Profitable Golf Course or Sub development?

June 17, 2008 7:08 PM

How profitable is a golf course? I love playing golf and would love to own a golf course. However, with the price of real estate the way it is, I wonder if it is even really profitable? Is it more profitable to buy couple hundred acres and put a course on it or put some homes down? I would think that it would be more profitable to put homes down, because the course would take several years to get out of the red.
posted by CWitt to work & money (9 comments total)

Here's an old report that addresses some of the factors in building courses. The author notes that the growth of courses continues to shrink, perhaps reflecting higher property values, but that this is possibly offset as the number of golfers increases.

Generally I would bet that existing golf courses are no where near capacity in most places, so the market may be saturated. I've played in places where I and my friends were seriously the only people there all day long - on a Sunday, no less... anecdotal, yymv (your yardage may vary)

Personally I've noticed the trend of golf courses being built along side housing developments - often by the same developers. It's probably an easy sell to zoning boards for land that they normally wouldn't be allowed to build on because it abuts other developments and the like. Perhaps it's a good way to squeeze extra profitability out of every acre?

Looking forward to inevitably higher costs on water and fertilizer (which is petro based) I think courses will increasingly be seen as a poor investment no matter how many baby boomers get into the sport...
posted by wfrgms at 7:25 PM on June 17

Strangely I was talking to someone about this not long ago. Short answer, you do both.

You buy some unwanted land for a relatively small amount on money, you want to make a load of money out of it, but because it's in the middle of no-where and has no actual desirable traits you need to make it desirable.

So you build a golf course, now the golf course isn't actually why you bought the land (in your bank managers eyes anyway). It just so happens that people like the idea of living next to a golf course, if they enjoyed living next to cattle eating grass and farting, you'd just put cattle there.

So you ring the course with as many nice houses as you can afford and a lot of empty plots. As the current homes sell you use that to fund phase two of your buildings etc.

So, you've essentially turned some worthless, quite of the way land into something of value , therefore make massive profit on the property sales. The golf course is really an afterthought and not something that you really care about making huge money out of, the property is the gold.

If my memory was better I could recall the construction companies name, but essentially this is all they do. Buy a bit plot, totally develop it around a course they build, then move on-- they're well funded enough to do it all in one, so there's no ongoing phases.
posted by Static Vagabond at 7:44 PM on June 17

Maintenance on a golf course is very expensive. There is a point where what you have to charge golfers for greens fees to cover expenses, yet be profitable, begins to exceed the amount the golfers are willing to pay to play the course. Finding that happy medium is the trick to making it a successful venture.
posted by netbros at 8:30 PM on June 17

The problem with doing the 'development in the middle of nowhere' thing is that rising gas prices will mean fewer people will want to live in the middle of nowhere. Unless there's some weird intersection of 'survivalists' and 'golf enthusiasts' that you could tap into.
posted by dirtynumbangelboy at 8:46 PM on June 17

What has been described above is really common here in South Africa and are called golf estates. Have a look at this google search for more information.
posted by Gomez_in_the_South at 11:21 PM on June 17

Maintenance on a golf course is very expensive.

A 1.5m cut width mower will cost about $30,000 and cut at about 6.6km/h. To mow a golf course of around 500 acres (two 18 hole courses) you need to drive about 660km, assuming about 50% of the area needs to be mown. In other words, 100 hours to completely mow the course, not including refuelling, mower maintenance, etc. So just keeping the grass mowed once a week can take two or three employees full time.
posted by Mike1024 at 1:12 AM on June 18

Starting from scratch is not the only answer. Buying into a company which already owns a golf course may get you where you want to be. There are always companies which have senior executives who are nearing retirement age and who want a graceful exit, with a younger, very motivated person to take over as successor. Get to know them and see if something can work out.
posted by yclipse at 3:47 AM on June 18

So just keeping the grass mowed once a week can take two or three employees full time.

And there's a lot more to keeping a golf course in shape than that, too. The mower will handle the fairways and the rough (depending how rough you like it, heh) but the trees, shrubs, greens and especially sandtraps will require by-hand care, too.
posted by rokusan at 6:13 AM on June 18

Golf courses require huge amounts of water & chemicals, in addition to trimming the growing stuff.
posted by stupidsexyFlanders at 7:14 AM on June 19