How does one go about buying a golf course?
It's a complicated question at a time when golf course values are lower, on average, than they have been in recent years, particularly prior to the Great Recession (2007–09).
Many of the courses on the market right now can be purchased at around US$3 million.
The process usually starts in one of two ways: a prospective owner has a specific golf property in mind or you start talking with an agent who specialises in the golf course acquisitions.
There's plenty of opportunity for people to make money in the golf business, but you have to work with someone who understands the competition and the golf industry, because you may have to change the business platform to make money.
There are properties that aren't listed, but still available and there's understandably greater interest in buying a golf course in areas/countries with a 12-month playing season.
More sophisticated buyers will tend to gravitate towards private golf courses because there's typically a more dependable source of income, as opposed to daily green fees.
Existing 'mismanaged' golf clubs also allow a new owner to come in and create value.The areas that are the most desired by buyers (and generally priced as such) are along the coast line.
Once a potential property is identified, this starts the buyer down the road of due diligence, for both the facility itself and the market.
Among these considerations here would be if the course is in good working order and if there are any critical systems like irrigation, drainage that need to be looked at then attention would turn to the clubhouse and the overall age of the property.
Then there's the market itself, are there plenty of golfers nearby?
Can real estate be developed around the course?
Will it be positioned as a public or private facility?
Is there growth potential or the opportunity to sell memberships? What can the course charge for green fees?
What does the competition in the area look like?
Those who do their due diligence up front and don't make decisions based on emotion are the ones who tend to be successful.
As is so often the case in real estate, it comes down to location, location, location.
Golf course property isn't what it once was -- at least not right now.
Those in the industry will tell you that a golf course that was purchased for $5 million in 2006 would be worth about $3.million today.
Several years ago there were a lot of distressed golf courses for sale, today there aren't as many quality assets simply because owners that held on through the lean times are hoping it gets better.
Many are reluctant to sell at this point. However, there are still plenty of courses up for sale if you know where to look.
Out of Bounds: Murphy walked his dog on the golf course everyday. One day Murphy was on his walk without his dog.
His pal Tom saw him and asked: "Where is your dog?"
Murphy replied: "I had to put him down"
"Was he mad?" asked Tom.
"He wasn't too pleased," replied Murphy.