Should I buy a home in a resort community?

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catdude
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Should I buy a home in a resort community?

Post by catdude » Fri Jun 07, 2019 12:39 am

Hi Bogleheads -

I'm currently pondering whether or not to buy a home (townhouse or condo) in a nearby resort community. It's a lovely and scenic area, and the resort has golf courses, swimming pools, exercise facilities, miles of hiking trails, restaurants, etc. etc. Quite a few property owners there rent their places out, either short- or long-term. I've arranged to rent a house there for a couple nights in mid-June, just to get a feel for the resort area. From what I gather, the resort is generally a quiet place, but can be busy and noisy in the summer.

I'm just wondering if there are any pitfalls I'm not aware of in buying a home in a resort community. Anybody out there have a resort property? Please share your experience!
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Re: Should I buy a home in a resort community?

Post by Vanguard Fan 1367 » Fri Jun 07, 2019 12:41 am

You probably are aware of HOA type rules but some folks can find those rules pretty oppressive. The reading of those rules can be challenging, it is not easy reading. Be sure you understand what you are getting into.

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Re: Should I buy a home in a resort community?

Post by catdude » Fri Jun 07, 2019 12:51 am

Thanks. I don't have a specific property in mind yet but I do know the HOA fees are fairly steep ($275 - $400+ a month). I'll definitely take a long look at the HOA rules & regulations.
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phxjcc
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Re: Should I buy a home in a resort community?

Post by phxjcc » Fri Jun 07, 2019 1:32 am

With older golfers disappearing and boomers giving up the game, many golf based properties are struggling to support their courses.

There are several litigations going on in the desert wrt to HOA raising dues to cover the cost of maintaining the course(s).

..and I am talking about people that pay $900/month as their HOA fees being asked to pay an additional $200; so this is not the low end of the market.

At least 3 courses have closed, and 2 more have gone public.

Caveat emptor...and find out if the course is for sale...most states do NOT require this to be disclosed in the SPUD's.

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Re: Should I buy a home in a resort community?

Post by Archimedes » Fri Jun 07, 2019 2:06 am

Many golf course communities are struggling. When the HOA fees required to maintain things climb to an onerous level, the market value of the homes can suffer greatly. The amenities which look nice can become a high cost albatross, like a noose around the necks of the homeowners.

Proceed with caution!

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Re: Should I buy a home in a resort community?

Post by csm » Fri Jun 07, 2019 2:39 am

catdude wrote:
Fri Jun 07, 2019 12:51 am
I don't have a specific property in mind yet but I do know the HOA fees are fairly steep ($275 - $400+ a month).
The amount you cite is definitely not "fairly steep" for a community with shared common areas and amenities. Make absolutely sure you review the HOA financials and reserves. Walk the property and see how well-maintained the residential buildings are as well as the amenities. How is the annual budget distributed between line items. How frequently are buildings scheduled for painting and has this been done on schedule over the past many years.

When the community is busy, do a lot of day guests visit the area, e.g. to use the restaurants? If so, the common areas will be more worn down by visiting guests but your HOA fees may be paying for the extra clean-up, trash collection and landscaping required to keep it looking nice.

Proceed with caution. I speak from experience.

Johnfmh
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Re: Should I buy a home in a resort community?

Post by Johnfmh » Fri Jun 07, 2019 3:53 am

Make sure to scrutinize the financials of the resort (if they are available) because when you buy into one of these communities, the financial fate of your property is intimately tied to the financial health of the resort. I bought a property a number of years ago at a ski resort and now the resort is closed and has applied for Chapter 11 status. Not only have property values plummeted, but many services in the area have shuttered: restaurants, bike/ski rentals, horse stables, etc. Most property owners like myself are trying to ride out the storm, hoping the resort will soon fall under new ownership, but the process could take a several years.

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Re: Should I buy a home in a resort community?

Post by Watty » Fri Jun 07, 2019 4:50 am

catdude wrote:
Fri Jun 07, 2019 12:39 am
I'm currently pondering whether or not to buy a home (townhouse or condo) in a nearby resort community.
What is "nearby"?

It was not clear if this would be your primary residence or not.

If this would be a second home then owning two homes that are close to each other could be a diversification problem if they would be worth a large percentage of your net worth.
catdude wrote:
Fri Jun 07, 2019 12:39 am
I'm just wondering if there are any pitfalls I'm not aware of in buying a home in a resort community.
Homes like that often get slammed when there is even a mild recession or the housing market is soft. In a bad recession or terrible housing market the only houses that can be sold may be foreclosures or homes from estates that need to be settled.

Right now most local economies are strong and most housing markets are booming. I obviously don't have a crystal ball or know that real estate market but one option would be to rent for a few years then try to buy a property during the next recession.

If they are still building houses in the area, even in a different development, then an existing home can much harder to sell.

Some HOAs, especially condos, have limitations on how many units can be rented. Even if the property next door is a rental don't automatically assume that you can rent your property.

One problem with some resort communities is that you may have rental properties on both sides of you. This can mean that you tend to have people there who are up for a week or weekend of hard partying and they may not be the best neighbors. Even when they are not too rowdy it might be a family of ten people in a house with lot of kids and six cars and since they are on vacation they will be very active.

In some areas parking can be a problem especially in ski areas where there is lots of snow.

In a resort area it may be hard to hire people like plumbers since that are not a lot a local plumbers. They will often charge you a premium price since it is a resort community since they assume that you are rich and willing to pay high prices.

Hiring a good property manager can be difficult and in some areas there are property managers who take advantage of out of town owners.

If you will be living there be sure to take a hard look at what medical care is available, driving two hours to get medical care gets old real fast. Even if you will just be visiting there take a hard look at what emergency care is available. If it is 45 minutes to the nearest hospital then if you have a heart attack it might take a long time for an ambulance to get to you then a 45 minute ambulance ride to the hospital. In some areas there may only be one or two ambulances that serve the area and if they are both out on calls already then you may have to wait a long time for an ambulance to arrive.

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Re: Should I buy a home in a resort community?

Post by Bacchus01 » Fri Jun 07, 2019 5:30 am

Archimedes wrote:
Fri Jun 07, 2019 2:06 am
Many golf course communities are struggling. When the HOA fees required to maintain things climb to an onerous level, the market value of the homes can suffer greatly. The amenities which look nice can become a high cost albatross, like a noose around the necks of the homeowners.

Proceed with caution!
Golf’s peak was 20 years ago and has fallen steadily ever since in both number of courses and rounds played. Core golfers, those that golf many times per year, has stayed steady or risen, but gold courses are just not a good business. If golf is the main draw, run.

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Re: Should I buy a home in a resort community?

Post by catdude » Fri Jun 07, 2019 1:57 pm

Thanks very much everyone for your responses so far.

To answer a couple questions from above, this property is 12-14 miles from my current house. If I bought a house in this resort community, it would be my primary home.

I can see from the info y'all have provided that there are quite a few potential pitfalls here. I'm going to try to get copies of the HOA's financial statements and go over them thoroughly (I'm a retired CPA). It was a fairly close call to begin with, whether or buy in the resort, or buy a townhouse elsewhere in the larger community. I'm now leaning towards doing the latter.
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Re: Should I buy a home in a resort community?

Post by 123 » Fri Jun 07, 2019 2:10 pm

catdude wrote:
Fri Jun 07, 2019 1:57 pm
...this property is 12-14 miles from my current house. If I bought a house in this resort community, it would be my primary home...

It was a fairly close call to begin with, whether or buy in the resort, or buy a townhouse elsewhere in the larger community. I'm now leaning towards doing the latter.
Your profile indicates the central Oregon area. While I grant that "resort" can be the mind of the beholder any resort is subject to significant seasonal factors. If you're within a half-hour drive of the resort I'd likely consider myself as already living in the "larger community". Due to the influx of tourists and visitors to some resort areas sometimes it just isn't advisable to live too close. Maybe the first year or two it feels new, but then it's hum-drum.
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Re: Should I buy a home in a resort community?

Post by catdude » Fri Jun 07, 2019 3:36 pm

123 wrote:
Fri Jun 07, 2019 2:10 pm
Your profile indicates the central Oregon area. While I grant that "resort" can be the mind of the beholder any resort is subject to significant seasonal factors. If you're within a half-hour drive of the resort I'd likely consider myself as already living in the "larger community". Due to the influx of tourists and visitors to some resort areas sometimes it just isn't advisable to live too close. Maybe the first year or two it feels new, but then it's hum-drum.
Sorry, I wasn't clear. If I buy a place at the resort, it will be my only home...
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Re: Should I buy a home in a resort community?

Post by barnaclebob » Fri Jun 07, 2019 3:40 pm

catdude wrote:
Fri Jun 07, 2019 3:36 pm
123 wrote:
Fri Jun 07, 2019 2:10 pm
Your profile indicates the central Oregon area. While I grant that "resort" can be the mind of the beholder any resort is subject to significant seasonal factors. If you're within a half-hour drive of the resort I'd likely consider myself as already living in the "larger community". Due to the influx of tourists and visitors to some resort areas sometimes it just isn't advisable to live too close. Maybe the first year or two it feels new, but then it's hum-drum.
Sorry, I wasn't clear. If I buy a place at the resort, it will be my only home...
My main concern would be how the resort will change over time. How new is it? What do similar resorts that were built 15 or 20 years before that look like if it your prospect is say 5 or 10 years old?

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Re: Should I buy a home in a resort community?

Post by IMO » Fri Jun 07, 2019 8:58 pm

II'm having difficulty comprehending the type of community you are describing?

There are planned communities that have all the specifics you note, such as golf, community pools/gyms and also have shopping/restaurants and many other services. Typically these are communities where a significant number of the residents are both living as their primary residence and would typically be commuting to work from the planned community. An example of this would be anthem, az: http://www.clubcorp.com/Clubs/Anthem-Golf-Country-Club. At this type of community, one would typically not even need a car day to day as shopping, healthcare, and recreation can all be an easy walk or bike ride away.

The other community ("resort") would be typically a location that many of the homes are 2nd homes with some people renting homes out on a short term basis for those looking to get away, or for themselves to get away from their particular rat race and have a more desirable place for weekends/short trips. An example of this would be angel fire, nm: https://www.angelfireresort.com/activit ... ntry-club/
Note that there are various types/levels of private homes that utilize the main country club, all in a very nice setting (not apparent from the link).

The 1st community would not be a much of a concern in my opinion. The area is scenic, and should the golf course fail, it could end up being turned back into open space/park space. If one was a big golfer, that would obviously be a significant loss of amenity. This type of planned community is typically solid because of the primary home nature of most owners.

The 2nd community would have higher risk, especially in periods of bad economy's. These are the areas where homes can remain unsold for long periods at times. But doesn't mean that they can't be stable, although one poster noted how the belly up of a ski resort caused his place's demise.

In either case, if you've never dealt with HOA's, these can sometimes be an issue. Especially bothersome if your someone who doesn't like to be told what home color you can have, what plants are approved, etc. On the positive, it does typically mean that one doesn't have to deal with owners doing things that can be personally bothersome to you, and/or things that can drive down re-sale values.

It is worthwhile to look at the HOA and see if it seems strong from a financial perspective. Look at the HOA fee history, has it been relatively stable, or have rates gone up significantly. Look at the CCR's of the HOA and make sure you are okay with those. Look at HOA newsletters, look at their newsletters (online/print) to see concerns. If you can see what the board meetings covered. Look into special assessments that may have come up and what that entailed. And it is helpful on your upcoming rental time their to talk to some homeowners, ask them their thoughts/personal experience with the HOA.

As you've noted, seasonal periods can be busier. Kids are off school, and that can impact both type of communities (i.e. pools might be too crowded for you). What is the policy for guests, small fee, limited number of visits, or is it something that too many people can bring too many guests too often? This is where the rental issue can sometimes be a concern, do rental guests all have access to facilities? In the above 2 example I noted, that is not the case.-VRBO/Abnb rentals do not get automatic access to the facilities.

The right resort/planned communities can be a very enjoyable place to live. There are varying degrees of what is included in the fees, but much of the "annoying" things about home ownership/maintenance can be done for you. Not for everyone though, and for some it may be good for a certain time, but not a forever type of home location.

Post your decision outcome and best of luck.

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Re: Should I buy a home in a resort community?

Post by Mr.BB » Sat Jun 08, 2019 8:25 am

Request and spend some time reviewing the resort meetings/ management owners have. You can learn a lot how the resort is a run by those meeting notes
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Re: Should I buy a home in a resort community?

Post by Sandtrap » Sat Jun 08, 2019 9:23 am

catdude wrote:
Fri Jun 07, 2019 1:57 pm
Thanks very much everyone for your responses so far.

To answer a couple questions from above, this property is 12-14 miles from my current house. If I bought a house in this resort community, it would be my primary home.

I can see from the info y'all have provided that there are quite a few potential pitfalls here. I'm going to try to get copies of the HOA's financial statements and go over them thoroughly (I'm a retired CPA). It was a fairly close call to begin with, whether or buy in the resort, or buy a townhouse elsewhere in the larger community. I'm now leaning towards doing the latter.
Some random considerations:

Perhaps a far better option in the long term
An idea is to purchase and then have a transition period where you can own both and decide to rent out the townhouse or existing home if it is financially lucrative. You would know the numbers since you are a CPA.

There would likely be a lot less monthly cash drag on the townhouse (less or no surprise assesements on top of monthly fees). And, you might not like, or like, the closer social groups and politics of a resort community, whereas likely a townhouse situation gives you a bit more "air". Something to consider whichever suits you better.

Sometimes the resort ammenities and so forth are like attractive candy at first, "buying a lifestyle" marketing thing. But, OTOH, R/E is R/E, cake vs frosting.

As "Watty" brought up: conveniences, distances to primary stores you shop at, medical care, etc.

Purchase with an exit plan in mind. How difficult would it be to sell the property later?

Owning and living in a townhouse is not "seasonal" so no summer or holiday influx.

Are you downsizing?

j

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Re: Should I buy a home in a resort community?

Post by InvestorThom » Sat Jun 08, 2019 6:37 pm

“Resort community.”

Keyword is community. You may feel different, but to me community is also THE PEOPLE. I prefer to live where people have a vested interest in where they live. Vacationers don’t. Vacationers also do not have the same patterns as people who go to work or residents who just want to enjoy their neighborhood and surrounding areas. They have no structure, they aren’t living by “the rules”, they only care about themselves because they’re on vacation... and they will never see you again.

Is this A) a resort; B) a development in a resort town; C) a resort-style planned residential neighborhood?

If it’s a resort I would run the other way. There would be no community feel for me since the vast majority of people are transient vacationers — even the owners who are there a week or two here and there.

If it’s a resort town and I really liked the town, I would look for a development that severely restricts short term rentals — i.e., they are trying to attract full time residents or seasonal owners who want the same.

In addition to what others have shared about their experiences and the important financial considerations, here are two recommendations:

1. Staying there a couple of nights to check out the area is not enough. Rent a furnished unit for 3 months and stay there the whole time. Do you still like it?

2. Write a list of what’s important to you wherever you choose to live. Write another list about what you really like about this resort community. Be honest. For example, how much are you going to use those amenities? Compare the two lists.

Let us know what you learn and end up doing.

Good luck to you!

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Re: Should I buy a home in a resort community?

Post by Ybsybs » Sat Jun 08, 2019 7:13 pm

You may want to try renting in the off season too. Some places seem to roll up the sidewalks and you may or may not like that.

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Re: Should I buy a home in a resort community?

Post by catdude » Sun Jun 09, 2019 12:56 am

Sandtrap wrote:
Sat Jun 08, 2019 9:23 am
Are you downsizing?

j

PS: love your avatar cat picture!!!
I'm not exactly downsizing. I'm looking for a place that's roughly comparable in size to my current home. My potential new community has a lower cost of living than my current one, so at the end of the day I hope to pocket a few bucks.

Thanks for the kind words about my avatar! My cats will be thrilled when I tell them about your compliment.
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Re: Should I buy a home in a resort community?

Post by catdude » Sun Jun 09, 2019 1:02 am

InvestorThom wrote:
Sat Jun 08, 2019 6:37 pm
Is this A) a resort; B) a development in a resort town; C) a resort-style planned residential neighborhood.
As best I can tell, it's (C) -- a resort-style planned residential neighborhood ...
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Re: Should I buy a home in a resort community?

Post by catdude » Sun Jun 09, 2019 1:13 am

Thanks again everyone, very much, for your feedback. I am much obliged. I've done a bit of research and found several quarterly bulletins (from the management company to homeowners) on-line. I learned that the property was sold about a year ago, and is under new management. Do y'all suppose that that's significant? Also, there was an article with tips for homeowners on how to make their properties safe from wildfires. Here in Central Oregon, wildfires are a big threat. This resort is in a heavily-wooded area. Seeing that newsletter article makes me wary of buying a home there...
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Re: Should I buy a home in a resort community?

Post by IMO » Sun Jun 09, 2019 2:37 am

catdude wrote:
Sun Jun 09, 2019 1:13 am
Thanks again everyone, very much, for your feedback. I am much obliged. I've done a bit of research and found several quarterly bulletins (from the management company to homeowners) on-line. I learned that the property was sold about a year ago, and is under new management. Do y'all suppose that that's significant? Also, there was an article with tips for homeowners on how to make their properties safe from wildfires. Here in Central Oregon, wildfires are a big threat. This resort is in a heavily-wooded area. Seeing that newsletter article makes me wary of buying a home there...
I suppose new management could be a concern, but I suppose one would really need to know the details of why it was sold. I have ownership in a large planned community that had been started by one large development company and then was taken over by another large development company. Never knew why, just that the namesake for the community had essentially changed. In that particular situation, whatever the buyout reason, it didn't seem to turn out negatively over a long period of time.

To clarify, you are saying that the community is primarily owner occupied primary residence homes, correct?

All things being equal, being in wildfire country obviously has it's concerns. I know once we were looking at a property in a very mountainous heavily treed community and when we had done some inquiry with our homeowners insurance company we were told they were not writing new policies for that particular community. This was after a period where there was a very large fire in a neighboring state that likely had a big impact on our insurer. Did make us think twice and we didn't make that move - kept thinking what if we became unable to obtain homeowners in the future. With that said, we know others that own property in that area and seemed to not have that issue.

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Re: Should I buy a home in a resort community?

Post by catdude » Wed Jun 26, 2019 12:14 am

Y'all -

I'm reviving this thread just to let everyone know that I did not buy a home in the resort area. Instead I'm buying one in the larger community... a single family home (new construction)... It'll be a single-story house with an attached 2-car garage. I've basically been living in townhouses for the past 20 years and am pretty dang tired of walking up & down stairs all day long. I'm really looking forward to a stair-free existence.

My primary reason for not buying in the resort area relates to the advice several of you gave to be wary of buying in a golf-based resort. I think that was good advice and I very much appreciate it. I can understand why golf is declining in popularity -- I used to golf myself, decades ago, but gave up the game because it's just too frustrating and expensive to play. I don't want my home's value to be tied to a declining sport.

My other reasons for buying a SFH have to do with having a garage (most houses at the resort don't have garages), much lower HOA fees, and single-story living (as mentioned above).

Thank you all again for your advice!
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Re: Should I buy a home in a resort community?

Post by csm » Thu Jun 27, 2019 7:27 am

Thanks for the update and congrats! Sounds like a good choice for you.

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Re: Should I buy a home in a resort community?

Post by Sandtrap » Thu Jun 27, 2019 7:43 am

catdude wrote:
Wed Jun 26, 2019 12:14 am
Y'all -

I'm reviving this thread just to let everyone know that I did not buy a home in the resort area. Instead I'm buying one in the larger community... a single family home (new construction)... It'll be a single-story house with an attached 2-car garage. I've basically been living in townhouses for the past 20 years and am pretty dang tired of walking up & down stairs all day long. I'm really looking forward to a stair-free existence.

My primary reason for not buying in the resort area relates to the advice several of you gave to be wary of buying in a golf-based resort. I think that was good advice and I very much appreciate it. I can understand why golf is declining in popularity -- I used to golf myself, decades ago, but gave up the game because it's just too frustrating and expensive to play. I don't want my home's value to be tied to a declining sport.

My other reasons for buying a SFH have to do with having a garage (most houses at the resort don't have garages), much lower HOA fees, and single-story living (as mentioned above).

Thank you all again for your advice!
Thanks for the update.
Really appreciate the follow up.

Sounds like a wise decision.
Good luck in your new home.
Roof for more cat trees. Happy Kitties!

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