The Chairman's Page
An interview with Mike Meldman, Chairman & CEO, Discovery Land Co.

By Edward F. Pazdur, Chairman

Mike Meldman Chairman & CEO Discovery Land Co.

Private golf club developer, Mike Meldman, challenges the alleged real estate “bubble” with high-end growth in Mexico, the Bahamas, and America.

Meldman explains a trend to “generational investments” and gives some advice to potential retirees and real estate speculators.

Beverly Hills, California: Meeting Mike Meldman poolside, at a luxurious estate in Beverly Hills, seemed appropriate. He was dressed in his traditional attire of beige Bermuda shorts, a tee shirt, and sandals. He also looked handsome, physically fit, tanned, happy, and armed with his indispensable Blackberry.

A Blackberry is godsent to Mike because he’s long on persistence and short on patience. For example, one of his recent Blackberry replies expressing appreciation simply read “thx.” — nothing more. He is a man of few words and loves to come quickly to the point. He’s charismatic, energetic, bold, prudent, and, up to a point, a risk taker.

Mike Meldman is the founder, chairman and CEO of Discovery Land Company, one of America’s leading and fastest growing private golf community developers, headquartered in San Francisco. He was visiting a friend in Beverly Hills and scheduled our meeting there to spare me a trip to San Francisco.

The purpose of meeting this day in Beverly Hills was for an update on the growth of his Discovery Land Company (DLC). When we originally met in Texas, DLC had about six communities, either fully operational or under development.

Today, just two years later, it has nine more, including El Dorado Golf and Beach Club in Los Cabos, Mexico; Baker’s Bay Golf and Ocean Club in the Abaco Islands of the Bahamas; Spanish Oaks in Austin, Texas; and Kohanaiki and Kohala, both on the Big Island of Hawaii.

We had refreshments at poolside in a serene setting under an umbrella for protection against the sun. We no sooner sat down when a housekeeper appeared with more refreshments and turned off the pool pump for a quieter atmosphere.

Fabled golf course designer Tom Fazio (left) and Mike Meldman are pictured at the launch of Vaquero in Westlake, Texas, near Dallas. Fazio also designed Mike’s golf courses at Mirabel and Estancia in Scottsdale; and Iron Horse in Montana.

The Real Estate Gold Rush

I initially met Mike two years ago in Westlake, Texas, (near Dallas) to inaugurate Vaquero, a private residential golf community with a course designed by Tom Fazio. Vaquero, one of DLC’s earlier deals, launched him into a distinguished career as a real estate developer and visionary, with great accomplishments in the coming years. His parents were disappointed he hadn’t initially enrolled in law school at Stanford.

“My parents were horrified when I left Stanford and went into real estate,” recalled Mike. “They put me through Stanford, which was a stretch for them, and they always had the expectation that I would go to law school.

“When I started in real estate,” he said, “I went to work for a company that had no history, no track record—I was a 100 percent commissioned salesman.” Upon this reflection, Mike casually commented, “You know, it’s funny, ever since then I’ve actually never had a salary in my life.”

“Not ever?”

“Not ever,” he laughed.

“How did you make your first buck?”

“Right out of college, I was a bartender in San Jose and a blackjack dealer in Lake Tahoe. I started my real estate career, as a young man, with a small firm in Northern California. Later I hooked up with a well-established development company before starting Discovery Land Company in 1997,” said Mike.

I really didn’t want to be a spoilsport in such pleasant surroundings, but, I had to get his views on the media’s hype of a looming problem for real estate developers.

This year is a veritable gold rush in real estate. Everyone is cashing in and causing concern among many economists that prices are rising too quickly. The fear of an economic bubble is being created and will burst if the economy should fall into a recession. I asked Mike if it’s worrisome for him.

“No,” he said smiling. “I think the theory is overblown. Will the bubble burst? Will the real estate market go into a down cycle? Sure, everything always does. My attitude is to try to be prepared for it.”

“The high rate of appreciation,” I argued, “is unnatural.”

“I don’t expect a crash,” said Mike, “but rather the rate of appreciation in real estate values could decrease if market supply overtakes demand. There is an inherent supply constraint within our projects. With only 300 to 375 residential products, there’s always a limited supply that will drive higher demand and higher prices.”

How To Insulate Against Downturns

“How do you protect yourself?”

“What I try to do with my projects,” he said, “is to insulate myself as much as possible.”

“How do you do that?”

“There are several ideologies that we strictly adhere to when making a determination of whether or not to invest in and develop a property. First, we pursue projects with minimal entitlement risk—in other words, we try to avoid protracted zoning and approval processes that make it difficult to predict when you will be able to bring your product to market. In doing so, we are able to move swiftly and are able to judge market conditions on that day and not ten years from now. Typically, we are grading or under construction within a very short time period after purchasing a property.

“Another of our core philosophies,” explained Mike, “is to finance our projects with as much equity, and as little debt as possible. By using equity as the primary source of capital, we have the ability to continue developing a project, even in the face of market downturn. We can still deliver the quality facilities that we promised to our members. If the market turns, it may take longer to sell but we may actually make more money over the long run. We try to insulate ourselves that way.

“We also try to generate early demand in our projects through pricing. Prices in the first phases are set to leave room for the initial buyers to have upside. The people buying before anything is actually built are the ones truly committed to our projects and we want to try to reward them,” continued Mike.

“We have been fortunate with our last three or four projects—they have sold out so fast that we didn’t need to worry about the effect of a cycle. Another aspect of our projects that helps—none are so big that it would take ten years to sell out. We’re in and out of a deal within a time span of four to five years. This is a short enough time frame that we have the ability to gauge a market cycle.”

An Unexpected Demographic

“How do you account for that?” I asked. “Baby Boomers?”

“Yes, the aging Baby Boomer is still significant when we consider who is purchasing in our projects,” said Mike. “However, we are actually noticing an interesting trend as of late—the average age of all of our buyers is actually going down tremendously.

“Vaquero, and Iron Horse in Whitefish, Montana, are great examples of this. These have become communities for young families. So, in addition to the empty nesters, we are also attracting thirty-something couples with young children. They have created a completely different dynamic that we never anticipated.

“I think our projects are attractive to a younger crowd because our vision is always to find a great piece of land, incorporate local culture, and make it much more than just a golf course community.

“This is especially true in remote areas like Whitefish, Montana, where we’ve incorporated outdoor pursuits for younger families who need much more family oriented activity than they can find in most traditional golf clubs,” said Mike.

A Generational Investment A Hokey Idea?

“Another important factor is that people are now rewarding themselves for a lifetime of hard work and thus investing in themselves and in their families,” continued Mike.

“People are now buying into residential golf communities because they want a place where their children and grandchildren will want to come together—a place where you create memories to be valued by the family for the the rest of their lives.

“Traditionally, private golf club members view their club as a place to escape from their families. Our communities are designed as places to escape with their families.

“I am particularly proud of our signature Outdoor Pursuits program,” he said. “We have special activities and events for everyone in the family with special twists in some of our communities. For example, at Iron Horse in Montana, we can make you a mountain man. You’ll learn to fly-fish, tie your own flies, wakeboard on Whitefish Lake in the summer, and snowboard Big Mountain in the winter.

Mike Meldman has cause to celebrate at his Kukio Beach Club in Hawaii following a highly successful launch five years ago.

“At Kukio Beach Club in Hawaii, we can help you become a surfer, a scuba diver, a spear fisherman, and teach you how to paddle through the waves in a canoe. The experience my kids have had at our projects illustrates exactly what Outdoor Pursuits is set up to accomplish. They love spending time with me over the summer at Iron Horse to hunt and fly-fish and they travel with me to Kukio during their school breaks to surf and play golf. They love the activities and I love having them with me.”

Some Advice To Potential Buyers

“In my mind,” I explained to Mike, “there are two types of buyers. One is a retiree and the other is a speculator.

“The retiree worked hard all of his life, saved his money, did some due diligence on where he’s going to build a home and live for the rest of his life. He cannot afford to speculate or risk losing his life’s savings.

“The speculator is generally well off and already lives in some high-end residential golf community. He’s out to make a quick buck by buying several homesites, holding them a couple of years and then selling them for a neat profit. What advice can you give him?”

“Well, Ed, I can give advice as to how it pertains to our projects. My advice is the same for both retirees and speculators.

“I would say, first and foremost, learn as much as you can about the developer. Ask key questions such as: Is he financially stable? What is his track record? Has he done it before?” suggested Mike.

“Yeah,” I interrupted. “How do you do that?

“It’s not easy,” said Mike. “You need to be disciplined about your research. Talk to people who might have financed him in the past. Talk to members of the developer’s other projects and ask whether or not all the developer’s promises have been kept. Talk to current members in the club you’re interested in, and ask how they are being treated. Make sure the project is being developed properly, according to a well-integrated master plan,” said Mike.

“Secondly, be sure to visit the community personally to make sure it will deliver the kind of lifestyle you are planning on.

“Speculators are asking me: ‘Right now, you’ve got Hawaii, the Bahamas, and Cabo. Which one should I buy?’ My initial answer is ‘all three.’ I always say buy the one you think you would like to visit the most. It’s surprising how many speculators build a home on their homesite to sell it—and then don’t. Over time they actually become users—they end up keeping their homes and retiring in them because they enjoy the community so much,” he said.

“Our Kukio Beach Club in Hawaii is a good example,” continued Mike. “You don’t want to create artificial markets through speculation. Our prices at Kukio are steep and people bought for the right reasons. A lot of them were speculators who built homes on their homesites and sold them for a great profit. But, no one has ever really left Kukio.

“Kukio taught me a great lesson. It proved high-end products appreciate in value much faster than low-end products.

“We had a low-end project called The Islands at Mauna Lani and a high-end project at Kukio, both are on the Kohala Coast of the Big Island in Hawaii.

“The Islands project has appreciated very little in the past seven years whereas Kukio has doubled or tripled in value. Obviously, high-end is the way to go,” concluded Mike.

What Drives Mike Meldman?

Mike Meldman’s business philosophy is different and he tends to be shy. He is a risk taker only after carefully making sure the odds are heavily in his favor. His decisions are swift, he’s easily accessible and he loathes mediocrity.

What drives him? J.W. Marriott Jr. is driven to prove his business philosophy is sounder than his dad’s. Donald Trump wants to be No. 1 in real estate. Tim Blixseth, Wayne Huizenga, and the late Robert Dedman Sr. swore never to return to the poverty of their childhoods. Lyle Anderson is driven by pride. And Mike Meldman is driven by his love for his sons, Hunter, 17, and Will, 15.

Mike’s primary interest in life is to leave a meaningful legacy for his two sons. He is wise enough not to press them into real estate.

A recent photo of Mike Meldman (center) with his two sons; Hunter, 17, (left) and Will, 15, (right). At this point in their lives, Hunter has an interest in nature conservation and Will aspires to become a movie producer.

They will choose their careers and he will help them in every way he can. Currently, Hunter has an interest in nature conservation and Will aspires to become a movie producer. “Or,” jokes Mike, “at least that’s what Will tells the girls.”

I’ll put my money on real estate within five years after they graduate college.

If you wish to communicate with Mike Meldman, please write Discovery Land Company, 100 California Street, Suite 700, San Francisco, California 94111; or phone (415) 676-5800; fax (415) 276-1991; or visit www.discoverylandco.com.

Some Discovery Land Projects

Fully Operational and Under Development

	The Estancia Club, Meldman’s first project, is located on 640 acres in Scottsdale, Arizona, with 262 homesites and a 33,000-square-foot Tuscany-inspired clubhouse.
Iron Horse Golf Club, in Whitefish, Montana, is an 820-acre community with 316 member homesites and a masterfully designed 18-hole Tom Fazio golf course.
	CordeValle Golf Club is a 1,700-acre development in Silicon Valley, California, which features a spectacular course designed by Robert Trent Jones Jr. and a luxurious Auberge Resort and spa.
Mirabel Golf Club, in Scottsdale, Arizona, is a 713-acre development with 350 homesites and a beautifully appointed desert lodge clubhouse which features swimming, tennis, and first-class dining.
	The Hideaway, a private community in La Quinta, California, provides 36 holes of golf and a Spanish Revival-style clubhouse, the epicenter of social and recreational activities.
Kukio Golf & Beach Club, located on the Kohala Coast of the Big Island of Hawaii, is a 1,200-acre golf community with 375 homesites; a private 18-hole and 10-hole short course by Tom Fazio.
	Gozzer Ranch Golf & Lake Club overlooks beautiful Lake Coeur d’Alene in Idaho. Its 665-acres offers 267 homesites, 34 cabins and 46 cottages. Amenities include club-owned watercraft, a marina, a Tom Fazio-designed golf course, and a mountain-lodge and kids’ cabin.
Mountaintop Golf & Lake Club, a private community in the Blue Ridge Mountains of North Carolina, offers 250 homesites and 68 cabins and lodges on 731 acres with a Tom Fazio golf course, a private lake club, a Southern mountain-lodge clubhouse, a spa, and lodging suites for members and their guests.
	El Dorado Golf & Beach Club, a 520-acre private beach and golf community in Los Cabos, Mexico. The Club features a Jack Nicklaus-designed golf course, a beach club and spa, beachfront homesites, and golf and beach villas.
Baker’s Bay Golf & Ocean Club, located in the Abaco Islands of the Bahamas, is a 585-acre private community with more than six miles of beachfront with a Tom Fazio-designed 18-hole golf course, an exceptional beach club and a private 180-slip marina.
	The Madison Club in La Quinta, California, offers 193 homesites and 27 golf villas spread across 500 landscaped acres and a Tom Fazio-designed golf course.
Vaquero Club, located between Dallas and Fort Worth, Texas, offers 282 homesites on 525 acres, a 30,000 square-foot clubhouse featuring Texas Hill Country themes, and an 18-hole Tom Fazio-designed golf course.
	Back to Top