Ok, so the latest studies show that a private golf course closes (net closings) every 9 hours. On average, private golf course cost $375,000 per year to maintain + staff, insurance etc. You might get 20,000 rounds played in a year and so net $200,000. BUT….
Interested in double-digit returns secured by real estate but without the common headaches? Then it’s a good time to discover how to buy mortgage notes or notes secured by real estate!
Terry Christopher Bounds, Austin Texas 07/20/2015
Today’s savvy investors know they need solid returns backed by secure assets they can control. This is one of big attractions to note buying. If something goes wrong and you have to foreclose you could end up with a piece of land or a home or a note that can be held as an investment or sold for cash.
No question that there can be risk with any kind of investment. Real estate notes are no different. What if you could invest in something familiar, set your own return, AND determine your level of risk? It may sound too good to be true, but that could be some of the benefits of purchasing private mortgage notes or notes collateralized by real estate. You still have to do your homework.
A seasoned note (one that has a history of on time payments) that is collaterized by an improved golf course lot which has a market value of 2x or 3x the face amount of the note and carrying an interest rate above that of a CD or AAA bond can be very interesting. You collect interest and principal payments monthly according to the amortization schedule (cash flow) but do not have to change out toilets, deal with lease contracts or late rent payments.
But there are downsides to owning real estate notes:
When you own a note, you are acting like the bank. You are the one receiving the payments. If something needs fixed the owner has to do it. And like the bank, you also have the right to take the house or lot back in the event of non-payment.
To make the situation even better, you can structure a transaction so you are not owed anywhere near the value of the property, giving you tremendous leverage. 
The Resort Development industry continues to grow despite the perception that it is stuck in 2008 and that there is a sub-prime loan crisis ongoing and that all banks are insolvent and cant fund projects and that golf courses are overbuilt and that timeshare is dead. Quite the contrary. The Resort lifestyle industry, including golf course communities, timeshare and interval ownership companies as well as private camping networks and vacation clubs continue to see large sales volume increases. According to A.R.D.A. (American Resort Development Association), timeshare sales topped $7.9 Billion in 2014, up for the fifth year in row and with forecasts of 6%+ sales growth for the foreseeable future. Chris Bounds, of Austin, notes that moderately priced to high end, golf course communities are flourishing in every major market that has a positive population grown and RVing and RV resorts continue to try and keep up with baby boomer demand. Marriott Vacation Club continues to add luxury properties to its stable of world wide resorts and will once again finance many of its sales internally. The industry is growing.
Admittedly the markets have shifted and changed and consumers have more choices for their leisure dollars and are much more “educated” about such things than they once were (which is great) and the internet is a THING! OK fine, these are all good changes. A well dressed, non-chain smoking, educated sales team under seasoned leadership is what it may now take to sell out all the lots around a golf course before it is complete or sell Points for interval exchanges at a higher average rate and volume than on-site sales, but that is that. Resort companies that understand and embrace this concept are setting sales records. Public companies own more and more such assets and old, mismanaged country clubs with musty carpet and divot laced greens or timeshare communities with faded paint and mossy swimming pools are struggling the same fate carriage manufacturers did in 1920. For them, without change, it won’t end well.
Many land and timeshare notes are once again being financed at face value and many are once again being securitized on Wall Street. The US consumers HAVE CHANGED and the developers that change with them will fair just fine as we plan sales projects into 2020!
