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 should I look for in a golf course appraisal?
These are some of the highlights that relate to appraisal standards requirements, but are often overlooked by inexperienced golf course appraisers. A few other things to look for in a golf property appraisal are: Leased fee and leasehold valuations. Descriptive maps and photos.
What does the Society of golf appraisers do?
The Society of Golf Appraisers annually publishes an Investor Survey that provides information on gross revenue multipliers and other metrics that measure the pulse of the industry on certain benchmark indicators like capitalization rates, discount rates, mortgage terms and other indicators.
How does the process of buying a golf course work?
The process usually starts in one of two ways: a prospective owner has a specific golf property in mind (having played there or heard about it from a friend), or the person knows they want to buy a course and starts by talking with a broker who specializes in golf course properties.
Do “national averages” matter in golf appraisals?
“National averages” often published can be sometimes helpful in framing an issue in a golf course appraisal, but as they say “all politics are local” and golf markets are the same way. The national averages rarely tell the story for the specific market.
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.
Why are golf course appraisals so difficult to trust?
Golf course appraisals are difficult to trust because the three standard methods of appraisal – replacement cost, comparable sales, income approach – cannot apply at a time when golf courses in recent years, for instance, have been trading well below replacement cost.
How much did golf courses earn in 1995?
In 1995 a golf course with annual earnings of $500,000 may have traded for a multiple of 6 to 12 times EBITDA. The predators – mostly the experienced golf companies – aimed for the six multiple.
How far apart were the two golf courses in the same county?
The assessor was puzzled because the two golf courses appeared so much alike and located less than eight miles apart in the same county. The two golf course sales transactions occurred only a few months apart. Both were 18-hole residential development type golf courses, with similar middle-class neighborhoods.
When were golf courses allowed?
In my experience, golf courses created after the early 1970s were probably permitted as permanent green space, which meant all other land rights were relinquished as the permitting condition. It means the land can only be a golf course or an open field.
Was golf a business or asset?
The golf course as a business was worthless in the eyes of the banker. The land as an asset, which still retained most of its original property rights was actually attractive as a financeable collateral asset. We know the banks were rather liberal in the 90’s.
Is a golf course loan a real estate loan?
Based on what I was told by an executive with a major bank, a golf course loan was regarded as a business loan and not a real estate property loan – even though it was secured by the real estate asset. Therefore, the loan was primarily based on the ability of the business to repay the loan.
Can golf courses be financed?
In 2017 the rules have changed. Many golf courses are not showing profits and cannot be financed. Sellers are telling buyers that the earnings will return, but smarter buyers are saying they won’t pay now for tomorrow's profits. With the banks gone, the only golf course finance source may be the seller.
What is the National Golf Foundation's GolfMAP system?
The National Golf Foundation’s GolfMAP system, for example, provides a detailed look at demand-related variables such as participation rates, golfing households, rounds played, interest among non-golfers, and household income in a particular region.
How much did Doyle pay for the golf course in Florida?
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.
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.
