Need to Have a Golf Course Real Estate Appraisal?
The game of golf as played in the United States originated in Scotland during the 15th century. The first permanent golf club and course in the United States was established in 1887 in Foxburg, Pennsylvania.
Since that time, there has been a steady growth of golfing facilities for some time except for the past decade. In 1950 there were 4,931 golf facilities; in 1970, 10,188 facilities; in 1990, 11,780; and in 2012, 15,500.
Types of U.S. Golf Courses that We Find Valuations For
There are three kinds of operational golf courses found in the United States:
1. Private golf courses
2. Municipal golf courses
3. Daily fee golf courses
Private golf course are primarily member-owned, exclusive and non-profit. Municipal golf courses are owned by tax-supported governmental bodies, and are operated for people of the community. However, in recent decades the municipal golf course is often leased to a third-party for profit. The fastest growing golf facilities have been Daily Fee Golf Courses which are open to the public and owned by individuals, partnerships, or corporations.
Factors to Consider When Appraising a Golf Course
Upon appraising a golf course, the appraiser must take into consideration the make up of the population to support a golf course. Among the factors the appraiser reviews are the following: population, growth rates, age statistics, income levels, and recreation preferences. The appraisal will also reference the individual state in the United States where the golf course real estate appraisal is taking place such as AZ,NV,TX,CA,IA,HI,PA or NY.
Golf Course Maintenance
It must also be known that cost for golf course maintenance is always one of the largest expense categories.
Objective of a Golf Course Appraisal
The objective of a “golf course appraisal” may be for the following valuation purposes:
- sale transaction
- merger or stock transaction
- lease arrangement
- ad valorem taxation
- or condemnation
The golf course appraisal value sought may also be for a value in exchange, value in use, assessed value, going concern value, insurable value, liquidation value, rental value, or leasehold value.
Adjustments Made in a Golf Course Appraisal
The adjustments made in the Sales Comparison Approach between golf courses used as comparables and the subject golf course may be
- price per acre,
- price per hole,
- price per square foot,
- and the number of rounds per year.
All of these adjustments must also be taken into consideration when arriving at an expert golf course valuation.
Methods to Use When Appraising a Non-Profit Golf Course
Non-profit private golf courses are owned and operated solely to benefit the members. They differ for analysis of profit-making private, semiprivate, or public courses owned by individual investors, hotels, or motels. As such, the three traditional approaches are applied and then concluded with a reconciliation section of the approaches of value.
Income differs between profit and non-profit clubs and daily fee courses. In addition, expenses will vary too.
Common Non-Profit Golf Course Expenses
The most common not-for-profit golf course expenses found on a golf course appraisal will often include:
- operational expenses,
- payroll taxes,
- equipment reserves,
- golf association dues,
- other recreational facilities,
- cost of goods sold,
- staff salaries including payroll taxes,
- office supplies,
- insurance and utilities,
- and other fixed charges
After determining that the highest and best use of the property is for a golf course, then the three traditional approaches (Sales Comparison, Income, and Cost Approach) are applied. Finally, a reconciliation of value is applied to arrive at the market value of the golf course.
What is Happening to Golf Courses Now?
Nowadays, many golf course appraisals are requested by our firm because golf courses are being taken out of operation more and more frequently now in the United States. However, the potential to redevelop or re-purpose troubled golf course properties is in part determined by zoning and restricted covenants contained in community contracts that limit property uses. Golf courses are often zoned for open space, which limits their “non-golf course use” to parks and other greenbelt purposes.
Golf Course Appraisal Expert Gary Valentine
Also, homeowner opposition to changing a golf course to a business use is often usually quite strong. Owners of homes located adjacent to golf courses often had to pay a premium for views of lush fairways and water features, not views of commercial buildings and bright lights.
Therefore, the most likely redevelopment to a golf course involves a shift in business approach, which means keeping the golf course open but reducing its size.
Final Thoughts About Golf Course Appraisals
Due to the reduced number of holes, the redevelopment costs of golf courses are often reduced. Also, property values surrounding golf courses often increase making a faltering, money-losing golf course more viable as an investment. This may often be the most viable alternative for struggling golf courses: modernizing and upgrading the existing golf course facility. To discover the highest and best use of your public or private golf course, however, start with a professional golf course appraisal such as one provided by Valentine Appraisal & Associates. Visit their website at: http:www.valentineappraisal.com/new/