Is a Golf Course Community Right for You?

Philadelphia and its suburbs are well-known as a bastion of top-tier golf.  Merion Golf Club in Delaware County recently hosted the U.S. Open, Aronomik in Chester County is regarded as one of the nation’s best, and Saucon Valley has earned a stellar reputation after years as the private club of Bethlehem Steel execs.  When you combine public, private and community courses there are more than 150 options in and around the city of Philadelphia.  So is living on the course your idea of a real estate hole-in-one? There are pros and cons to this type of situation.

Why golf communities are so attractive?

First and foremost, money.  Studies have proven that homes in a golf community often sell at a 40% premium to similar homes in more traditional communities.  If you are purchasing in a new community you may see a return on investment greater than other opportunities.  Of course ROI is always speculative and you should do additional research before making your move.  Additionally, golf course communities often offer walking-distance amenities such as clubhouse and swimming pool.  Be prepared, however, these services are often not included in traditional community fees and may require you to join a separate entity.  Finally, and perhaps most obvious, golf course communities provide an easy outlet for golf enthusiasts to get onto the course frequently.  Depending on the club and your relationship, you may be able to play the hole outside your back door whenever you want!

What things should one consider regarding golf communities?

As mentioned before, many golf course communities don’t offer residents anything more than a traditional residential community would.  You may not have golf privileges, the clubhouse may be for members only and the waiting lists at some clubs may last longer than you desire.  Additionally the dues and fees may end up making the ROI on any real estate investment less-than-desirable.

Additionally, you must consider that in most golf course communities the price you pay for having the fairway out the back door is that you have others using your backyard throughout the day.  If the course opens to members at 6:00, and your bedroom sits outside the second tee be prepared for a 6:15 wake-up call from a less-than-perfect golfer verbally encouraging his or her golf ball to go straight.  

Finally, there is property damage that can come from living in an area where golf balls are flying through the air.  There are many differences of opinion on who is responsible for damage done by errant golf shots (if you are in Pennsylvania or New Jersey we advise you to speak with an attorney to get a detailed answer) but whomever is eventually responsible financially, you are still the one with a broken window that needs to be repaired.  While most clubs and housing are built to minimize this possibility, golfers continue to amaze each other with their ability to hit the ball in places you never expected.

What Does it Really Cost to Buy a Home?

An Idea of the Cost

When you do the calculations on the initial costs, the recurring costs and the net proceeds, you will see that buying a home is certainly advantageous. In addition to your deposit(s) and money down, you will pay fees to your mortgage company, title insurance, prorated taxes/water/sewer, recording charges and other fees. You will be required to secure homeowners insurance (paid in full) and have your declaration page in hand as required by your mortgage company. Depending on your mortgage program, you can expect to pay roughly 5 to 8% of the sale price in closing costs.

Remember, there are some fabulous advantages to owning a home that go way beyond being the master of your own domain ...

• Tax Deductibility You can deduct the cost of your mortgage loan interest from your state and federal income taxes. Since interest generally will account for most of your payment during the first half of your mortgage, the savings can be significant. Some of your costs at the time of closing (including prepaid mortgage interest) can be taken as deductions on that year's income tax return, and points paid up front at the time of closing represent additional mortgage interest and may be taken as a deduction.
• Tax Deductibility of Property Taxes You can deduct all of the property taxes you pay.
• Appreciation Potential Real estate is considered a good long-term investment because it usually appreciates in value. The effects of borrowing potential can increase as the value of the home appreciates.
• Capital Gains Exclusion When it's time to sell your home the amount of capital gains you have to pay is reduced. A homeowner can exclude up to $500,000 per couple if married and filing jointly, or $250,000 if single or filing separately for homes that have been the taxpayer's principal residence for the previous two years.
• Capital Gain Treatment Congress allows preferential tax treatment on gains from capital assets held for more than one year. This would be important for a homeowner who has gains in excess of the allowable exclusion.

Know your monthly nut

Before meeting with a loan officer, work with your real estate agent to determine your monthly nut. How much can you comfortably afford to pay for a mortgage and all of the costs that go into monthly homeownership each month? Your Realtor(r) can give you an estimate of your monthly mortgage payment at a few different price points and in a few different areas to assist you in narrowing things down.

If you are not ready to reach out to an agent yet, do some homework on your own. Access market data for 400+ areas here: www.cbhearthside.com/marketdata. Click on "click here to find market data on a specific area or zip code" in the middle of the page to get started. Here is a peek of what you will get:

Bottom line: What does it really cost to buy a home? It depends. Some of it is up to you! Your agent and loan officer will make sure you are aware of all the fees to purchase.

Do some research, talk to a Realtor(r) and have a little faith! You can totally do this ... if your financial situation does not allow it at this time, your agent and loan officer can give you some great information and guidance to put you on a path to homeownership.