Meaningful Returns

That’s the headline in this article over at Bloomberg today, and basically the short of it is, way too many golf courses were built back in 1990s and early 2000s AND golf is becoming less popular, which is a situation that could be filed under “Candle Burning at Both Ends.” The consequence of the double-ended burning is that golf courses are shutting down, home values surrounding those courses are plummeting, HOAs are getting really mad, and a number of clubhouses have been, in keeping with the general theme here, set on fire. Basically it’s all just one big dumpster fire.

A moral of this story is that one of the problems of relying on individual pieces of real estate for investment return is that amenities supporting the value of those properties sometimes just disappear. And when they do, so does a good portion of the value of those properties. And because it’s very difficult to hold a diversified portfolio of individual properties to begin with, this drop in value is exceptionally problematic for the things you were hoping to do with the investment returns you hoped to earn but which got burned up in the golf course dumpster fire.