saturated with country clubs, and competition for the smaller population of potential new members is driving initiation fees lower and lower.  That certainly is good news for new members, at least in the short term.  But whether or not the hard-pressed country clubs choose to give away the razors to sell the blades, survival for all but the most creative clubs is bound to be a close shave.  

 

 
 

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November 2010

October 2010

 
    October 2010

 

Homes for sale and rent

Desperate times call for desperate measures, and people who would rather sell their homes sometimes have to compromise by renting them (anything to generate a little needed income). This is an opportunity for potential buyers to kick the tires in a community before they commit the big bucks. Virtually every golf community has at least a small selection of homes for rent. Here are a few samples on the market today; in some cases the same home is available for rent or to purchase; in other examples, we have listed comparably sized and located homes for rent and sale.

If you would like more information on any of them, please contact me at This email address is being protected from spambots. You need JavaScript enabled to view it..


Glenmore - Kenswick, VA

5 BR, 3 ½ BA, 2-story,
4,200 square feet
Taxes $3,459 per year
List price: $549,000
Rental: $2,700 per mo.

thumb_Glenmore


River's Edge - Shallotte, NC

3 BR, 2 ½ BA, 2 story
2,300 square feet
List price: $349,900
Rental: $1,750 (6 month min.)

thumb_rivers-edge


Governors Club - Chapel Hill, NC

For rent:
3 BR, 2 ½ BA town home
3,266 square feet
$2,500 per month

Comparable for sale:
3 BR, 3 ½ BA town home
3,953 square feet
Listed at $519,000

 

Queen’s Harbour Golf & Yacht Club - Jacksonville, FL

For rent:
4 BR, 3 ½ BA single-family home
2,655 square feet
In-ground pool, 3-car garage
$3,200 per month

Comparable for sale:
4 BR, 4 1/2 BA single-family home
3,036 square feet
View of marsh
$485,000

 

Osprey Cove - St. Marys, GA

For rent:
3 BR, 2 BA ranch
2,000 square feet, 1/3 acre
$1,400 per month

Comparable for sale:
3 BR, 2 BA cottage style (new)
2,060 square feet, .23 acre
$239,800

 

Reader Feedback

We want to make this newsletter as useful as possible for you. If you have comments, suggestions or observations about the newsletter, please email them to: This email address is being protected from spambots. You need JavaScript enabled to view it..
I promise to respond quickly. Thanks.
-- Larry Gavrich, Editor

 

Assessing the risks in bargain-priced golf communities

One of the occupational hazards of visiting golf communities virtually every month of the year is that most of them -– the communities and, especially, their golf courses -– seem like bargains in this economy. Those that have survived the recession still are showing significant market value erosion as employment numbers remain low and the national political scene remains uncertain. Club fees are way down as well. I have been encountering more and more communities lately whose prices are so low and that have reasonable chances of survival that I think to myself, “How much lower could it go?” and “Maybe I should talk with Connie [my wife] about this.”

The urge to buy low ranks right up there with other human urges that cause a rush of blood to the head.

The urge to buy low ranks right up there with other human urges that cause a rush of blood to the head. But such temptations can carry big risks, as well as big rewards. Some of the low-priced and potentially high-value communities I quite like have suffered financial difficulties in the past few years, and their survivals are anything but sure things. Still, there is much to recommend some of them. The bad press they generate scares away most potential customers, but it also forces the owners to drop prices so low as to re-energize the market. No matter how much a property may have suffered, there is always a price low enough for someone to buy it.

Growth Properties

Not to sound like a Merrill Lynch broker, but undervalued golf communities I have visited lately seem to fall into two groups –- those that are value plays and those that are growth plays. The growth opportunities are those communities that have barely gotten off the ground, suffered financial setbacks, but are now under new owners who seem to have a plan. A few weeks ago, I visited one such community outside of Richmond, VA, Mountain Run, and played its excellent Federal Club golf course.

No matter how much a property may have suffered, there is always a price low enough for someone to buy it.

Mountain Run is barely a golf community, since only a couple dozen homes have been built. The original owners of the development did not survive the recession, defaulting on their $8 million loan, but not before they transformed the private golf club into a public one to generate some much needed income. At auction, Richmond area developer Chris Gilman purchased for just $2.6 million the remainder of the 625 acres that comprise both the real estate and the excellent Arnold Palmer designed golf course.
Gilman is acting like he is in it for the long haul. He has announced that Federal Club will revert to private status again in September 2012; as advance announcements go, coupled with a bargain initiation fee of $6,000 for full-family golf (dues $350 per month), this is smart. Those who like the club may join now for the discounted rate of $4,000, play all the golf they can, and not worry about fee increases later. Gilman is also building confidence by not putting the available lots up for sale at the moment, preferring to wait a little for the market to recover. His patience is commendable and a signal that he has the deep pockets to execute his plan for the golf course and community. That said, it is hard to imagine any developer passing up an opportunity for a little cash flow: This may be an opportune time for those looking for a bargain piece of property in a community with a future private golf club to make an offer.

Value hunting

The owner of Richmond's Federal Club has announced the club will go private in September 2012.

Value-oriented communities are those in which most or all of the infrastructure has been completed, residents are in charge of the property owners association and the club is at least functioning, if not making much money for the owner. My wife and I own a second home in Pawleys Plantation, south of Myrtle Beach, where there was much gnashing of teeth among club members and residents earlier this year when the club owner and original developer of the 20-year old community decided to sell the golf course. Property values in Pawleys Plantation have dropped an average of about 25% since the market began to erode in 2007, and we all worried that a sale of the club to the wrong type of owner could accelerate more losses in value.
But the buyer is the Myrtle Beach National golf group, owner of 13 other courses along the Grand Strand. MBN sees the Nicklaus-designed Pawleys Plantation as one of the jewels in its crown, and they have made all the right moves, enhancing the course in their first few months of ownership and announcing that members can play any of their other courses for a ridiculously low rate of $22. My fellow members at Pawleys and I will have to work a little harder at planning our play dates on our own course since MBN will be filling the tee sheets with more and more vacationing golfers. But on the face of it, their ownership of our course should enhance the value of our properties. Those looking for less risk and more value in a golf community might look for such situations in which residents own the community and a smart operator owns or manages the golf club.

 

A little bit value, a little bit growth

There are also some interesting communities that fall somewhere between the growth and value definitions, like the 750-acre Cobblestone Park in Blythewood, SC. Originally developed around the former University of South Carolina golf course, the community was purchased by the Ginn organization in 2004. Typical Ginn flourishes and promises followed, most unrealized as that company spiraled downward. By the time Ginn abandoned the project in 2008, the clubhouse was only partially finished and property owners had lost nearly 50% of the values in their homes.

At Cobblestone, prices are off as much as 40%, but a reputable management team is now in place.

Linger Longer Inc, part of the operation that developed the well-regarded Reynolds Plantation in Georgia, took over the property and priced the remaining properties to sell. For example, a corner lot with views of tee box and green is currently available at $40,000 and includes a waiver of club initiation fees. Lawn maintenance is included in the property owner association fees. Completed homes for sale at Cobblestone range in price from $240,000 to $650,000. All developer properties and most of the homes for sale include initiation fees to the golf club, which features a nice P.B. Dye 27-hole layout threaded through the community, plus such amenities as lighted tennis courts, a pool and fitness facility. The 28,000 square foot clubhouse is finally set to open in a few months. South Carolina state capital Columbia is just 20 minutes away and, as host to a large state university, it is economically sound. Columbia and the university are good sources of upwardly mobile folks who could consider Cobblestone as their future home. The semi-private golf club should attract local members as well: full-golf initiation fees are just $1,850 initiation for locals and $250 for a “national” membership, with monthly dues of $275 and $61.25 respectively (national members are limited to 10 no-green-fee rounds annually).
As calculated risks go, Cobblestone Park seems to have all the ingredients of a good bet. With experienced developers now managing the property, all originally promised amenities either completed or on the way, and prices lower than they will reasonably be in the future, Cobblestone may warrant some investigation by bargain hunters looking for a golfing lifestyle near a university community. (Note: As always, do your homework and understand circumstances in this current market can change quickly.)

More than 20 years, and then trouble

Some developers stumble even after they have turned management of the community over to the residents. A couple of years ago I visited the family-owned Ford’s Colony in Williamsburg, VA, which began selling properties in the 1980s and was considered a top planned community in its day. I found little to criticize but nothing wowed me either. The Dan Maples designed golf was plentiful -- 45 holes -- but not as stimulating or challenging as either the nearby River Course at Kingsmill or the Tom Fazio-designed course at Governors Land. However, something must have been going right at Ford’s Colony because the Ford family decided to build a second community in Rocky Mount, NC, and named it Ford’s Colony as well (perhaps more out of ego than marketing clarity). Then the recession started, and you can figure out the rest.

The reputation of a golf club has an affect on the reputation -- and market values -- of the community.

Both Ford’s Colony developments declared bankruptcy last April and the operations’ creditors, with the help of the courts, are now trying to mediate a resolution for the golf clubs and unsold land. But as is the case with more mature communities that hit the skids, bankruptcy by no means brings the curtain down on operations. In the case of Ford’s Colony/Williamsburg, the homeowner’s association is in charge of the community. The banks could sell the clubs to a professional management organization, or conceivably keep the clubs and bring in professional management to run the golf club, or the members could buy it from the banks. In any case, the outcome for golfers and residents could very well be positive (as it appears to be the case at Pawleys Plantation as explained above). The court expects to hear from the creditors on a resolution in three weeks. If they cannot reach a settlement, a judge will likely decide who winds up with the club.
Although club and community are often in the hands of two different entities, the status of the golf club at the heart of a golf community affects the values of the homes surrounding it. Stable clubs owned and run by members who practice good governance pass that glow onto the adjacent real estate, which will be relatively higher priced than properties in less harmoniously run communities. The true bargains are those clubs and communities that are not yet living in perfect harmony, but have the potential to do so. With a little research, you can uncover these bargains. And with some calculation and an appetite for risk, you can take advantage of them.

 

 
 

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© 2010 Golf Community Reviews
 
    October 2010

 

Homes for sale and rent

Desperate times call for desperate measures, and people who would rather sell their homes sometimes have to compromise by renting them (anything to generate a little needed income). This is an opportunity for potential buyers to kick the tires in a community before they commit the big bucks. Virtually every golf community has at least a small selection of homes for rent. Here are a few samples on the market today; in some cases the same home is available for rent or to purchase; in other examples, we have listed comparably sized and located homes for rent and sale.

If you would like more information on any of them, please contact me at This email address is being protected from spambots. You need JavaScript enabled to view it..


Glenmore - Kenswick, VA

5 BR, 3 ½ BA, 2-story,
4,200 square feet
Taxes $3,459 per year
List price: $549,000
Rental: $2,700 per mo.

thumb_Glenmore


River's Edge - Shallotte, NC

3 BR, 2 ½ BA, 2 story
2,300 square feet
List price: $349,900
Rental: $1,750 (6 month min.)

thumb_rivers-edge


Governors Club - Chapel Hill, NC

For rent:
3 BR, 2 ½ BA town home
3,266 square feet
$2,500 per month

Comparable for sale:
3 BR, 3 ½ BA town home
3,953 square feet
Listed at $519,000

 

Queen’s Harbour Golf & Yacht Club - Jacksonville, FL

For rent:
4 BR, 3 ½ BA single-family home
2,655 square feet
In-ground pool, 3-car garage
$3,200 per month

Comparable for sale:
4 BR, 4 1/2 BA single-family home
3,036 square feet
View of marsh
$485,000

 

Osprey Cove - St. Marys, GA

For rent:
3 BR, 2 BA ranch
2,000 square feet, 1/3 acre
$1,400 per month

Comparable for sale:
3 BR, 2 BA cottage style (new)
2,060 square feet, .23 acre
$239,800

 

Reader Feedback

We want to make this newsletter as useful as possible for you. If you have comments, suggestions or observations about the newsletter, please email them to: This email address is being protected from spambots. You need JavaScript enabled to view it..
I promise to respond quickly. Thanks.
-- Larry Gavrich, Editor

 

Assessing the risks in bargain-priced golf communities

One of the occupational hazards of visiting golf communities virtually every month of the year is that most of them -– the communities and, especially, their golf courses -– seem like bargains in this economy. Those that have survived the recession still are showing significant market value erosion as employment numbers remain low and the national political scene remains uncertain. Club fees are way down as well. I have been encountering more and more communities lately whose prices are so low and that have reasonable chances of survival that I think to myself, “How much lower could it go?” and “Maybe I should talk with Connie [my wife] about this.”

The urge to buy low ranks right up there with other human urges that cause a rush of blood to the head.

The urge to buy low ranks right up there with other human urges that cause a rush of blood to the head. But such temptations can carry big risks, as well as big rewards. Some of the low-priced and potentially high-value communities I quite like have suffered financial difficulties in the past few years, and their survivals are anything but sure things. Still, there is much to recommend some of them. The bad press they generate scares away most potential customers, but it also forces the owners to drop prices so low as to re-energize the market. No matter how much a property may have suffered, there is always a price low enough for someone to buy it.

Growth Properties

Not to sound like a Merrill Lynch broker, but undervalued golf communities I have visited lately seem to fall into two groups –- those that are value plays and those that are growth plays. The growth opportunities are those communities that have barely gotten off the ground, suffered financial setbacks, but are now under new owners who seem to have a plan. A few weeks ago, I visited one such community outside of Richmond, VA, Mountain Run, and played its excellent Federal Club golf course.

No matter how much a property may have suffered, there is always a price low enough for someone to buy it.

Mountain Run is barely a golf community, since only a couple dozen homes have been built. The original owners of the development did not survive the recession, defaulting on their $8 million loan, but not before they transformed the private golf club into a public one to generate some much needed income. At auction, Richmond area developer Chris Gilman purchased for just $2.6 million the remainder of the 625 acres that comprise both the real estate and the excellent Arnold Palmer designed golf course.
Gilman is acting like he is in it for the long haul. He has announced that Federal Club will revert to private status again in September 2012; as advance announcements go, coupled with a bargain initiation fee of $6,000 for full-family golf (dues $350 per month), this is smart. Those who like the club may join now for the discounted rate of $4,000, play all the golf they can, and not worry about fee increases later. Gilman is also building confidence by not putting the available lots up for sale at the moment, preferring to wait a little for the market to recover. His patience is commendable and a signal that he has the deep pockets to execute his plan for the golf course and community. That said, it is hard to imagine any developer passing up an opportunity for a little cash flow: This may be an opportune time for those looking for a bargain piece of property in a community with a future private golf club to make an offer.

Value hunting

The owner of Richmond's Federal Club has announced the club will go private in September 2012.

Value-oriented communities are those in which most or all of the infrastructure has been completed, residents are in charge of the property owners association and the club is at least functioning, if not making much money for the owner. My wife and I own a second home in Pawleys Plantation, south of Myrtle Beach, where there was much gnashing of teeth among club members and residents earlier this year when the club owner and original developer of the 20-year old community decided to sell the golf course. Property values in Pawleys Plantation have dropped an average of about 25% since the market began to erode in 2007, and we all worried that a sale of the club to the wrong type of owner could accelerate more losses in value.
But the buyer is the Myrtle Beach National golf group, owner of 13 other courses along the Grand Strand. MBN sees the Nicklaus-designed Pawleys Plantation as one of the jewels in its crown, and they have made all the right moves, enhancing the course in their first few months of ownership and announcing that members can play any of their other courses for a ridiculously low rate of $22. My fellow members at Pawleys and I will have to work a little harder at planning our play dates on our own course since MBN will be filling the tee sheets with more and more vacationing golfers. But on the face of it, their ownership of our course should enhance the value of our properties. Those looking for less risk and more value in a golf community might look for such situations in which residents own the community and a smart operator owns or manages the golf club.

 

A little bit value, a little bit growth

There are also some interesting communities that fall somewhere between the growth and value definitions, like the 750-acre Cobblestone Park in Blythewood, SC. Originally developed around the former University of South Carolina golf course, the community was purchased by the Ginn organization in 2004. Typical Ginn flourishes and promises followed, most unrealized as that company spiraled downward. By the time Ginn abandoned the project in 2008, the clubhouse was only partially finished and property owners had lost nearly 50% of the values in their homes.

At Cobblestone, prices are off as much as 40%, but a reputable management team is now in place.

Linger Longer Inc, part of the operation that developed the well-regarded Reynolds Plantation in Georgia, took over the property and priced the remaining properties to sell. For example, a corner lot with views of tee box and green is currently available at $40,000 and includes a waiver of club initiation fees. Lawn maintenance is included in the property owner association fees. Completed homes for sale at Cobblestone range in price from $240,000 to $650,000. All developer properties and most of the homes for sale include initiation fees to the golf club, which features a nice P.B. Dye 27-hole layout threaded through the community, plus such amenities as lighted tennis courts, a pool and fitness facility. The 28,000 square foot clubhouse is finally set to open in a few months. South Carolina state capital Columbia is just 20 minutes away and, as host to a large state university, it is economically sound. Columbia and the university are good sources of upwardly mobile folks who could consider Cobblestone as their future home. The semi-private golf club should attract local members as well: full-golf initiation fees are just $1,850 initiation for locals and $250 for a “national” membership, with monthly dues of $275 and $61.25 respectively (national members are limited to 10 no-green-fee rounds annually).
As calculated risks go, Cobblestone Park seems to have all the ingredients of a good bet. With experienced developers now managing the property, all originally promised amenities either completed or on the way, and prices lower than they will reasonably be in the future, Cobblestone may warrant some investigation by bargain hunters looking for a golfing lifestyle near a university community. (Note: As always, do your homework and understand circumstances in this current market can change quickly.)

More than 20 years, and then trouble

Some developers stumble even after they have turned management of the community over to the residents. A couple of years ago I visited the family-owned Ford’s Colony in Williamsburg, VA, which began selling properties in the 1980s and was considered a top planned community in its day. I found little to criticize but nothing wowed me either. The Dan Maples designed golf was plentiful -- 45 holes -- but not as stimulating or challenging as either the nearby River Course at Kingsmill or the Tom Fazio-designed course at Governors Land. However, something must have been going right at Ford’s Colony because the Ford family decided to build a second community in Rocky Mount, NC, and named it Ford’s Colony as well (perhaps more out of ego than marketing clarity). Then the recession started, and you can figure out the rest.

The reputation of a golf club has an affect on the reputation -- and market values -- of the community.

Both Ford’s Colony developments declared bankruptcy last April and the operations’ creditors, with the help of the courts, are now trying to mediate a resolution for the golf clubs and unsold land. But as is the case with more mature communities that hit the skids, bankruptcy by no means brings the curtain down on operations. In the case of Ford’s Colony/Williamsburg, the homeowner’s association is in charge of the community. The banks could sell the clubs to a professional management organization, or conceivably keep the clubs and bring in professional management to run the golf club, or the members could buy it from the banks. In any case, the outcome for golfers and residents could very well be positive (as it appears to be the case at Pawleys Plantation as explained above). The court expects to hear from the creditors on a resolution in three weeks. If they cannot reach a settlement, a judge will likely decide who winds up with the club.
Although club and community are often in the hands of two different entities, the status of the golf club at the heart of a golf community affects the values of the homes surrounding it. Stable clubs owned and run by members who practice good governance pass that glow onto the adjacent real estate, which will be relatively higher priced than properties in less harmoniously run communities. The true bargains are those clubs and communities that are not yet living in perfect harmony, but have the potential to do so. With a little research, you can uncover these bargains. And with some calculation and an appetite for risk, you can take advantage of them.

 

 
 

Read my Blog This email address is being protected from spambots. You need JavaScript enabled to view it.
 

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October 2010

September 2010

 
    September 2010

 

Low cost of the high life in ...Myrtle Beach, SC

If you live in Omaha, Des Moines, Indianapolis, or Wichita, your cost of living won’t change much if you move to Myrtle Beach, SC. But for virtually everyone who lives in a major metro area of the northern U.S., or anywhere in California, a home on the Grand Strand will reduce your expenses significantly -– in some cases by almost 40% -- and put you within an easy drive of more than 110 quality golf courses.

The following shows the percent reduction in cost of living with a move to Myrtle Beach from a selection of metro areas.

 

Bergen County, NJ 28%
Boston 29%
Buffalo, NY 2%
Chicago 18%
Cleveland, OH 7%
Detroit 8%
Milwaukee 8%
Minneapolis 18%
Nassau County, NY 35%
Manhattan, NY 58%
Philadelphia 25%
Providence, RI 22%
Stamford, CT 37%
Washington, DC 33%
   

 

Here is a sample of current listings of homes for sale in the Myrtle Beach area:


Wachesaw Plantation, Murrells Inlet

4 Bedroom 2 ½ Bath “Low Country” style home. Tom Fazio private course. One of only four private golf clubs in the Myrtle Beach area. Offered at $349,000


Pawleys Plantation, Pawleys Island

3 BR, 2 BA home on patio lot. Semi-private Jack Nicklaus Signature course. Offered at $299,900.


Grande Dunes, North Myrtle Beach

3 BR, 3 BA, 3,000 square foot condominium home. Resort Course (semi-private) designed by Roger Rulewich. Members Course (private) by Nick Price. Offered at $525,000.

 

Reader Feedback

We want to make this newsletter as useful as possible for you. If you have comments, suggestions or observations about the newsletter, please email them to: This email address is being protected from spambots. You need JavaScript enabled to view it..
I promise to respond quickly. Thanks.
-- Larry Gavrich, Editor

 

Story of Owe:

Golf communities tout their debt-free status

Golf communities have begun to treat their potential buyers like conservative Wall Street investors. “Debt free” has replaced “championship golf” as the selling proposition de jour. The bankruptcies of former high-flying golf communities such as Ginn Resorts and the financial difficulties of such former elites as The Cliffs Communities has put a scare into many prospective buyers. But sharp marketing managers at the stronger communities are transforming a lemon of a market into lemonade by using their companies’ deep pockets to advertise their companies’ deep pockets. Whereas the pre-2008 marketing battle among golf communities was fought over the size and quality of amenities –- “My fitness center is bigger than yours!” –- now it is being fought over the balance sheet.

Older is better

Older golf communities are in the best positions to market their financial stability. Communities that have been around for decades, and especially those where all or most lots have been “improved” with houses, are the most financially solid by definition. This is because their residents are running the show through their POAs (property owner associations). These homeowners who waved goodbye to their developers a decade or more ago have gotten used to running their communities and paying the expenses themselves. Despite some early sticker shocks that resulted from the loss of the developers’ subsidies for the golf courses and other amenities, POAs at established golf communities like Champion Hills in Hendersonville, NC, and The Landings in Savannah are running their communities as if they were Fortune 500 companies.
Governance, of course, is a challenge in the early days of independence as property owners hash it out over which amenities might be too expensive to pay for and which of their fellow residents are best suited for board positions. But despite the occasionally contentious meetings, mostly about spending and holding down dues increases, owners with a long-term interest in their properties do a better job of governing their community than the developer did. Loud board meetings are better than none, and good decisions typically emerge from vigorous debate.

Amenities first

Newer communities have picked up on the debt-free mantra and are touting their own financial conditions. Brunswick Forest in Leland, NC, for example, is the fastest selling golf community on the east coast, largely on the basis of its financial profile and reasonably priced properties. The community’s web site proclaims “Developer Strength, Stability and Resources,” and it is hard to argue. Backed by the $2 billion Lord Baltimore Capital Corporation, the 4,000-acre Brunswick Forest’s local developers finished the golf community’s amenities in the early days of property sales, whereas other communities of recent vintage were cutting expenses in anticipation of weak sales (self-fulfilling prophecy, that).
Brunswick Forest, instead, began work on its golf course almost from the gitgo and built a wellness and fitness center and a town center that quickly attracted medical and retail services. This visible sense of progress gave confidence to new buyers and also sent a message to the market that the developers’ pockets were indeed deep. The on-site Cape Fear National Golf Club, which opened last October, lagged the other amenities by a couple of years, but the ongoing presence of earth-moving equipment and press release updates showed constant movement forward. The course, which I played in March, was worth the wait, a perfectly indigenous Tim Cate design, which is to say it uses the native grasses and sand to exquisite advantage.

 

Patient capital for one community

Some communities that tasted the bitter medicine of foreclosure have re-emerged with new financial backing that they are eager to tout. For example, the 4,400-acre Balsam Mountain Preserve near Waynesville, NC, looked like a goner when its developer, Chaffin & Light, could not pay its bills. Lucky for the community’s well-heeled property owners that real estate investment company TriLyn held the note on the $22 million in debt and decided not to cut its losses, as many “banks” would do, by selling everything at a loss. Instead, TriLyn foreclosed on the property quickly and made a strategic decision to supervise management of the community's operations, citing as key to their interest the already built infrastructure, including a dramatic Arnold Palmer golf course on the top of the Balsam Mountain.
Furthermore, TriLyn sent a meaningful message to the market by not gutting the prices on its remaining inventory of 120 lots, a decision that made existing homeowners so happy that they haven’t complained about the increased fees they have been assessed (better to pay a few hundred dollars more per year than lose a few hundred thousand dollars in house value). “Balsam now has the advantage of stable, institutional ownership and no debt,” Balsam Mountain’s Director of Sales Bruce Fine told the Mountaineer newspaper shortly after TriLyn took over early this year.

‘Til debt do us part

Residents of some upscale golf communities have stepped in to save their struggling developers from default, and themselves from a catastrophic loss of value in their homes. The Cliffs Communities in the mountains of South and North Carolina became the poster child for this unique new approach to financing.
Faced with a Hobson’s choice, Cliffs property owners loaned developer Jim Anthony $64 million to finish promised amenities that included Gary Player and Tiger Woods designed golf courses (Woods’ first in America). Many, but not all, of The Cliffs’ residents ponied up increments of $100,000 to keep Anthony from seeking much-higher-interest loans in the open market. If Anthony had defaulted on such a loan, some distant bank or venture capitalist might have become the absentee landlord for all the Cliffs’ amenities. For the owners who now hold the note on the multi-community Cliffs’ amenities, they are earning a 12% interest rate, do not have to pay club dues for the duration of the seven-year term of the loan and, most importantly, have claim to all the amenities in the event of a default by the developer.

Keeping commissions In house

A few golf communities not only are debt free, but they also pad their reserve funds with additional revenues related to real estate sales. When a developer leaves a community after it is mostly sold out, a few agents in the on-site sales office typically stick around to sell off the remaining developer lots and, in some cases, to represent those residents who need to re-sell their own properties. But when all the original lots are sold, the sales office either closes or is taken over by a local agency that leases the space from the community. This is essentially the case at the mature and well-organized Champion Hills, where the local Prudential Realty leases an office on site. Agents in the office, one of whom is a full-time Champion Hills resident, are permitted to sell only properties inside the community.
The 20-year old Landings on Skidaway Island, just 15 minutes from downtown Savannah, took a slightly different tack -– the POA itself took over the real estate office once the developer departed. Today, the sales commissions that Landings Realty agents generate support the community’s financial well-being. In a real sense, when they purchase their properties, new residents at The Landings contribute directly to the community’s security even before they move in.

 

 
 

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    September 2010

 

Low cost of the high life in ...Myrtle Beach, SC

If you live in Omaha, Des Moines, Indianapolis, or Wichita, your cost of living won’t change much if you move to Myrtle Beach, SC. But for virtually everyone who lives in a major metro area of the northern U.S., or anywhere in California, a home on the Grand Strand will reduce your expenses significantly -– in some cases by almost 40% -- and put you within an easy drive of more than 110 quality golf courses.

The following shows the percent reduction in cost of living with a move to Myrtle Beach from a selection of metro areas.

 

Bergen County, NJ 28%
Boston 29%
Buffalo, NY 2%
Chicago 18%
Cleveland, OH 7%
Detroit 8%
Milwaukee 8%
Minneapolis 18%
Nassau County, NY 35%
Manhattan, NY 58%
Philadelphia 25%
Providence, RI 22%
Stamford, CT 37%
Washington, DC 33%
   

 

Here is a sample of current listings of homes for sale in the Myrtle Beach area:


Wachesaw Plantation, Murrells Inlet

4 Bedroom 2 ½ Bath “Low Country” style home. Tom Fazio private course. One of only four private golf clubs in the Myrtle Beach area. Offered at $349,000


Pawleys Plantation, Pawleys Island

3 BR, 2 BA home on patio lot. Semi-private Jack Nicklaus Signature course. Offered at $299,900.


Grande Dunes, North Myrtle Beach

3 BR, 3 BA, 3,000 square foot condominium home. Resort Course (semi-private) designed by Roger Rulewich. Members Course (private) by Nick Price. Offered at $525,000.

 

Reader Feedback

We want to make this newsletter as useful as possible for you. If you have comments, suggestions or observations about the newsletter, please email them to: This email address is being protected from spambots. You need JavaScript enabled to view it..
I promise to respond quickly. Thanks.
-- Larry Gavrich, Editor

 

Story of Owe:

Golf communities tout their debt-free status

Golf communities have begun to treat their potential buyers like conservative Wall Street investors. “Debt free” has replaced “championship golf” as the selling proposition de jour. The bankruptcies of former high-flying golf communities such as Ginn Resorts and the financial difficulties of such former elites as The Cliffs Communities has put a scare into many prospective buyers. But sharp marketing managers at the stronger communities are transforming a lemon of a market into lemonade by using their companies’ deep pockets to advertise their companies’ deep pockets. Whereas the pre-2008 marketing battle among golf communities was fought over the size and quality of amenities –- “My fitness center is bigger than yours!” –- now it is being fought over the balance sheet.

Older is better

Older golf communities are in the best positions to market their financial stability. Communities that have been around for decades, and especially those where all or most lots have been “improved” with houses, are the most financially solid by definition. This is because their residents are running the show through their POAs (property owner associations). These homeowners who waved goodbye to their developers a decade or more ago have gotten used to running their communities and paying the expenses themselves. Despite some early sticker shocks that resulted from the loss of the developers’ subsidies for the golf courses and other amenities, POAs at established golf communities like Champion Hills in Hendersonville, NC, and The Landings in Savannah are running their communities as if they were Fortune 500 companies.
Governance, of course, is a challenge in the early days of independence as property owners hash it out over which amenities might be too expensive to pay for and which of their fellow residents are best suited for board positions. But despite the occasionally contentious meetings, mostly about spending and holding down dues increases, owners with a long-term interest in their properties do a better job of governing their community than the developer did. Loud board meetings are better than none, and good decisions typically emerge from vigorous debate.

Amenities first

Newer communities have picked up on the debt-free mantra and are touting their own financial conditions. Brunswick Forest in Leland, NC, for example, is the fastest selling golf community on the east coast, largely on the basis of its financial profile and reasonably priced properties. The community’s web site proclaims “Developer Strength, Stability and Resources,” and it is hard to argue. Backed by the $2 billion Lord Baltimore Capital Corporation, the 4,000-acre Brunswick Forest’s local developers finished the golf community’s amenities in the early days of property sales, whereas other communities of recent vintage were cutting expenses in anticipation of weak sales (self-fulfilling prophecy, that).
Brunswick Forest, instead, began work on its golf course almost from the gitgo and built a wellness and fitness center and a town center that quickly attracted medical and retail services. This visible sense of progress gave confidence to new buyers and also sent a message to the market that the developers’ pockets were indeed deep. The on-site Cape Fear National Golf Club, which opened last October, lagged the other amenities by a couple of years, but the ongoing presence of earth-moving equipment and press release updates showed constant movement forward. The course, which I played in March, was worth the wait, a perfectly indigenous Tim Cate design, which is to say it uses the native grasses and sand to exquisite advantage.

 

Patient capital for one community

Some communities that tasted the bitter medicine of foreclosure have re-emerged with new financial backing that they are eager to tout. For example, the 4,400-acre Balsam Mountain Preserve near Waynesville, NC, looked like a goner when its developer, Chaffin & Light, could not pay its bills. Lucky for the community’s well-heeled property owners that real estate investment company TriLyn held the note on the $22 million in debt and decided not to cut its losses, as many “banks” would do, by selling everything at a loss. Instead, TriLyn foreclosed on the property quickly and made a strategic decision to supervise management of the community's operations, citing as key to their interest the already built infrastructure, including a dramatic Arnold Palmer golf course on the top of the Balsam Mountain.
Furthermore, TriLyn sent a meaningful message to the market by not gutting the prices on its remaining inventory of 120 lots, a decision that made existing homeowners so happy that they haven’t complained about the increased fees they have been assessed (better to pay a few hundred dollars more per year than lose a few hundred thousand dollars in house value). “Balsam now has the advantage of stable, institutional ownership and no debt,” Balsam Mountain’s Director of Sales Bruce Fine told the Mountaineer newspaper shortly after TriLyn took over early this year.

‘Til debt do us part

Residents of some upscale golf communities have stepped in to save their struggling developers from default, and themselves from a catastrophic loss of value in their homes. The Cliffs Communities in the mountains of South and North Carolina became the poster child for this unique new approach to financing.
Faced with a Hobson’s choice, Cliffs property owners loaned developer Jim Anthony $64 million to finish promised amenities that included Gary Player and Tiger Woods designed golf courses (Woods’ first in America). Many, but not all, of The Cliffs’ residents ponied up increments of $100,000 to keep Anthony from seeking much-higher-interest loans in the open market. If Anthony had defaulted on such a loan, some distant bank or venture capitalist might have become the absentee landlord for all the Cliffs’ amenities. For the owners who now hold the note on the multi-community Cliffs’ amenities, they are earning a 12% interest rate, do not have to pay club dues for the duration of the seven-year term of the loan and, most importantly, have claim to all the amenities in the event of a default by the developer.

Keeping commissions In house

A few golf communities not only are debt free, but they also pad their reserve funds with additional revenues related to real estate sales. When a developer leaves a community after it is mostly sold out, a few agents in the on-site sales office typically stick around to sell off the remaining developer lots and, in some cases, to represent those residents who need to re-sell their own properties. But when all the original lots are sold, the sales office either closes or is taken over by a local agency that leases the space from the community. This is essentially the case at the mature and well-organized Champion Hills, where the local Prudential Realty leases an office on site. Agents in the office, one of whom is a full-time Champion Hills resident, are permitted to sell only properties inside the community.
The 20-year old Landings on Skidaway Island, just 15 minutes from downtown Savannah, took a slightly different tack -– the POA itself took over the real estate office once the developer departed. Today, the sales commissions that Landings Realty agents generate support the community’s financial well-being. In a real sense, when they purchase their properties, new residents at The Landings contribute directly to the community’s security even before they move in.

 

 
 

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September 2010

July 2010

 
    July 2010 

 

 You could give yourself
a raise by moving to... Greenville, SC 
 

   Anyone contemplating a move from north of the Mason-Dixon Line to Greenville, SC (see accompanying market report) will find a cost of living far less than they are used to.  A chart published in Where to Retire magazine shows a lower cost of living than Greenville in just one of 39 other cities (Indianapolis, about 1% cheaper to live than in Greenville). 

    The following are a selection of other northern cities and how much cheaper it is, on a percentage basis, to live in Greenville.

 

Baltimore 26%
Boston 32%
Chicago 21%
Detroit 14%
Hartford 26%
Milwaukee 12%
Minneapolis 20%
Nassau County (NY) 39%
Philadelphia 28%
Pittsburgh 1%
Providence 26%
Rochester 11%
Washington, D.C 36%

 

Reader Feedback

      We want to make this newsletter as  useful as possible for you.  If you have comments, suggestions or observations about the newsletter, please email them to:  This email address is being protected from spambots. You need JavaScript enabled to view it..
      I promise to respond quickly.  Thanks.
  --  Larry Gavrich, Editor

 

Beyond the brochure:
Some key questions to ask
before choosing your golf community

    Mike Tower is a proud owner in the Champion Hills golf community of Hendersonville, NC, and a subscriber to this newsletter.  Having been through the search for a golf home in the southeast and as an involved resident of Champion Hills, Mike speaks from experience about looking for a home in a golf community.
      The following are a few of the key questions he thinks everyone should ask before plunking down a big chunk of their life savings on their dream home.  The explanations are a stitch-together of Mike's and my own thoughts.  This is not a comprehensive list of what you need to know before making one of the biggest investments of your life, but you won't find any of these answers in a golf community's marketing materials.
-- Larry

How close is the community to being built out?

A developer typically pulls up stakes and goes on to his next project when a community is 75% to 80% sold.

     Generally speaking, the more built out a community, the more stable it is, and the less construction noise and debris you will have to endure.  Conversely, many of the communities that opened in the mid-2000s just in time for the economy to tank are in shaky condition.  (Note: The risks of investing in such communities are reflected in property prices, which are in some cases incredibly low right now.)  A typical rule of thumb is that a developer pulls up stakes and goes on to his next project when a community is 75% to 80% sold.   Before the developer leaves, the homeowners have formed their association(s), created governance structures and set monthly dues payments for the community's infrastructure (e.g. roads, landscaping and security gate maintenance, if there is a gate).  In some cases, the developer has sold the golf course and other amenities to the residents or club owners (see below).

Who owns the golf course?  What's in reserve?

     The traditional relationship between developers and the golf clubs they built may change with the new economic realities.  For the last few decades, the model has been that the developer of the community commissions the golf architect and pays for the golf course.  The golf course has been used to lure prospective buyers and, depending on the designer name on the course, to add a few percentage points to the price of properties (such luminaries as Dye, Nicklaus and Fazio generate the highest prices).  When the community is almost built out and the developer moves on to his next project, he either sells the course to club members—most or all of whom are residents—or to an outside golf-management firm, like ClubCorp.  In some cases, if the developer lives in the community or the nearby area and does not have other projects in the hopper, he might keep the course himself and hire a firm to manage it for him.

Make sure to ask about the club's financial status, including the amount of reserves.

     No matter who owns the club—developer or members—you will want to ask a board member or club official about the club's financial status, especially how much money they keep in reserve (at minimum, enough to cover the equivalent of one year's operating budget) and what capital expenditures are likely to be necessary in the future.  In the current economic environment, a club with thin or no reserves might have trouble putting gas in the tanks of its lawnmowers when the next spike in oil prices inevitably comes.  If that's the case, then they certainly won't be able to buy the new lawnmowers they need, let alone finish any uncompleted amenities.
      Of course, a club or community owned and run by a developer rather than members and residents has control over maintenance of everything as well as who gets to play the golf course.  If you are interested in a community and/or club that is not member-owned, make sure you are satisfied that the owner has a plan, and that it is reasonable and fundable.

How many club members and what is the trend?

     Any club that has kept its membership rolls net even over the last three years deserves kudos and serious consideration from prospective members.  More likely is a club that has lost members recently because the economy has turned what once felt like a casual spend for many of us into a "discretionary" luxury.   Although every club's situation is different, the most stable are those that have lost no more than 5% of their members (net) in the last few years.  Most 18-hole clubs set a ceiling of between 350 and 400 full-golf memberships; more than that creates a waiting list for members, and fewer creates a cause for concern.  There are, of course, mitigating circumstances behind all numbers, so ask enough questions to give you the full picture.  A club with just 300 members and down 10% since 2007, but with a full year's budget in reserve, might have a brighter future, for example, than one with 350 members and no reserve.

Will you feel welcome?

Ask leading questions like "What changes would you make if you could?" rather than "Are people friendly here?"

     Virtually every couple I work with lists a variant of the same requirement:  They must feel "at home" in their next community.  Before you start looking at properties in a community, ask the real estate agent or an official of the club about programs that help integrate new residents.  I have found that the larger communities (the 4,500+ acre Landings in Savannah comes to mind) do a good job of this because the more numerous the residents  (The Landings' population is more than 8,000), the greater the chances that someone has formed a "welcome wagon."  But some smaller communities that understand that prospects are concerned about the friendliness factor set up "ambassador" programs where they match a serious prospect with a resident who can answer their questions about what it is like to live there.  
     When you visit a community, ask leading questions rather than general questions like "Are people friendly here?"  Try asking, "How long did it take you and your spouse to feel comfortable here?" or "What would you change about the club or community if you could?" or other tough questions that demand specific responses.
    The clubhouse is a good place to plop yourself down for an hour (have lunch so you can test drive the food) to observe your future fellow residents.  And if a round of golf in the community is on your itinerary—it should be—then ask for at least one club member to be in your group.  Pepper him or her with some of those tough questions.

Which is a better deal, equity or non-equity membership?

    In my experience, there is a roughly 4 to 1 ratio between the cost of equity and non-equity memberships in comparable clubs.  For example, if a non-equity membership is $10,000 then an equity membership will be $40,000 or more.  (Note: Relatively few clubs offer both options, but I anticipate that could change with the current economy.)   Although there is no strict rule of thumb, between 75% and 100% of an original equity payment will be returned to a member who resigns after a certain number of new members join.  At most clubs, especially in these times of declining memberships, do not count on anything less than a few years minimum after you resign before you get your money back.

    Given that many private clubs have dropped their initiation fee levels in the last couple of years, my advice is to go for the less expensive non-equity membership, and consider it part of your investment in the property you purchase.  A $50,000 initiation fee coupled with a $500,000 home purchase is pretty much the same as a $10,000 fee and $540,000 price for the real estate.  I can hear CFOs in the audience arguing that the higher priced home will appreciate more dollars than the lower priced one over time, but I might counter that the community with the $50,000 golf club could very well hold its value better than the one with the $10,000 club.
     As with most choices in life, pick your poison.

 

Market Update:  Greenville, SC

by Lee Cunningham

 

     This is the first in a series of updates on key golf retirement markets in the southern U.S. Lee Cunningham leads a team of Realtors at RE/Max in Greenville and is a member of the Home On The Course network of preferred real estate professionals. Lee has special knowledge about the golf communities and courses in and around Greenville, including Thornblade Club and Carolina Country Club, two of the three venues for the annual BMW Charity Pro-Am on the Nationwide Tour. This year, 57,000 people attended the tournament.  Lee's comments follow:

     The recession has been tough on golf clubs in our area, and although the BMW event brings thousands of fans to the fairways, the effect on home sales is probably negligible.  
     According to the Greenville and Spartanburg Multiple Listing Services, sales of homes in the Thornblade Club community (featuring a classic Tom Fazio golf course) have increased over the past six months, with 10 sold and three currently under contract.  With 18 homes currently listed, Thornblade has 9 1/2 months of inventory (six months is considered "balanced").  Prices in the un-gated community, where HOA dues are just $560 annually, are down about 20% since 2008; the average home sells for just under $600,000.  The Thornblade course is currently closed for a $2 million renovation and will reopen in November.  The club is offering 20 memberships at $8,000 initiation fees, a $10,000 discount to normal fees and down from $22,000 just a few years ago. Full family dues are $445 per month.

The Thornblade Club is closed
for a $2 million renovation and will reopen in November.

     Although Spartanburg has had some strong economic news, the nearby Carolina Country Club continues to struggle to sell real estate.  With only three sales so far this year, one more pending and 39 homes on the market, Carolina CC has 78 months of inventory.  The community is a good 20 minutes from the center of Spartanburg.  All amenities inside the community are finished, and the golf course (I have played it) is in nice shape and challenging.  The club is currently waiving an initiation fee but that is likely to change soon.  Price points on homes there average almost $200,000 less than at Thornblade, but annual HOA fees are $1,250, in large part to support the only 24x7 security patrol in Greenville area communities.
     The selling performance at the nearby Cliffs Communities, which hosted the BMW tournament up to 2008, has been similar to that at Carolina CC.  The MLS reports from the three areas in South Carolina that include all The Cliffs Communities indicate that only nine homes were sold at The Cliffs so far this year, with two currently under contract; with 56 active listings, buyers might find some bargains amidst the 37 months of inventory.  In the Western Upstate MLS region that includes the Lake Keowee area, the average Cliffs house was listed at $1.5 million and the average selling price was $890,000.  (Note: The preceding figures do not include Cliffs homes sold by the developer, which would likely not be listed with the local Realtor board.)  As reported at GolfCommunityReviews.com, The Cliffs raised $64 million from homeowners to finish two courses and other uncompleted amenities.  We expect sales to continue to be slow in these communities.

     Although the recession may be far from over, Greenville's popular city scene and the area's strong economic engine (BMW of America is headquartered in Spartanburg) are creating jobs in the Upstate area.  Anyone considering Greenville as a destination for a golf home should strongly consider the stability and fine golf course at Thornblade.  More mature homes closer to the city are also available adjacent to The Greenville Country Club, with its two courses, including the highly rated Chanticleer.

 

Editor's note: If you would like more information about the Greenville area, please contact me at This email address is being protected from spambots. You need JavaScript enabled to view it. and I will be pleased to put you in touch with Lee.
 

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    July 2010 

 

 You could give yourself
a raise by moving to... Greenville, SC 
 

   Anyone contemplating a move from north of the Mason-Dixon Line to Greenville, SC (see accompanying market report) will find a cost of living far less than they are used to.  A chart published in Where to Retire magazine shows a lower cost of living than Greenville in just one of 39 other cities (Indianapolis, about 1% cheaper to live than in Greenville). 

    The following are a selection of other northern cities and how much cheaper it is, on a percentage basis, to live in Greenville.

 

Baltimore 26%
Boston 32%
Chicago 21%
Detroit 14%
Hartford 26%
Milwaukee 12%
Minneapolis 20%
Nassau County (NY) 39%
Philadelphia 28%
Pittsburgh 1%
Providence 26%
Rochester 11%
Washington, D.C 36%

 

Reader Feedback

      We want to make this newsletter as  useful as possible for you.  If you have comments, suggestions or observations about the newsletter, please email them to:  This email address is being protected from spambots. You need JavaScript enabled to view it..
      I promise to respond quickly.  Thanks.
  --  Larry Gavrich, Editor

 

Beyond the brochure:
Some key questions to ask
before choosing your golf community

    Mike Tower is a proud owner in the Champion Hills golf community of Hendersonville, NC, and a subscriber to this newsletter.  Having been through the search for a golf home in the southeast and as an involved resident of Champion Hills, Mike speaks from experience about looking for a home in a golf community.
      The following are a few of the key questions he thinks everyone should ask before plunking down a big chunk of their life savings on their dream home.  The explanations are a stitch-together of Mike's and my own thoughts.  This is not a comprehensive list of what you need to know before making one of the biggest investments of your life, but you won't find any of these answers in a golf community's marketing materials.
-- Larry

How close is the community to being built out?

A developer typically pulls up stakes and goes on to his next project when a community is 75% to 80% sold.

     Generally speaking, the more built out a community, the more stable it is, and the less construction noise and debris you will have to endure.  Conversely, many of the communities that opened in the mid-2000s just in time for the economy to tank are in shaky condition.  (Note: The risks of investing in such communities are reflected in property prices, which are in some cases incredibly low right now.)  A typical rule of thumb is that a developer pulls up stakes and goes on to his next project when a community is 75% to 80% sold.   Before the developer leaves, the homeowners have formed their association(s), created governance structures and set monthly dues payments for the community's infrastructure (e.g. roads, landscaping and security gate maintenance, if there is a gate).  In some cases, the developer has sold the golf course and other amenities to the residents or club owners (see below).

Who owns the golf course?  What's in reserve?

     The traditional relationship between developers and the golf clubs they built may change with the new economic realities.  For the last few decades, the model has been that the developer of the community commissions the golf architect and pays for the golf course.  The golf course has been used to lure prospective buyers and, depending on the designer name on the course, to add a few percentage points to the price of properties (such luminaries as Dye, Nicklaus and Fazio generate the highest prices).  When the community is almost built out and the developer moves on to his next project, he either sells the course to club members—most or all of whom are residents—or to an outside golf-management firm, like ClubCorp.  In some cases, if the developer lives in the community or the nearby area and does not have other projects in the hopper, he might keep the course himself and hire a firm to manage it for him.

Make sure to ask about the club's financial status, including the amount of reserves.

     No matter who owns the club—developer or members—you will want to ask a board member or club official about the club's financial status, especially how much money they keep in reserve (at minimum, enough to cover the equivalent of one year's operating budget) and what capital expenditures are likely to be necessary in the future.  In the current economic environment, a club with thin or no reserves might have trouble putting gas in the tanks of its lawnmowers when the next spike in oil prices inevitably comes.  If that's the case, then they certainly won't be able to buy the new lawnmowers they need, let alone finish any uncompleted amenities.
      Of course, a club or community owned and run by a developer rather than members and residents has control over maintenance of everything as well as who gets to play the golf course.  If you are interested in a community and/or club that is not member-owned, make sure you are satisfied that the owner has a plan, and that it is reasonable and fundable.

How many club members and what is the trend?

     Any club that has kept its membership rolls net even over the last three years deserves kudos and serious consideration from prospective members.  More likely is a club that has lost members recently because the economy has turned what once felt like a casual spend for many of us into a "discretionary" luxury.   Although every club's situation is different, the most stable are those that have lost no more than 5% of their members (net) in the last few years.  Most 18-hole clubs set a ceiling of between 350 and 400 full-golf memberships; more than that creates a waiting list for members, and fewer creates a cause for concern.  There are, of course, mitigating circumstances behind all numbers, so ask enough questions to give you the full picture.  A club with just 300 members and down 10% since 2007, but with a full year's budget in reserve, might have a brighter future, for example, than one with 350 members and no reserve.

Will you feel welcome?

Ask leading questions like "What changes would you make if you could?" rather than "Are people friendly here?"

     Virtually every couple I work with lists a variant of the same requirement:  They must feel "at home" in their next community.  Before you start looking at properties in a community, ask the real estate agent or an official of the club about programs that help integrate new residents.  I have found that the larger communities (the 4,500+ acre Landings in Savannah comes to mind) do a good job of this because the more numerous the residents  (The Landings' population is more than 8,000), the greater the chances that someone has formed a "welcome wagon."  But some smaller communities that understand that prospects are concerned about the friendliness factor set up "ambassador" programs where they match a serious prospect with a resident who can answer their questions about what it is like to live there.  
     When you visit a community, ask leading questions rather than general questions like "Are people friendly here?"  Try asking, "How long did it take you and your spouse to feel comfortable here?" or "What would you change about the club or community if you could?" or other tough questions that demand specific responses.
    The clubhouse is a good place to plop yourself down for an hour (have lunch so you can test drive the food) to observe your future fellow residents.  And if a round of golf in the community is on your itinerary—it should be—then ask for at least one club member to be in your group.  Pepper him or her with some of those tough questions.

Which is a better deal, equity or non-equity membership?

    In my experience, there is a roughly 4 to 1 ratio between the cost of equity and non-equity memberships in comparable clubs.  For example, if a non-equity membership is $10,000 then an equity membership will be $40,000 or more.  (Note: Relatively few clubs offer both options, but I anticipate that could change with the current economy.)   Although there is no strict rule of thumb, between 75% and 100% of an original equity payment will be returned to a member who resigns after a certain number of new members join.  At most clubs, especially in these times of declining memberships, do not count on anything less than a few years minimum after you resign before you get your money back.

    Given that many private clubs have dropped their initiation fee levels in the last couple of years, my advice is to go for the less expensive non-equity membership, and consider it part of your investment in the property you purchase.  A $50,000 initiation fee coupled with a $500,000 home purchase is pretty much the same as a $10,000 fee and $540,000 price for the real estate.  I can hear CFOs in the audience arguing that the higher priced home will appreciate more dollars than the lower priced one over time, but I might counter that the community with the $50,000 golf club could very well hold its value better than the one with the $10,000 club.
     As with most choices in life, pick your poison.

 

Market Update:  Greenville, SC

by Lee Cunningham

 

     This is the first in a series of updates on key golf retirement markets in the southern U.S. Lee Cunningham leads a team of Realtors at RE/Max in Greenville and is a member of the Home On The Course network of preferred real estate professionals. Lee has special knowledge about the golf communities and courses in and around Greenville, including Thornblade Club and Carolina Country Club, two of the three venues for the annual BMW Charity Pro-Am on the Nationwide Tour. This year, 57,000 people attended the tournament.  Lee's comments follow:

     The recession has been tough on golf clubs in our area, and although the BMW event brings thousands of fans to the fairways, the effect on home sales is probably negligible.  
     According to the Greenville and Spartanburg Multiple Listing Services, sales of homes in the Thornblade Club community (featuring a classic Tom Fazio golf course) have increased over the past six months, with 10 sold and three currently under contract.  With 18 homes currently listed, Thornblade has 9 1/2 months of inventory (six months is considered "balanced").  Prices in the un-gated community, where HOA dues are just $560 annually, are down about 20% since 2008; the average home sells for just under $600,000.  The Thornblade course is currently closed for a $2 million renovation and will reopen in November.  The club is offering 20 memberships at $8,000 initiation fees, a $10,000 discount to normal fees and down from $22,000 just a few years ago. Full family dues are $445 per month.

The Thornblade Club is closed
for a $2 million renovation and will reopen in November.

     Although Spartanburg has had some strong economic news, the nearby Carolina Country Club continues to struggle to sell real estate.  With only three sales so far this year, one more pending and 39 homes on the market, Carolina CC has 78 months of inventory.  The community is a good 20 minutes from the center of Spartanburg.  All amenities inside the community are finished, and the golf course (I have played it) is in nice shape and challenging.  The club is currently waiving an initiation fee but that is likely to change soon.  Price points on homes there average almost $200,000 less than at Thornblade, but annual HOA fees are $1,250, in large part to support the only 24x7 security patrol in Greenville area communities.
     The selling performance at the nearby Cliffs Communities, which hosted the BMW tournament up to 2008, has been similar to that at Carolina CC.  The MLS reports from the three areas in South Carolina that include all The Cliffs Communities indicate that only nine homes were sold at The Cliffs so far this year, with two currently under contract; with 56 active listings, buyers might find some bargains amidst the 37 months of inventory.  In the Western Upstate MLS region that includes the Lake Keowee area, the average Cliffs house was listed at $1.5 million and the average selling price was $890,000.  (Note: The preceding figures do not include Cliffs homes sold by the developer, which would likely not be listed with the local Realtor board.)  As reported at GolfCommunityReviews.com, The Cliffs raised $64 million from homeowners to finish two courses and other uncompleted amenities.  We expect sales to continue to be slow in these communities.

     Although the recession may be far from over, Greenville's popular city scene and the area's strong economic engine (BMW of America is headquartered in Spartanburg) are creating jobs in the Upstate area.  Anyone considering Greenville as a destination for a golf home should strongly consider the stability and fine golf course at Thornblade.  More mature homes closer to the city are also available adjacent to The Greenville Country Club, with its two courses, including the highly rated Chanticleer.

 

Editor's note: If you would like more information about the Greenville area, please contact me at This email address is being protected from spambots. You need JavaScript enabled to view it. and I will be pleased to put you in touch with Lee.
 

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July 2010

August 2010

 
    August 2010

 

 Low cost of the high life ...in Savannah, GA  

   Most northerners contemplating a move to the Savannah, GA, area will find a cost of living less than they are used to.  A chart published in Where to Retire magazine shows a lower cost of living than in most major cities of the north.

    The following data show the % decrease or increase in cost of living with moves from selected northern cities to Savannah.

 

Baltimore -24%
Boston -29%
Buffalo -2%
Chicago -18%
Columbus, OH -1%
Detroit -8%
Indianapolis +4%
Manhattan -57%
Milwaukee -8%
Minneapolis -18%
Nassau Cty (NY) -35%
Newark, NJ -27%
Philadelphia -25%
Pittsburgh +1%
Portland, ME -18%
Providence, RI -22%
Stamford, CT -37%
Washington, DC -33%

 

Reader Feedback

      We want to make this newsletter as  useful as possible for you.  If you have comments, suggestions or observations about the newsletter, please email them to:  This email address is being protected from spambots. You need JavaScript enabled to view it..
      I promise to respond quickly.  Thanks.
  --  Larry Gavrich, Editor

 

Copy Cats:
Golf community marketing hyperbole
insults our intelligence

    Like the French, I am taking the month of August off and re-publishing here a commentary about golf community advertising.  If the headline above and article that follows seem familiar, it is because they ran at GolfCommunityReviews.com last March. Apologies to anyone who may have read it in its original incantation, but a recent perusal of online golf community advertising indicates the flow of overstatement goes on, unabated.  Beware.

 

Golf community marketing is often heavy on hyperbole and a little light on the facts.

     Too-good-to-be-true storylines never seem to go out of fashion in marketing campaigns, and no group hyperventilates more than do real estate developers, or at least the folks they hire to advertise in their behalf.  A sucker may be born every minute, but in the wake of the housing collapse and the unfulfilled promises in many of the most expensive golf communities, you would think the marketing geniuses would substitute more fact for hyperbole in current promotions.
     No such luck.  Even those planned communities that barely survived the meltdown are back to their old promotional ways, loading up their marketing language with the kinds of unsubstantiated pronouncements of which a Countrywide Financial sub-prime loan pusher would be proud.

“…compressing the largest amount of words into the smallest amount of thought.” – Winston Churchill

     I received a newsletter recently from a beautiful mountain golf community that I had visited before it maneuvered past some life-threatening financial issues.  It had the bad fortune to position itself at the top of the market just months before the collapse; it was the kind of place hedge fund managers and bank executives would like and, at one point, could afford.  The half-finished development came close to going over the cliff but it has come back from the brink with new owners and a fresh outlook.  The newsletter proudly references that the community is now debt free.  In these parlous times, the financial status of the community is critical to its marketing; but that strong selling point is trivialized by an unfortunate avalanche of trite and exaggerated pronouncements that follows.  (Note:  I am not naming the community because, frankly, it is no guiltier of hyperbole than are most of its competitors.)

     The newsletter describes the development as “a community that would defy all conventional logic”; it is unclear in the copy what logic it defied, but my best guess is that it is a reference to the low density of housing (one home per 12 acres) and the “park” that surrounds the community.  This same community that defied all conventional logic also provides “superb amenities…of quality without pretentiousness.”  When you actually have to say you are not pretentious, you are being quite pretentious.

     The new president of this community may have been hired for his strong portfolio of adverbs and adjectives (emphases mine).  “…we're moving forward expeditiously to complete this exceptional project in one of the country's most beautiful settings," he says of the “unique property…” (as if we are not smart enough to understand that every community is unique).

     Just in case you haven’t reached for your checkbook to send a deposit on a mountain home site, the new prez adds that, “It's really a now or never opportunity for inaugural buyers with only 30% of [our] home sites still available.”  Unless re-sales will never be permitted, there is nothing “now or never” about the opportunity, unless he offers a money-back guarantee that prices will never be lower.

Copywriting by Pollyanna and Rebecca of Sunnybrook, via Stepford

If a developer says it is "now or never," you might want to opt for "never."

     They teach you in Golf Community Development Marketing 101 that you must always present happy homeowners in your ads, and that you put words in their mouths that are straight out of Stepford; the more banal the better.  Something like: “I think that the strongest feature of the development is the enormous feeling of community and friendship among its members.”  Q.  Where have I seen that line before?  A.  In dozens of golf community advertisements.
     Call me elitist, but I have this notion that folks who are being asked to plunk down $250,000 for a piece of property and another $1 million or more to build their dream home are intelligent enough to figure out for themselves whether this is a good time to buy or not.  But some marketing copywriters and their editors don’t understand this:  “You've read the stories,” the newsletter reminds us, “seen the television specials, maybe even received a few E-Mails telling you that this moment in time is a truly historic one to be in the market for real estate.  Whether you're looking for a primary home, a vacation home, or a retirement destination, everyone is rolling out the red carpet for you.  Feels good for a change, doesn't it?”
     Not really.  What would feel good is a lot more fact and a lot less drivel.
 

   Read my Blog      This email address is being protected from spambots. You need JavaScript enabled to view it.
 

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© 2010 Golf Community Reviews
 
    August 2010

 

 Low cost of the high life ...in Savannah, GA  

   Most northerners contemplating a move to the Savannah, GA, area will find a cost of living less than they are used to.  A chart published in Where to Retire magazine shows a lower cost of living than in most major cities of the north.

    The following data show the % decrease or increase in cost of living with moves from selected northern cities to Savannah.

 

Baltimore -24%
Boston -29%
Buffalo -2%
Chicago -18%
Columbus, OH -1%
Detroit -8%
Indianapolis +4%
Manhattan -57%
Milwaukee -8%
Minneapolis -18%
Nassau Cty (NY) -35%
Newark, NJ -27%
Philadelphia -25%
Pittsburgh +1%
Portland, ME -18%
Providence, RI -22%
Stamford, CT -37%
Washington, DC -33%

 

Reader Feedback

      We want to make this newsletter as  useful as possible for you.  If you have comments, suggestions or observations about the newsletter, please email them to:  This email address is being protected from spambots. You need JavaScript enabled to view it..
      I promise to respond quickly.  Thanks.
  --  Larry Gavrich, Editor

 

Copy Cats:
Golf community marketing hyperbole
insults our intelligence

    Like the French, I am taking the month of August off and re-publishing here a commentary about golf community advertising.  If the headline above and article that follows seem familiar, it is because they ran at GolfCommunityReviews.com last March. Apologies to anyone who may have read it in its original incantation, but a recent perusal of online golf community advertising indicates the flow of overstatement goes on, unabated.  Beware.

 

Golf community marketing is often heavy on hyperbole and a little light on the facts.

     Too-good-to-be-true storylines never seem to go out of fashion in marketing campaigns, and no group hyperventilates more than do real estate developers, or at least the folks they hire to advertise in their behalf.  A sucker may be born every minute, but in the wake of the housing collapse and the unfulfilled promises in many of the most expensive golf communities, you would think the marketing geniuses would substitute more fact for hyperbole in current promotions.
     No such luck.  Even those planned communities that barely survived the meltdown are back to their old promotional ways, loading up their marketing language with the kinds of unsubstantiated pronouncements of which a Countrywide Financial sub-prime loan pusher would be proud.

“…compressing the largest amount of words into the smallest amount of thought.” – Winston Churchill

     I received a newsletter recently from a beautiful mountain golf community that I had visited before it maneuvered past some life-threatening financial issues.  It had the bad fortune to position itself at the top of the market just months before the collapse; it was the kind of place hedge fund managers and bank executives would like and, at one point, could afford.  The half-finished development came close to going over the cliff but it has come back from the brink with new owners and a fresh outlook.  The newsletter proudly references that the community is now debt free.  In these parlous times, the financial status of the community is critical to its marketing; but that strong selling point is trivialized by an unfortunate avalanche of trite and exaggerated pronouncements that follows.  (Note:  I am not naming the community because, frankly, it is no guiltier of hyperbole than are most of its competitors.)

     The newsletter describes the development as “a community that would defy all conventional logic”; it is unclear in the copy what logic it defied, but my best guess is that it is a reference to the low density of housing (one home per 12 acres) and the “park” that surrounds the community.  This same community that defied all conventional logic also provides “superb amenities…of quality without pretentiousness.”  When you actually have to say you are not pretentious, you are being quite pretentious.

     The new president of this community may have been hired for his strong portfolio of adverbs and adjectives (emphases mine).  “…we're moving forward expeditiously to complete this exceptional project in one of the country's most beautiful settings," he says of the “unique property…” (as if we are not smart enough to understand that every community is unique).

     Just in case you haven’t reached for your checkbook to send a deposit on a mountain home site, the new prez adds that, “It's really a now or never opportunity for inaugural buyers with only 30% of [our] home sites still available.”  Unless re-sales will never be permitted, there is nothing “now or never” about the opportunity, unless he offers a money-back guarantee that prices will never be lower.

Copywriting by Pollyanna and Rebecca of Sunnybrook, via Stepford

If a developer says it is "now or never," you might want to opt for "never."

     They teach you in Golf Community Development Marketing 101 that you must always present happy homeowners in your ads, and that you put words in their mouths that are straight out of Stepford; the more banal the better.  Something like: “I think that the strongest feature of the development is the enormous feeling of community and friendship among its members.”  Q.  Where have I seen that line before?  A.  In dozens of golf community advertisements.
     Call me elitist, but I have this notion that folks who are being asked to plunk down $250,000 for a piece of property and another $1 million or more to build their dream home are intelligent enough to figure out for themselves whether this is a good time to buy or not.  But some marketing copywriters and their editors don’t understand this:  “You've read the stories,” the newsletter reminds us, “seen the television specials, maybe even received a few E-Mails telling you that this moment in time is a truly historic one to be in the market for real estate.  Whether you're looking for a primary home, a vacation home, or a retirement destination, everyone is rolling out the red carpet for you.  Feels good for a change, doesn't it?”
     Not really.  What would feel good is a lot more fact and a lot less drivel.
 

   Read my Blog      This email address is being protected from spambots. You need JavaScript enabled to view it.
 

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August 2010

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