Golf Courses: Owning, Operating and Investing Billings MT

There are more than 17,000 golf courses in the U.S., and with a growing number of baby boomers reaching retirement age it may seem like putting money into a golf course or community would be a worthwhile investment. But owning and operating a golf course isn’t all fun and games. An investor looking to create or buy a golf course needs to consider how to make the course appeal to players and whether or not the course can sustain itself in the current market.

Owning a golf course may seem like a fun investment idea, but investors need to be prepared for the amount of work and money their course will require.

“A golf course is almost like a human being on a lifeline; you can’t take your eye off it for a second. They’re very, very demanding. They can be a very good investment if a buyer...approaches it as a pure business proposition before the romance of owning a golf course takes effect,” Mike Kahn, president of GolfMAK, Inc., a golf consulting firm based in Bradenton, Fla., said. In addition to an estimated $500,000 to $1 million per year just for maintenance of a typical 18-hole golf course, investors need to consider additional costs such as food and beverages, staff, building maintenance and management fees. Ideally, investors should look for at least a 15 percent return, Kahn said.

When considering a golf course as an investment, there are several big decisions that investors need to make. One of these is whether to invest in a standalone golf course or a community. “[M]any people prefer the cachet of a community with a range of amenities, both for the personal validation it gives them plus the perceived resale value it gives their homes,” Larry Gavrich, founder of HomeOnTheCourse LLC and GolfCommunityReviews.com, said in an e-mail interview.

Golf communities require more care than standard courses but can be more lucrative These communities typically offer larger returns than standalone golf courses, according to Richard Eide, principal of Golf Club Consulting, Inc. “Margins are very tight in the golf business; there’s lots of competition....A standalone golf course is a pretty tough deal to do now,” he said.

Investors also have the option to either invest in the development of a new golf course or to purchase an existing course. Because the golf industry has been overbuilt, most investors would probably be wise to focus on rehabilitating existing courses rather than creating new ones.

“We have more than enough golf courses now,” Kahn said. “[Often] you have a golf course that’s not very old and the infrastructure is all in good shape; it’s just been under-managed.”

“To build a golf course you’ll be spending $6 to 10 million,” Eide said. “You can buy an existing golf course for half that."

Florida, in particular, has been overbuilt when it comes to golf courses. The state was once an ideal pla...

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