How do I determine a fair purchase price for a golf course?
It is hard to set a price on golf courses, because they are all so different from each other. The variables are endless. However, the best way to set a fair price for a golf course is based on its income and earnings. It is this gray area where inexperience can cause buying mistakes. Usually the income side of the statements can be clearly verified, but the expenses side needs study by an expert. Too many golf courses try to show high earnings to command a higher price for the property. What cannot be seen by inexperience are hidden maintenance insufficiencies and shortcuts that result in a perception of higher earnings. There are formulas to find the ‘real’ costs to maintain a golf course and they need to be applied to the subject. If reasonable maintenance costs are higher than shown on the subject’s financial statements, the property is probably not really earning what is says. Therefore, it is worth less. Once you’ve determined the real cash flow of a golf course, you can base a pr
