how to appraise a golf course

by Dr. Virginie Heller I Published 3 years ago Updated 2 years ago 5 min read

Generally our reports for golf course properties include two methods for determination of the course value: and income analysis and a market analysis. A cost analysis is usually not applicable for existing golf properties and the income analysis is typically most important.

Full Answer

What is a golf course appraisal?

Jan 14, 2017 · Golf course appraisals are difficult to trust because the three standard methods of appraisal – replacement cost, comparable sales, income approach – …

What information should be included in a club appraisal?

Oct 27, 2017 · Some of the more important things to look for in a golf course appraisal include: Methods and techniques should be golf industry specific and reflect timely behavior of market participants, such as appropriate and relevant units of comparison, golf industry specific capitalization and discount rates and appropriate consideration of real and personal property …

Do “national averages” matter in golf appraisals?

This is usually, but not always the case, and can affect the value of the property. An operating Golf Course is usually appraised as a Going Concern. Going Concern values include the value of the land, buildings, site improvements, equipment, and goodwill. Golf courses can be appraised in Fee Simple, which would not include any personal property. The purpose of the appraisal usually …

Is the cost approach relevant in golf property assignments?

A golf course is actually a large business enterprise that groups revenue-producing departments under one identity. Performing a golf course appraisal involves the valuation of real estate, personal property and a business. A golf course appraiser must have an understanding of the components that comprise a golf course operation and how their interdependence impacts …

How do you determine the value of a golf course?

As with most property types, golf courses can be valued via the income approach, sales approach, or cost approach. Each method has its limitations. Given the specialized nature of golf course properties, the application of the comparable sales approach is preferred.

What is a good profit margin for a golf course?

Profitable golf courses are generally selling for six to eight times EBITDA, while courses that aren't profitable tend to sell at 0.8 to 1.4 times revenue.Dec 21, 2021

Does living on a golf course add value to your home?

Golf Courses Increase the Value of Nearby Properties

Research as far back as the 1990s has suggested that the presence of a golf course increased nearby home values by 7.6%. More recent studies indicate that the value decreases significantly as the distance between the home and the golf course increases.Dec 9, 2020

What are the factors you must consider before buying a property within a golf course?

To pick a location, you'll need to look at a number of factors, including:

Population density.
The number of other courses.
The number of golfers.
The number of people you can target to play golf for the first time.
Weather conditions.
Seasonality.
Tourism.
Demographics.

More items...

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Apr 2, 2019

How much money does the average golf course make?

According to the National Golf Foundation's 2010 Operating & Financial Performance Profiles of 18-hole golf facilities in the U.S., private 18-hole golf clubs had average total revenue of $3,277,000 in 2009, but with total expenses of $3,204,500.Aug 16, 2018

Is golf course property a good investment?

Golf course properties typically have great resale value, selling at two to three times that of an average home – which is a magnet for investors.

Why do people buy houses on golf courses?

Well Manicured & Beautiful Surroundings

Another benefit of buying a home on a golf course is that the majority of the surroundings will be well manicured and maintained. Since most golf courses pride themselves on the condition of their grounds, the chances of having well manicured surroundings is higher.

Is it desirable to live on a golf course?

There are so many wonderful advantages to living on a golf course or in a golf course community – from the high property values and quality school districts that usually are nearby, to the other community amenities and golf at your fingertips, living on a golf course is living the dream.Aug 1, 2017

Is it good to live next to a golf course?

In addition to having your next round of golf right outside your door, living on a golf course often affords views of sprawling green vistas. Even if golf isn't your game, the benefits of living in a golfing community may be something worth considering.Oct 3, 2018

Is it more expensive to live on a golf course?

A study done by the National Recreation and Parks Association found that properties that view a golf course, even if they are not a part of that golf community, have 15-30% higher property values.Feb 17, 2021

What are the disadvantages of living on a golf course?

The most obvious drawback to living on a golf course is the constant activity behind your home if you live directly on a fairway or green. There are busy parts of every neighborhood, but few involve golf carts and a steady stream of people as early as 5 a.m. on every possible day the weather allows it.

How many acres is a golf course?

150 acres

At the individual level, an average 18-hole golf course covers 150 acres, approximately 100 (67 percent) of which is maintained turfgrass. This area is predominantly comprised of rough (51 acres) and fairways (30 acres).

What to look for in a golf course appraisal?

Some of the more important things to look for in a golf course appraisal include: Methods and techniques should be golf industry specific and reflect timely behavior of market participants, such as appropriate and relevant units of comparison, golf industry specific capitalization and discount rates and appropriate consideration ...

What is golf appraisal?

A golf course appraisal is a complex process that often means different things to different people. By definition, it is simply “the act or process of developing an opinion of value” or even simpler, “an opinion of value” . The appraisal of a golf course or golf club property is somewhat unique because unlike traditional investment real estate ...

Do appraisers need to know golf leases?

Golf property leases are fairly infrequent. Appraisers may be asked to provide market rent estimates, or to use valuation methodology often referred to as the market rent approach. Since lease information is difficult to come by, appraisers should take great care in utilizing same as often the data is dated, incomplete or unexplained.

Do golf courses sell as real estate?

Golf courses rarely sell as just real property and all interests must be accounted for and considered in the subject property and any comparable sale. Golf properties require some unique descriptive information. Some appraisers do an acceptable job of analyzing the clubhouse and other buildings. However, golf course improvements often throw most ...

Is a simple internet search to identify the “rack” rates for competitive courses adequate market research and sales should be

A simple internet search to identify the “rack” rates for competitive courses does not constitute adequate market research and sales should be developed and verified not only to include sale price and recording information, but where possible appropriate physical information and economic indicators.

Do appraisers analyze golf course improvements?

However, golf course improvements often throw most appraisers a curve ball when it comes to understanding them. Some of the elements requiring a thorough understanding and analysis include: turfgrass, irrigation system,

What is golf course appraisal?

A golf course is actually a large business enterprise that groups revenue-producing departments under one identity. Performing a golf course appraisal involves the valuation of real estate, personal property and a business. A golf course appraiser must have an understanding of the components that comprise a golf course operation ...

Where is a golf course located?

A golf course/resort located on an island on the Wisconsin and Michigan (Upper Peninsula) Border. Taking of land by eminent domain can provide a unique valuation challenge when it involves a partial taking of a golf course – a challenge we have dealt with. Losing a portion of a golf hole (s) can severely impact a golf operation.

What is a TCP golf course?

The TCP is a chain of public and private golf course operated by the PGA Tour. Golf course appraisals present unique challenges. A golf course is actually a large business enterprise that groups revenue-producing departments under one identity. Performing a golf course appraisal involves the valuation of real estate, ...

Can losing a golf hole affect a golf course?

Losing a portion of a golf hole (s) can severely impact a golf operation. An appraiser must analyze the effect on the remainder of the golf course. Expensive reconfiguration of the remaining course layout is not always an option. The remaining golf property may no longer be suitable for a golf course operation.

Do private golf clubs have financial statements?

By their nature, private or nonprofit golf clubs may have financial statements with a bottom line that does not look good. The purpose of the appraisal has a direct bearing on the approach. For financing purposes the club must be able to support the debt service.

Is cost analysis applicable to golf properties?

A cost analysis is usually not applicable for existing golf properties and the income analysis is typically most important. Much like conventional real estate investments golf course values tend to be linked to their locality. Estimating value by existing sales comparison is tricky since no two courses are exactly alike.

Is a golf course subject to tax?

It is important to recognize that the business measurement of a golf course may not be subject to assessment and taxation. Being national appraisers of golf courses provides the Gorman Group with the experience and knowledge to handle these assignments.

Do sales prices show any trend?

Sale prices don’t show any appreciable trends. They seem to move up and down significantly enough that no stable trend can be identified. A few very high priced or low priced sales can impact the statistics too much for reliable use.

Can a hobbyist buy golf properties?

Above all else, this tells us that economics largely drive the purchase of golf properties. Yes, there is the occasional “hobbyist” that can afford to and wants to buy golf properties, and there are other metrics besides GRM.

How much did Doyle pay for the golf course?

The $3.8 million Doyle paid for the course, in Florida’s third-biggest market, is slightly more than the average purchase price ($3.1 million) for the 114 golf course sales tracked by Leisure Investment Properties Group last year. And the majority of transactions in the current environment involve first-time buyers, like Doyle.

How much is Eagle Marsh?

Price: $4.9 million. Eagle Marsh is a Tommy Fazio-designed public course spread across 256 acres in an affluent, gated community in the heart of the Treasure Coast. The closest golf course to Hutchinson Island and its beaches, it is a premier South Florida golf destination.

What happens when a potential property is identified?

Once a potential property is identified, this starts the buyer down the road of due diligence, for both the facility itself and the market.

Is the golf course market oversupplied?

D o profitable opportunities exist? Yes , but th e reality is that the golf course market is oversupplied, the byproduct of more than 4,000 courses being built from 1986–2005. It’s why course closures have outweighed new course construction for the past decade. While some closures are attributable to mismanagement, too few golfers, or too much competition, this trend has been largely driven by residential and commercial real estate, and the demand for land.