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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.
Nassau County (NY)
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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 firstname.lastname@example.org and I will be pleased to put you in touch with Lee.