Club amenities vs. real estate market values
5 tips on how to determine a good (or bad) golf community real estate investment
Jason Becker, PGA
March 06, 2019
See the full article on golfadvisor.com
Over the past three years, I have had the opportunity to host several educational events for consumers from the northern part of the country starting the process of a transition to southern states. The forums tend to unfold in the same predictable fashion, but there was a question at one event that changed the course of my thinking on how to invest wisely in your future golf community home.
During a Q&A session at Milwaukee Country Club in 2015, a hand patiently raised up in the back. Up to this point, most questions had centered around club membership programs, typical club bylaws and the overall club culture differences that span across the Sun Belt. But then it happened: a curve ball. A question that was so intuitive for a consumer to ask, but the panel of advisors and I were left with no answer. Yet, we were inspired.
“Is there a fundamental formula that consumers can use to determine if real estate values in a Sun Belt golf community have been, or will be, either positively or negatively affected by the club’s golf course, amenities and overall assets? This is a major decision for me and my family, and I want to make the smartest investment I can.”
Silence fell on the panel as we all thought, Wow, what a great question! Unfortunately, at that time, none of us had a tangible answer.
On the flight home, I remember staring out the window and thinking: “How is it that there is no real estate program or road map in place for a consumer who will be making such a life-changing financial decision?” It seemed reasonable; there had to be a way to do research on, say, three to four club communities and determine which one was generating positive (or negative) real estate market values based on the club’s amenities. But, how would you correlate the two?
Case in point: In 2016, Grey Oaks Country Club in Naples, Florida underwent a masterful $36 million-dollar renovation and capital improvements plan that early-on had several members fearful of voting on such a large financial investment. The argument, however, was: “If we choose to invest in our club, not only will the membership grow and prosper, but our homes will increase in value due to the club’s amenities.”
As it turns out, those assumptions were correct.
At the end of the 2017 calendar year, the 34105 zip code (Naples) showed a year-to-year stagnate market in terms of fluctuating real estate values. But within that very zip code, real estate in the Grey Oaks Country Club community increased on average by 8.5 percent.
There are dozens of stories like Grey Oaks Country Club circulating amongst the private club marketplace from Palm Springs to Hilton Head, however how do consumers pinpoint the club that will be the best lifestyle investment for themselves and their real estate needs? Well, I am happy to say that after three years of obsession over the Milwaukee Country Club question, we have helped develope a roadmap to advance the research into making such a move.
Helping us on this project is Michael Timmerman, CRE and chief market intelligence officer of Club Benchmarking. Michael has studied the relationship between a club’s amenities and real estate values for over 30 years. He also speaks around the country on this topic to assist developers and investors in better understanding what to look for when trying to make this important purchase decision. I have asked him to help us formulate a list of the “Top Five Tips” for consumers to help with the search of utilizing the resources readily available. Our aim is to provide common-sense tips to help research a new home purchase into a future golf community.
Let us help you find your ideal golf lifestyle!
Here are Michael’s top five tips to aid in determining which club will offer the greatest chance to succeed with real estate investments:
1. Change is inevitable and constant
“Making a long-distance move is both exciting and stressful. Take time to reflect on how your lifestyle is going to change over the next year, five years, and beyond. Consider this your new ‘re-birth day’ as you prepare a new lifestyle road map for the future. Look for clubs that offer all the activities you plan to partake in and then look at unexplored activities that may not necessarily be part of your plan. Who knows – you may become an expert gardener or a croquet player.”
2. Investment is not always financial
“The word ‘investment’ typically conjures thoughts of risk and money-loss potential. In this case, ‘investment’ also includes the effort you put into enjoying life and your experiences along the way. You don’t want to lose money when you buy a piece of real estate, which is why finding the right community with all the lifestyle activities you desire is so important. Balance your lifestyle investment with your financial investment. Once you have found the right community, your home-design preference and location within the community may change. Think of movement within the community as the diversification of the financial portion of your investment and the social portion of your investment as the lifestyle and experience at the club.”
3. Be ready for market fluctuations
“Real estate markets constantly change due to local market influences. There are several sources I use to get general market insights on the main economic drivers and related home value trends:
www.census.gov/en.html – Search for a U.S. city or county in the and get a summary of the most recent economic and demographic data.
www.zillow.com/home-values/ – This link shows the historic sales prices and home sales volume from Zillow. It provides a great sketch of the general trends of the market. Be careful, though – this information alone is not granular enough for decisions.
www.golflifenavigators.com/ – Our team at Golf Life Navigators has put together the best summary of golf community lifestyles in the business.”
4. What was old is new again
“In order for established clubs to compete with new developments and attract a new audience, they are making investments in both golf and non-golf amenities. These investments can range from redecorating and resurfacing to a complete tear-down and redevelopment of the clubhouse, pool or tennis facility.
“Redevelopment of the course and its layout makes old fairways new again, putting new energy into an established community. Clubs that have recently made or committed to making both golf and non-golf amenity investments understand they must appeal to everyone from grandparents to grandkids. Multi-generational amenities such as pools with casual dining, sports fields and croquet are all great ways to keep the family engaged while appealing to a broader market.”
5. Location, location, location
“C’mon, I’m a real estate guy…this is important! When considering a new golf community, don’t sacrifice location for price. During the expansion of new golf course communities in the early 2000s, developers used price as the incentive to draw people away from the more established locations.
“When the market corrected in 2008, many people fled the outlying areas and moved closer to population centers, leaving many far-flung communities struggling. This is not to say these communities shouldn’t be considered, especially when taking into account the items discussed above. Just be aware of the location in relation to entertainment, employment centers, support facilities and medical care. You must also make sure your lifestyle preferences are aligned with the community’s location.”
At Golf Life Navigators, our trends show that 68 percent of consumers will be combining their search for the perfect golf club and home. In addition, 61 percent say that they would like to live within a gated golf community.
Which is more important – the club or the home? As it turns out, consumers are saying it is a 50/50 split and generally, his motivation is a bit different then hers.
That said, you’re not alone. Thousands of consumers are in your shoes as they plan for a winter escape in sun-rich golf communities. My advice is to continue to educate yourself and, by all means, reach out to us with any questions. Count on Golf Life Navigators to be your “trusted advisor” for one of life’s biggest and most important decisions. And as always, enjoy the journey! You’ve earned it!
See the full article on golfadvisor.com