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3/4/2014 10:30:35 AM
 
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Section 5: OPA Board Subject: COPE Golf Petition? Msg# 879497
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An asset makes money, something that loses money is called a liability, operating a golf golf course at a loss is a liability. Lets take that car with a market value of 25k and assume it cost you 2k a year to own it, and you sell it. You are making about 10% a year just by not having to support that car whether or not you reinvest the proceeds, just put that 2k a year in the bank with the 25k and viola! you have a great return. It also goes under the name of opportunity cost, owning that car takes away the opportunity to invest that 2k independent of the car ownership, not to mention the 25k sunk cost.
And FWIW, since that course was built, how many upscale courses have been built in the OC area? I don't know, seems like more than 10-15 anyway. And several offer very competitive memberships, you can play at Eagles Landing very reasonably, especially in the off season. With the competition, I don't see any way to have the course pay its way without major dues increase or outside play, which would mean that the current members may have to accept a course that's unavailable to them 3 or 4 day a week in the spring and fall. Fat chance of that. |
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For reference, the above message is a reply to a message where: Just a follow up to my post above....think of this on a personal level. Suppose you own a vintage car...between insurance, storage and maintenance, the costs are $2,000 year. You decide that the carrying costs are just too great and decide to sell the asset. Say you get $25,000 for the car. As long as that $25,000 is reinvested into other assets, your net worth stays the same and hopefully increases. If you go and blow it all at the casino, you reduced your annual carrying costs but your net worth just went down by $25,000! My point, assets are assets. If an asset just goes away without being replaced by something of equal or greater overall value, net worth goes down. In the case of the golf course, the community value could go down which ultimately does effect every homeowner. Something to consider. |
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