An Investor"s Golf Course Investment
As the number of failed golf courses tapers off, the potential for increasing profitability in these properties presents itself.
The game of golf still fascinates millions of women and men just as it has for decades.
Some owners might be able to offer seller financing, otherwise an investor will likely need mostly cash to buy a property.
Despite the upbeat talk from Wall Street and Washington, as a rule banks still aren't lending on most commercial properties.
One should remember these guidelines for investing in a golf course.
Key points to consider: · Profit proven properties may be bought at competitive cap rates; and · Commercial properties are selling from one-third to about one-half replacement cost.
For approximately the price of a garden apartment development, a class A building,(and comparative net operating income) five to six golf properties can be bought.
The possibility to spread the costs of management and any risk over several golf properties should be considered.
The main key to an astute purchase is to be able to tell the difference between the junk and the jewels.
Market Research: Some golf course operators may lack essential data about their customer base even though they understand course management.
It's not enough to think you have a general idea of what needs your customers have.
The wrong or incomplete intelligence data can lead to a domino effect of errors in services, use of facilities, stock available, pricing, and necessary market positioning.
A Bundle of Services: Golf itself is not the only issue any more.
To be successful, a property management firm must recognize it competes for the precious amount of time families have to spend together.
How the recreation budget of the family is spent is largely decided by the wives.
Golf course management needs to offer a group of features and activities which will compliment their needs and ensures the largest use of the golf course programs: youth activities such as summer day camps for young golfers can be a key factor not just to increase income but for also cultivating the player base; offering group golf instruction pulls in women who enjoy taking golf lessons with their female friends.
These services will improve the investor's return on investment (ROI).
The objective: Retailing and entertainment are the business model that golf properties are engaged in and successful investors should understand that.
They need to fill the parking lot with potential customers every day, not just on the weekends.
In the near future managers displaying talent may be recruited from a company such as Disney to run the golf course facility.
Disney's overall theme is to teach families how to play together.
A successful golf course program can likewise create family play together opportunities that are less expensive and are closer to home.
Show Me A Prototype of What I Should Buy: Here are bullets for a real property located in the southeast on a high traffic road in an upscale suburban market.
Has nearby stores and shops.
Surrounding the course are settled upscale neighborhoods.
Property: Is an 18-hole course with a water or marsh feature by every hole.
Type: A semi-private course (daily fee customers and dues-paying members) Amenities: 10,000 square foot club house remodeled recently (2005-2009).
A sizeable dining room with a bar that overlooks the 18th hole.
Separate women's and men's locker rooms.
A golf pro shop is a necessity, the minimum administrative offices, and of course a driving range.
Traffic in 2010: 40,000 rounds minimum.
Net Operating Income 2010: $450,000 Needs: A women and men's fitness center, 2 more ponds by some holes.
Everything is determined by the terms of the sale of course, but it would be ideal if an investor purchased this property for a 8% to 9.
5% capitalization rate.
If an investor looks around carefully they can find a property to fit these guideline and obtain a better than average deal that will earn a great return on investment (ROI).
Final Assessment: An investor should sit down with their accountant and run the operating figures past him.
This is the time to compare if the golf course will demand too much of the investor's time to help manage and if the ROI is comparative to, or better than, a passive investment like stocks, gold, or silver.
The game of golf still fascinates millions of women and men just as it has for decades.
Some owners might be able to offer seller financing, otherwise an investor will likely need mostly cash to buy a property.
Despite the upbeat talk from Wall Street and Washington, as a rule banks still aren't lending on most commercial properties.
One should remember these guidelines for investing in a golf course.
Key points to consider: · Profit proven properties may be bought at competitive cap rates; and · Commercial properties are selling from one-third to about one-half replacement cost.
For approximately the price of a garden apartment development, a class A building,(and comparative net operating income) five to six golf properties can be bought.
The possibility to spread the costs of management and any risk over several golf properties should be considered.
The main key to an astute purchase is to be able to tell the difference between the junk and the jewels.
Market Research: Some golf course operators may lack essential data about their customer base even though they understand course management.
It's not enough to think you have a general idea of what needs your customers have.
The wrong or incomplete intelligence data can lead to a domino effect of errors in services, use of facilities, stock available, pricing, and necessary market positioning.
A Bundle of Services: Golf itself is not the only issue any more.
To be successful, a property management firm must recognize it competes for the precious amount of time families have to spend together.
How the recreation budget of the family is spent is largely decided by the wives.
Golf course management needs to offer a group of features and activities which will compliment their needs and ensures the largest use of the golf course programs: youth activities such as summer day camps for young golfers can be a key factor not just to increase income but for also cultivating the player base; offering group golf instruction pulls in women who enjoy taking golf lessons with their female friends.
These services will improve the investor's return on investment (ROI).
The objective: Retailing and entertainment are the business model that golf properties are engaged in and successful investors should understand that.
They need to fill the parking lot with potential customers every day, not just on the weekends.
In the near future managers displaying talent may be recruited from a company such as Disney to run the golf course facility.
Disney's overall theme is to teach families how to play together.
A successful golf course program can likewise create family play together opportunities that are less expensive and are closer to home.
Show Me A Prototype of What I Should Buy: Here are bullets for a real property located in the southeast on a high traffic road in an upscale suburban market.
Has nearby stores and shops.
Surrounding the course are settled upscale neighborhoods.
Property: Is an 18-hole course with a water or marsh feature by every hole.
Type: A semi-private course (daily fee customers and dues-paying members) Amenities: 10,000 square foot club house remodeled recently (2005-2009).
A sizeable dining room with a bar that overlooks the 18th hole.
Separate women's and men's locker rooms.
A golf pro shop is a necessity, the minimum administrative offices, and of course a driving range.
Traffic in 2010: 40,000 rounds minimum.
Net Operating Income 2010: $450,000 Needs: A women and men's fitness center, 2 more ponds by some holes.
Everything is determined by the terms of the sale of course, but it would be ideal if an investor purchased this property for a 8% to 9.
5% capitalization rate.
If an investor looks around carefully they can find a property to fit these guideline and obtain a better than average deal that will earn a great return on investment (ROI).
Final Assessment: An investor should sit down with their accountant and run the operating figures past him.
This is the time to compare if the golf course will demand too much of the investor's time to help manage and if the ROI is comparative to, or better than, a passive investment like stocks, gold, or silver.
Source...