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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.

A golf community for retirees in Florida
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 place for golfers, but now hundreds of courses are struggling to meet expenses and are shutting down, according to Kahn. However, other areas in the country have markets for golf which are not as saturated.

“[The golf market] kind of parallels the growth of the population,” Eide said. “They have the most demand in Minnesota...but you don’t see the growth in those parts of the country because of the seasonality. Phoenix has been pretty strong. Texas is overbuilt in places. [Golf is popular] where the population is more athletic.” The top three North American golf markets in the 1990s were San Diego, Chicago and Toronto, according to Kahn. The Northeast region, particularly the Connecticut area, is also lucrative for golf, he said.

An aerial view of a golf course and surrounding houses in Phoenix
The Phoenix golf market has been strong, but drought may cause future complications
A typical 18-hole golf course requires approximately 150 acres of land, though this can vary depending on the type of terrain, according to Eide. Typical green fees for public courses and semi-private clubs range from $30 to $100, depending on location, while club memberships can be $100 to $600 per month or more. Gavrich, who writes reviews of golf courses and communities, said that the quality of a course comes down to layout, playability, aesthetics, condition and amenities.

“Layout is how well the holes mesh with the natural elements of the landscape. Playability is essentially whether the course is laid out in a way that is challenging but fair, and whether it offers a pleasing round to players of wide-ranging abilities. Aesthetics is about the views; for example, if the houses are too close to the fairways, I might be a little critical. Condition speaks for itself,” he said.

Golf courses are hands-on investments, and investors should be prepared to act not only as the owner but as the manager. This isn’t to say that it’s impossible for owners to hire professional course managers and remain remote from the course themselves, but the golf course may suffer as a result. For example, if a compressor breaks down at a course with a remote owner, there is likely to be a substantial wait time before the problem is fixed. The manager does not have the authority to authorize large expenses such as that required to fix the machinery; he or she must first get in contact with the owner, which may not always be possible right away. “If there’s an irrigation problem where you have a broken line...and the manager doesn’t have authority to get it fixed right away, you could lose half a fairway,” Kahn said. An owner-operator, on the other hand, could make the decision on the spot and save the course a lot of trouble, money and business.

Ultimately, a golf course is not the prime option for investors looking to make a quick buck. Operating expenses and other concerns that do not come into play with other investments—such as the effect of unpleasant weather—can have a major effect on the industry. But for those with a love of the game and a willingness to put in the necessary work, a golf course could prove to be a great investment.