A Guide to Buying Golf Courses & Driving Ranges
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Depending on whom you ask, few things are quite as relaxing as playing 18 holes on a nice spring day, and many seem to agree: The US golfing industry currently sits at about $84 billion and growing.
Buying a golf course or driving range for sale can be a great way to get in on the action for golf enthusiasts and entrepreneurs alike; however, owning and operating a golf course or driving range isn't without its risks and difficulties.
Here, we'll cover what you should know about buying golf courses and driving ranges for sale. We'll discuss location considerations, real estate considerations, financing, profitability, and more.
Let's get started.
Golf Courses vs. Driving Ranges
First, let's establish thedifferences between driving ranges and golf courses for sale.
Driving ranges tend to consist of a single complex, with facilities built specifically for practicing driving and long-range golf shots. Driving ranges don't typically come with playable courses; instead, users pay for balls to practice with as well as for concessions, golfing accessories, and anything else the facility might sell. Most driving ranges are about 200 yards long.
A golf course, in contrast, has up to 18 playable holes complete with fairways and greens. Golf courses can measure up to 7,000 yards long and come complete with a much wider and open layout than what's typically seen on driving ranges.
Where Is the Best Place to Build a Golf Course?
From a sports perspective, the best place to build or buy a golf course for sale is a flat expanse of gently rolling land with minimal obstruction. The more "regular" the land's shape, the better-suited it'll likely be for a golf course. Surface water, such as ponds and streams, also serve as good land features for golf courses.
From the perspective of a commercial real estate investor, the best place to buy commercial land to make a golf course or driving range is near a wealthier neighborhood that's accessible to major roads in a region with a busy tourism industry. Wealthier people are more likely to play golf, and golf tourism drives a lot of seasonal golf activity.
We recommend working with a commercial real estate broker when buying driving ranges or golf courses for sale. Having a broker on your investment team is useful when looking at property financials and negotiating sales and lease contracts.
Financing Your Golf Course Purchase
Even the cheapest full-size golf courses for sale in the US can cost seven figures; buying a driving range for sale will usually cost you an absolute minimum of $200,000, not counting for labor, utilities, and other miscellaneous startup costs.
Golf courses tend to be risky and expensive to start, so it may be difficult to find traditional financing options, such as conventional commecial real estate or SBA loans.
One option for golf course or driving range financing could be a hard money land loan. Hard money loans for buying commercial property are useful because the land itself is collateral, meaning funding can proceed faster than what's usually seen with traditional funding channels. However, hard money bridge loans have high costs and shorter repayment timeframes.
Securing a loan for buying a golf course will require a detailed business plan showing projected profits and operational revenues.
Environmental Considerations When Buying Golf Courses for Sale
Golf courses take up a lot of space and may require substantial land modification, so local governments heavily regulate their activity.
More specifically, golf courses and driving ranges have to follow environmental regulations that cover water use, waste disposal, and pesticide use.
Environmental regulations for golf courses vary heavily depending on the state, county, and city, so it's crucial to review the necessary regulations with a real estate attorney so you can avoid unexpected fines and fees.
Can Owning a Golf Course Be Profitable?
Golf courses can be incredibly profitable but carry several risks. A good profit margin for a golf course is between 5% and 10%. About 25% of golf courses don't turn a profit, though, once they account for loan repayments, employee wages, and management and upkeep costs.
Profit margins for driving ranges are between 8% and 35%. This higher margin reflects the fact that driving ranges have much lower course maintenance costs and a more streamlined customer experience.
Golf courses and driving ranges are categorized as special-purpose real estate, meaning they're built for a very specific purpose and tend to be difficult to convert into other property types. Golf course revenue is also highly susceptible to economic recessions, when high-income earners lose purchasing power and save more than they spend.
How Much Can You Make From Owning a Golf Course?
It's hard to find exact numbers, but surveys indicate that average annual revenue for the typical golf course in the US is about $1.2 million.
A bit over 35% of that revenue comes from green fees, with annual dues making up another 30%.
What's the Average ROI of a Golf Course and Driving Range?
Again, it's hard to find exact average ROI figures. Some sources say golf courses should aim for a 10% return, while others peg average annual returns at about 2% to 3%. One reason for this variance is high maintenance costs: Course maintenance can take up to a third of all operating expenses.
How Do You Run a Golf Course?
Golf courses make money primarily through green fees, memberships, and pro shop sales. Other sources of revenue for golf courses and driving ranges include food/drink sales, private lessons, and private event rentals.
Given that golf courses and driving ranges derive a majority of their revenue from green fees and membership, maximizing income is a matter of cultivating a loyal and reliable player base in the community. There are several ways to achieve this, ranging from player discounts and loyalty programs to hosting events and contests.
Is Buying a Golf Course for Sale a Good Idea?
Buying a golf course for sale is probably not a good idea for a first-time real estate purchase because of the risky nature of the business and high startup costs.
The best candidate for buying a golf course or driving range for sale would usually be an investor with experience buying commercial land in regions where golfing is popular and who also has an in-depth knowledge of the golf industry.
Get Vetted, Interested, & Local-Market Commercial Real Estate Clients Sent Straight to Your Inbox
Get notified when someone in your local market is looking to buy, sell, or lease commercial real estate with MyEListing.com's Client Connection Program: Agents who use our Client Connection Program tend to close 4x more deals than those who don't.
Find & Connect With Commercial Agents & Brokers Near You for Free on MyEListing.com
MyEListing.com maintains one of the largest databases of commercial agents & brokers in the country. Use it for free to find an agent or broker near you!
Other recent articles
Article Search
Share
All Article Categories
