Buying a Golf Course

16 Replies

Hey BP,

I know this is a bit out there... does anyone have experience financing and completing the purchase of a golf course?

There is a beautiful, yet poorly managed, golf course near my home in Suburban Philadelphia near Phoenixville in Chester County that has peaked my interest. It is not for sale currently, but as the owners refuse to invest in proper management and general course etiquette I can't imagine it will be successful for much longer.

Obviously I have no experience managing a golf course but a trained monkey could do a better job than these guys. A potential exit strategy would be using the land for development as it is a very desirable place to live with some picturesque scenery.

Anyone have any experience doing this or something similar?

Hey @Christian Beyer , I sure don't, but I like the sound of it.  I think golf courses are interesting in the fact that they can be operationally profitable themselves, but generally contain a lot of land, making it a bit of a dynamic investment. 

Good luck in this endeavor!

@Daniel McNulty

I see what you did there.

Listening to @Greg Dickerson short pod on the topic it seems to be a long putt to turn a profit and unless you have deep pockets or lots of investors it rarely is a good investment medium, instead it is more of a hobby.

It seems that this would be a sub par option unless there were more grandiose plans for development or other revenue streams.

@Christian Beyer . Definitely best purchased as land only for development value.

Some statistics on golf in the US:

The number of core American golfers (those playing eight rounds or more per year) has fallen between three and 4.5 percent every year since 2006.

Since 2007, the number of golf courses closing in America has significantly outnumbered the number of new course being built.

This downward trend in American golf is even making its way to the professional level.  In 1986, American golfers made up 60 percent of the Top 100 players in the World Golf Rankings. By the end of 2010, Americans made up only 32 percent of the Top 100.

@Christian Beyer. I respect everyone's feedback. I disagree, I can not wait to buy my first golf course. 3 revenue streams. I live in Utah and have seen first hand the benefits and money it brings. If you have the money to invest, I would insist on building a portion of the clubhouse into a wedding venue. This is a hidden gem! This can be rented out for over $1,000-$3,000 a day for weddings.   

If you own the land you can build one home at a time and sell it, or you can make all the homes on the golf course an HOA. That cashflow big time. Collecting rent in the slow months. (Utah we have snow) But that's when people need a wedding venue the most. Then you can make money from the golf side if you know how to upkeep a golf course.

Thoughts?


I have no experience but i have heard a couple stories of guys that have given it a shot.

It is an interesting strategy but I think it is very difficult and I would think you need prior experience (or partners with experience in the field) in order to pull this off successfully.

The one thing I do know is that the maintenance expense for a gold course is absolutely ridiculous, so just be sure you allocate a sufficient amount towards your expenses if you end up underwriting this. 

@Christian Beyer

I was in the golf business for 28 years, until 2015 when I decided to dive further into real estate. Golf courses seem like a sexy, fun, and exciting business. The truth is it is a lot of hard work. If you are in the right location with the right demographics, some money can be made, but there are a lot of variables that can eat up your profits in a heartbeat. Since Covid hit, a number of courses across the country have had the most profitable year they have had in a decade. It's one activity or sport that people have been able to participate in. However there are many factors that make it a tough business....weather, rising fixed costs, fertilizer, chemicals, fuel, labor, insurance, and the threat of a recession. Golf is a fairly discretionary activity. Unless you have experience and are willing to be a hands on operator, you can get eaten alive in the golf business.

Originally posted by @Nathan Sampson :

@Christian Beyer. I respect everyone's feedback. I disagree, I can not wait to buy my first golf course. 3 revenue streams. I live in Utah and have seen first hand the benefits and money it brings. If you have the money to invest, I would insist on building a portion of the clubhouse into a wedding venue. This is a hidden gem! This can be rented out for over $1,000-$3,000 a day for weddings.   

If you own the land you can build one home at a time and sell it, or you can make all the homes on the golf course an HOA. That cashflow big time. Collecting rent in the slow months. (Utah we have snow) But that's when people need a wedding venue the most. Then you can make money from the golf side if you know how to upkeep a golf course.

Thoughts?


my thought is you have to have a series of zonings to allow this use.. in Central Oregon Bend area they have such zoning but in other areas not possible to just create all those different revenue streams under current land use.

I agree golf is dying  too time intensive for many these days.. I think thats why TOP GOLF has done so well or appears to be doing so well.

its like Bowling meets golf more social  than just regular golf .

I just look at myself.. I was an avid golfer from basically 10 years old until I moved out of CA .. with northwest winters its just too cold for golf and wet.. At least for me.. so what was a typical year for me 120 plus rounds dwindled to 25 then to 15 then last year was 9 rounds and paying 450 .00 a month for private club.. i am like shoot i can take a vacation to Hawaii for what i spend at the club.. but for those 30 years or so I was a member of a private club its was great..  i enjoyed it .. but now I have hit exactly one bucket of balls in 2 years.. Maybe if I actually fully retire i will take it up..  But then again I always told myself if I would not play if I could not play to a certain level.  Which I doubt I will ever get back there..  Plus for me it really was about the guys and gals we played with.. as much as golf.. and of course there had to be betting not for huge money you know 20 to 50 bucks a round type thing but keep it interesting. 

 

Originally posted by @Troy Albers :

@Christian Beyer

I was in the golf business for 28 years, until 2015 when I decided to dive further into real estate. Golf courses seem like a sexy, fun, and exciting business. The truth is it is a lot of hard work. If you are in the right location with the right demographics, some money can be made, but there are a lot of variables that can eat up your profits in a heartbeat. Since Covid hit, a number of courses across the country have had the most profitable year they have had in a decade. It's one activity or sport that people have been able to participate in. However there are many factors that make it a tough business....weather, rising fixed costs, fertilizer, chemicals, fuel, labor, insurance, and the threat of a recession. Golf is a fairly discretionary activity. Unless you have experience and are willing to be a hands on operator, you can get eaten alive in the golf business.

I worry on the development side of what you have to do when you convert a course that has had all those chems and fert dumped on them for decades.. I know in some ag applications developers need to remove a ton of top soil that has bad stuff in it.. not sure about turf stuff..

But i would sure check on that before doing anything else. 

Having been a member of a handful of private clubs and being on the board of one..  I hear what your saying..  you get a down turn in economy and you lose members left and right.   during the crash one of the private/semi private top end golf courses in Bend area had a horrible time.. they had a think a mandatory 100k membership that had to be paid when you bought your lot.. Well you could see lots listed for ZERO dollars literally ZERO.. but you had to pay the 100k   When I bought at Silverado the Transfer fee back in 92 was only 10k and i think its up to almost 50k now.. and then you had about 200 plus homes burn down..  Johnny Millers group came in and finally bought the course ( he lived there for years during his playing days) 

 

Some guy developed a small cute golf course in our town.  Was live for a few years, didn't seem to really ever have that much business, though they did try to sell food out of the clubhouse.  It's been sitting vacant for more than a year, on the market.  

@Christian Beyer don't fall into the trap of getting into a business because you love the business. Only get into a business if you can make money doing it. Value the purchase price on current expenses and income. Maybe you can manage it better, but saying "obviously I have no experience" but a "trained monkey" is a very bold statement. The current owners are trying to make money too. There could be plenty of reasons they are having trouble that you are not aware of. 

A secondary way to value the property is land value for development, but that assumes you can develop the land. I had a friend who paid big money to build his dream home on a golf course. The golf course ran into financial troubles AFTER they sold through all the surrounding development lots. Selling lots that back up to a golf course are one of the ways to make money owning a golf course, but of course that has a limited life. The developer tried to rezone the land to develop, but the affluent home owners surrounding the golf course hired legal council to stop him. If you pay big money to live on a golf course, people don't take kindly to a developer putting houses in their back yard. They were able to stop the developer and he went bankrupt.

You are buying a business, so I would consider involving a consultant that has experience in golf courses. They will better understand expenses and ways to increase revenue. If land development is your exit strategy, make sure there are not barriers to doing this. 

I think @Jay Hinrichs had a good comment. For those who love golf, Topgolf is gaining popularity over traditional golf. Smaller foot print, less weather issues, appeals to all skill levels, less time commitment and party/bar amenities. 

Originally posted by @Joe Splitrock :

@Christian Beyer don't fall into the trap of getting into a business because you love the business. Only get into a business if you can make money doing it. Value the purchase price on current expenses and income. Maybe you can manage it better, but saying "obviously I have no experience" but a "trained monkey" is a very bold statement. The current owners are trying to make money too. There could be plenty of reasons they are having trouble that you are not aware of. 

A secondary way to value the property is land value for development, but that assumes you can develop the land. I had a friend who paid big money to build his dream home on a golf course. The golf course ran into financial troubles AFTER they sold through all the surrounding development lots. Selling lots that back up to a golf course are one of the ways to make money owning a golf course, but of course that has a limited life. The developer tried to rezone the land to develop, but the affluent home owners surrounding the golf course hired legal council to stop him. If you pay big money to live on a golf course, people don't take kindly to a developer putting houses in their back yard. They were able to stop the developer and he went bankrupt.

You are buying a business, so I would consider involving a consultant that has experience in golf courses. They will better understand expenses and ways to increase revenue. If land development is your exit strategy, make sure there are not barriers to doing this. 

I think @Jay Hinrichs had a good comment. For those who love golf, Topgolf is gaining popularity over traditional golf. Smaller foot print, less weather issues, appeals to all skill levels, less time commitment and party/bar amenities. 

In Summerlin there is a defunct golf course with million dollar homes now fronting desert scape instead of a golf course. kind of becomes a no mans land..  

 

I don't have any experience in this field but a avid golfer. It's very hard to run a course. Very expensive with fixed costs (Water).  Until this year it has been a dying industry.  Def need deep pockets.