One question I’m often asked is “Why do you need all this information just for an appraisal”?
In many cases a previous appraisal might have been done by someone less familiar with golf course and club properties and the appraiser might not have known what to ask for. Understanding the facilities and the club’s economics are critical to an accurate analysis. Among the items we’ll ask for that are usually expected include the following:
- Financial Statements (3 years w/ detail)
- Balance Sheet
- Current Budget
- Real Estate Tax Bills
- Deed or Legal Description
- Property Survey/Site Plan
- Building Floor Plans
- Golf Course Routing Map
- Prior Appraisal Report on Property
- Cost Estimates for any planned capital improvements/repairs
- Equipment Schedule
- Lease Summary
These are typical of most appraisal assignments. Golf properties, however have some unique characteristics. Depending on whether the club is private, daily-fee or some combination, we’ll want to know the source of revenues. Where do play and membership come from, geographically? What is the structure of membership? What is the maintenance equipment fleet like? Is it owned or leased? Does the club own the carts or lease them? How old are these items? We always seek to get summaries of all the leases for equipment, if applicable.
We’ll want to know a history of the property, including the golf course architect, membership and play history and any significant events that may have taken place. Unique to golf courses is the critical importance of the age and condition of the turf and components like irrigation systems, drainage, equipment and sources for irrigation water. In order to evaluate the maintenance budget, course capacity and other items, we’ll ask about things like the size of tees, greens and fairways, the maintenance schedule and the design of the irrigation system. Understanding the maintenance plan is essential to understanding the quality of the experience being provided. A golf course’s practice facilities and quality thereof are an integral component of the property. A thorough understanding of the club’s golf improvements, and not just the buildings, which most appraisers sometimes focus on is essential.
Most golf properties have several buildings, which serve a variety of purposes. The clubhouse is often a place where food and beverage services are provided and the kitchen and seating capacities are most relevant. Particularly at private clubs, it’s good to know how many lockers there are and whether there are fitness and other facilities. Does the club have a swimming pool? Tennis courts? Other facilities, such as maintenance buildings, cart storage and onsite residential buildings all contribute to a club’s value and need to be analyzed for their contribution to the club’s operation.
Typically, improvements are considered to be buildings. While this is true of golf properties, there are significant golf improvements that have a quality and character all their own and require consideration and analysis. It is those golf improvements that typically generate the bulk of the revenue and golf consumers (players/members) are sophisticated and want value. There are significant differences between daily-fee and private facilities and often these can only be quantified by a detailed analysis of the golf improvements and their maintenance.
Next time you have a golf property appraised or analyzed, take the time to answer the appraiser’s questions and compile the relevant information. It will enhance the appraiser’s ability to provide an accurate and reliable analysis.