If you're looking for a rental property, it's important to pay attention to changing consumer preferences. With the COVID-19 pandemic, many people are searching for ways to get exercise and enjoy the outdoors in a safe and socially distanced manner, and golf courses can be an excellent way to do that. Plus, with the pandemic enabling millions of people to work remotely (in some cases, permanently), homes in golf communities have risen in popularity.
Golf course homes haven't been great investments, but that could be changing
Until recently, golf course homes were generally not great investment properties. Renters (which skew younger) are less likely to be golfers, and overbuilding caused many golf courses to fall into disrepair and property values to underperform their markets. In fact, in 2017 alone, more than 200 golf courses in the U.S. ceased operations, while only 15 new ones opened.
However, after years of subpar performance, it looks like things might be turning around. Due to the COVID-19 pandemic, Americans are leaving city life behind. More people are able to work remotely than ever before. And as an outdoor sport that is highly conducive to social distancing, golf courses are seeing a big uptick in demand.
In fact, the Wall Street Journal recently reported that Americans played 10 million more rounds of golf in August 2020 than in the same month of 2019. And this is translating into increased interest in living near golf courses. One golf community in Jupiter, Florida reported a 47% year-over-year rise in home sales in 2020 through October.
Even for nongolfers, a golf community often has some very desirable amenities. Clubhouses often feature social gathering spaces and restaurants, and the communities themselves often have very attractive outdoor spaces and walking trails.
Is a golf course home a smart investment?
One important thing to keep in mind is that your property's value will be somewhat dependent on the condition of the golf course itself. In other words, living near a golf course that is generally in disrepair isn't likely to make an investment property more attractive and could even lower your property value. On the other hand, a pristine, attractive golf course that's in demand could be a huge value-add when it comes to rental income.
And you really don't want to own a golf-community home if the course itself ends up closing. When a golf course closes, home prices in the related community can fall by about 25%. So, one extremely important thing to remember is quality matters. It might cost more to invest in a community that has a top-quality, popular golf course, but it can be well worth the peace of mind.
It's also worth mentioning that studies have shown that homes in golf course communities tend to hold their value better than other homes. So, not only could a golf-community home be an attractive investment property, but it could potentially limit your downside risk in the event the market cools off.
Finally, if you buy a home in a golf community as a rental property -- either for short-term or long-term rentals -- be sure to check if you're allowed to rent your home. Many communities with homeowners associations (HOAs) have rental restrictions, especially when it comes to short-term rentals. The last thing you want to do is buy a property with the intention of renting it on Airbnb (NASDAQ: ABNB) only to discover you aren't allowed to.
The Millionacres bottom line
The bottom line is that golf course communities seem to be making a nice comeback, and demand for homes in these neighborhoods could stay elevated for the foreseeable future. But if you decide to invest in a golf community, be sure you pick one that has a top-notch, well-maintained golf course that will help keep your property value elevated for years to come.