There is a stunning amount of golf homes for sale at the moment. Largely thanks to the artificial boom that was created during the credit bubble that is still deflating. The massive boom in golf properties caused an enormous over supply, and a considerable number of retirement communities and golf course developments that were relying on large amounts of residential property investors to buy a home on the course, pay yearly membership fees and provide income to the development are either gone broke, or in the process of going broke.

Many of these were originally built with local government assistance – either in the form of tax breaks, or direct financing. The rest were provided financing by large investment banks, but the large percentage of failures is causing the local governments and the banks to withdraw support or financing. I would hazard a guess that unless you have several billions in the bank, you are not going to finish your golf course. The US is littered with part built golf courses now, many of which will end up being torn down.

Quite how bad things are going to get is unclear, but the only healthy ones are the well-established, older developments, and my recommendation – if you are considering an investment in a golf home is to look to the better established communities, and take a look at their balance sheet before buying. There are a number of these around. A lot of recent buyers are discovering that although their house was finished, the clubhouse is not, or the courses are not being maintained because membership levels are too low to sustain them. In some cases, the course was never finished. Which makes the home almost worthless. Some communities are banding together where there are enough members to make it work, but a high proportion are failing.

I would not personally get involved or buy a property on a development that is less than 80% occupied, with a finished course (or courses) and able to demonstrate a healthy financial situation. Once the markets settle down, there will be plenty of opportunities to pick up a bargain – with the inherent risk of complete failure. There are a few overseas developments that seem successful, but largely these are built with criminal money, and are run by the local mafia with extremely dubious labor practices. Again – be careful and avoid such situations if possible.

Picking the right development is worth spending some time researching, because golf properties can be extremely rewarding and a perfect place to retire – if you like golf that is.