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Most of us think we are going to downsize our physical space when we retire. After all, the kids are grown and out of the nest, which cuts a couple of bedrooms out of the equation; we are only going to cook for two people regularly; we plan an “active” retirement, including golf, outside the home for much of the day; and, dirty little secret, we no longer feel the need to keep up with the Joneses or impress the boss. That aspect of the rat race is over, thank goodness.
Of course, the most important reason to downsize is the preservation of cash once you are on a fixed income. During our careers, we may have managed a house that we could just about afford, and probably took on some debt to validate our careers and provide a good place for our children to be raised. Now, we may not need to borrow money to buy our retirement home, especially if our primary homes appreciated over a couple of decades or more (the 2008 recession notwithstanding). We understand, justifiably, that eliminating square footage from one home to the next is a surefire way to reduce the cost of the new home and sock away some of the proceeds from the sale of our old home. The fact is that, with rare exception in the South, many can actually afford to buy a home of similar square footage to our current primary home and still save money, often extreme amounts of it. This is because the cost of real estate in the South is so much less expensive on a per square foot basis than it is in most other parts of the U.S.
In short, money should not be the driving reason to downsize when you move North to South. Lifestyle should be.
Here, in no particular order, are a few lifestyle considerations when “right-sizing” your objectives for your golf community home.
Visits by kids and grandkids
I’ll never forget one customer, a grandmother, telling me that she and her husband purposely bought a two-bedroom golf community home so that when her children and grandchildren came to visit, there would not be enough room for them; they would have to stay in a nearby hotel. “We don’t want the noise and chaos, even for a few days,” she told me. That may seem a bit harsh to those who crave occasional visits from children and grandchildren, but there are few better examples of matching lifestyle to house size.
There may be a good financial reason to take this approach as well. For example, we took a look at two homes currently for sale at Prestancia, a well-established community in the Sarasota, FL, area that features a TPC golf course. We compared the most expensive two-bedroom home in Prestancia with the least expensive four-bedroom home. The most expensive two-bedroom home is offered currently for $399,000; the least expensive four-bedroom home is listed for a comparatively whopping $870,000. This example may seem extreme, though real, but suffice to say that those extra couple of bedrooms to accommodate children and grandchildren could certainly go toward providing the children with a beautiful rental property for their visit and their own privacy.
"I Am the Entertainer, And I’ve Had to Pay My Price"
With apologies to Billy Joel, let’s face it: There are kitchens and dining areas that are perfectly suitable for a couple, and then there are those “perfect for entertaining,” as many real estate agents will describe some homes with large cooking and eating spaces. If during your time in your primary home you liked to cook for and entertain your neighbors and friends, chances are you will do the same in retirement (maybe more so, since you will have plenty of time). New-home builders know this and are designing showplace kitchens with upscale appliances in homes priced as low as the $200s. But in many 40-year old communities, homes are getting to the point of needing cosmetic and renovation work. If you can purchase an otherwise fine home in need of updating for $100,000 less than comparable homes down the block, consider spending $75,000 on a kitchen renovation to your specifications and apply the remainder to the master bathroom -- or a trip to some exotic place.
Editor’s Advice: As any serious cook knows, gas is better than electric. If you like to cook, make sure that the community you target permits the use of propane for cooking at the least, or has natural gas lines running into its homes at best.
Space to Do the Bills
If we had a home office during our careers, a place to pay the bills or do weekend work before returning to our official office on Monday, chances are we will count on one in retirement as well (after all, the bills don’t go away). My home office in Connecticut is in our guest room, and it is no big deal to abandon it to visiting friends or family for a day or two. Consider the same setup in your next home, a small third or fourth bedroom with a desk. As added costs go, this might be the least expensive trapping to retain from your former life.
It is hard to assess precisely the extra cost of a home office versus, say, just using your dining room or kitchen counter to balance the checkbook. Many buyers simply set up an extra bedroom as an office. One rule of thumb would be to consider a nice-sized office space to be 10 x 15, or 150 square feet. With resale homes in high-quality golf communities in the Southeast priced from about $120 per square foot, count on that bedroom cum office costing from about $18,000 (consider also that larger homes generally command more in the way of taxes). If you don’t have a lot of serious work to do, skipping that extra room and paying your bills from the kitchen table will certainly help you balance the checkbook.
Have Home, Will Travel
Early in our retirements especially, many of us will look to travel the world, having deferred travel during our careers and saved up for it in retirement. If you plan on, say, a month of overseas travel each year, and then some weeks traveling to see kids/grandkids and friends, you could find yourself closing up your house for three months or so. Especially if you have a mortgage as well as taxes and homeowner fees, paying for but not using your home for a quarter of the year could begin to nag at you. Before committing to a new home, you might want to figure out what your carrying costs will be and then calculate how much you will be “leaving on the table” for the time you are not there. The results could send you in another direction (renting, perhaps?).
But here is an idea that could pay off in terms of putting those unused weeks to use in your house. Consider a swap for a couple of weeks or more with another homeowner in a place you have always wanted to visit. My wife and I did this with a couple from Crail, Scotland, a short drive from St. Andrews, and it worked out great. George and Dorothy stayed in our condo in Pawleys Island, SC, and my son and I stayed in their cottage in Crail, 1 mile from the 7th oldest golf course in the world at the Crail Golfing Society. We spent seven glorious days of golf at the Old Course in St. Andrews and other wonderful links courses on the coast. I estimate that we saved nearly $2,000 on lodging alone during our stay.
If you want to know more about how the house swap works, check out homelink.org.
States of Confusion: Retire to Florida…or Wyoming, One Source Advises
We Americans love lists. Rankings, of course, have become the lifeblood of magazines and other media. Without its annual rankings of colleges and universities, for example, U.S. News & World Report might have faded into oblivion years ago. (As it is, the magazine printed its last regular edition in 2010.) I worked for a university for three years in the early 2000s, and I learned that institutes of higher learning spend months getting ready to report the best numbers they can to USN&WR. They know that every year, helicopter parents intent on sending their kids to the most highly rated schools in the nation gobble up the U.S. News printed issue. Every university wants to move up the list because doing so means tuition dollars and prestige.
Just about everything of any importance to a segment of the population gets ranked –- golf courses, hospitals, restaurants, movies, the richest people in the world…you name it. Most of us love these rankings because it saves us doing the onerous work of research on topics of specific interest. It is so much easier, for example, to check out the rankings in Forbes or Business Week for the best cities to live in than it is to access ponderous U.S. Census data and other reliable sources to construct our own opinions. Never mind that the media rankings are typically offered without nuance of explanation, or without much explanation at all. Plus, the few qualities of a city, a golf course or hospital the media use to make their judgments seem designed more for the expedience of producing the rankings quickly and cheaply rather than producing them well. For a couple looking to plunk down six figures for a retirement home, the stakes are too high to rely on some magazine’s rush to judgment.
Most surveys that compare cities are granular and fairly helpful in providing a picture of the relative merits of one city compared with another, although there are quality differences between zip codes in and around a metro area. That said, city rankings are certainly more reliable than state rankings which, to us, are meaningless.
Take, for example, a recent ranking of 2016’s "Best & Worst States to Retire" by the online service Wallethub.com, whose findings and rankings we have referenced in the past. The state rankings are a head scratcher, largely because the categories that determine the rankings are few in number and defined in what seems to be a rather narrow way. You can judge for yourself by accessing the rankings at Wallethub.com. Suffice to say that you might be surprised that, especially if you are a retiree, you hadn’t thought of Wyoming as a place to spend the rest of your days. But there it is on the Wallethub list at #2 overall, just behind the more predictable Florida and just ahead of the almost as surprising South Dakota. It appears that the category “Affordability” has much to do with Wyoming’s ranking, because the Cowboy State ranks #1 in that regard. (Florida ranks #2 in “Affordability.”) South Dakota, which ranks an unremarkable 14th in Affordability, nails a #1 position in “Healthcare.” (We wonder how comforting that will be to Dakota farmers four hours from the nearest city.) The third and final category is “Quality of Life.” With its #1 ranking in that category, California ranks #15 overall, overcoming its affordability ranking of an unsurprising 41st; if anything, we thought the California affordability ranking would have been worse. But if the quality of life in California is top ranked in the nation, no one has been telling the soon-to-be-former residents of the Golden State who have been contacting me lately for help in finding a home in the Carolinas. (For most of them, it is about the cost; they can sell their home at a hyper-inflated price and pocket half or more after buying a similar home in the Carolinas.)
At least South Carolina ranks 4th overall in the Wallethub survey, but how to reconcile that its neighboring state immediately to the north ranks a disappointing 22nd with rather mediocre numbers across all three categories? Virginia ranks 10th overall, its healthcare number holding it down. Georgia ranks 20th, healthcare again the retardant against a better ranking. Delaware ranks 16th but its Quality of Life ranking is a stunning 49th; only the rough and rural state of Alaska trails it. With a seacoast and good shopping spurred by no state sales tax, can Delaware’s quality of life really be that much worse than Wyoming’s?
Cold Stimulates Warm Thinking About Golf Communities
You can set your thermometer by it. Year after year, when temperature plummets finally signal winter, I receive more requests for assistance to find people a home in warmer climates than for any other week of the year. Granted, some of those potential buyers who fill out our Golf Homes Questionnaire decide not to relocate in the near future despite many good personal and financial reasons to do so. For them, it is hard to go beyond the dream of a warm winter. (Our previous issue of our free Home On The Course newsletter makes the case for moving soon; you can access it in our archives by clicking here.)
Those who are not really ready to move full time have caught the fever. A friend in Connecticut has asked me to refer him to my real estate professional in Sarasota, even though his retirement is probably five or six years away. The cold has warmed him to the idea of buying a home now that he can rent or use for vacation weeks in the intervening years and receive the anticipated price appreciation. Many Florida markets have been improving by as much 5% to 8% annually in the last few years, and the price escalation on the home he might buy now will help retain his buying power in whichever Florida market he chooses later.
The overhang from the recession has kept the costs of joining golf clubs in the South buyer friendly. Many golfers who contact me are surprised at the relatively low costs to become a member at many high-quality golf community clubs. On my questionnaire I ask how much the respondent would be willing to pay for golf membership and dues; recent responses have ranged from $5,000 –- for a semi-private membership –- to $50,000 for a private one. In both cases, that is more than is necessary at all but the most popular (waiting list) or snobbish clubs. At the vaunted Cliffs Communities, for example, the comprehensive golf membership, which includes all the other world-class amenities The Cliffs is known for, tops out at $50,000. Those serious golfers with an itinerant nature can avail themselves of all seven Cliffs courses spread a little over an hour from end to end across the upstate area of South Carolina to near Asheville, NC.
Initiation Fees & Dues
Conversely, dues at many clubs tend to be higher than many customers anticipate. One of my customers willing to pay $10,000 for an initiation fee to a semi-private club, for example, set a limit of $300 per month in dues. That is not unrealistic, say, for a club with an initiation fee under $5,000; but a semi-private club that has the reputation and quality to charge $10,000 is more likely to assess more than $500 in monthly dues, although there are exceptions to the rule, especially in more rural areas where clubs rely on a rather finite local population, and the costs to run the club are comparatively lower. In general, expect to pay dues of around $300 per month for semi-private clubs asking $2,500 or so for initiation fees. For private clubs, we see few dues levels under $500 per month, with most in the range of $600 to $1,000.
One Membership, 10 Private Clubs
Consolidation in the golf industry during and since the recession has created opportunities for golfers who want to just go out and play without reaching for their credit cards to pay green fees. This consolidation has occurred both in the private and public club realms. In the Carolinas, for example, and as we have written extensively, John McConnell has stitched together 10 private golf clubs into one comprehensive membership. Initiation fees, which range from $10,000 to $25,000 depending on the “home” club you choose, provide access to all 10 clubs without the payment of anything more than a cart fee. (Dues are different from home club to home club but are not unreasonable in our experience.) The clubs in the Raleigh, NC, area are within an hour’s drive of each other, but outliers like Musgrove Mill in rural Clinton, SC, typically require an overnight stay, or a long day in the car, for McConnell members from the other clubs. But if one is the traveling sort, a McConnell membership is tough to beat.
Arguably, two of the best golf courses on the golf-centric Grand Strand of Myrtle Beach are Caledonia Golf & Fish Club and True Blue Plantation, about a drive and 8-iron away from each other in Pawleys Island, SC. The clubs are under the same management and offer an annual membership –- no initiation fee –- for under $2,000 for a single member, just under $2,600 for a couple. This buys a year round green fee charge of just $25 per round; since the rack rate for these courses can be upwards of $180 during peak season, this is an especially good deal for those who live most of the year in the area (the courses are open year round).
Homes with Membership Attached
The Pinehurst Resort offers a variety of golf memberships, depending on which of its nine courses you want to play. The top-of-the-line membership, which includes all courses, carries an initiation fee of $45,000, but if you find a home to purchase that has a membership attached, the fee is discounted by 50%. (The same holds true for other levels of membership.) Monthly dues are reasonable at a high of $445 per month. Of course, you will be sharing Pinehurst’s popular layouts with visiting golfers, but tee times are set aside for members to make reservations up to two weeks in advance.
The fact is, if you can dream up a type of membership for yourself, it is probably available somewhere. And if it isn’t, it doesn’t hurt to ask your club of choice if it can design something to suit your needs. Most clubs are not yet back to full, pre-recession membership rosters, and they might just be willing to be a bit creative.