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GOLD! Margaritaville (I've Bought A Golf-Course!)

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SteveO

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Not really wasting away though. Too bad that I don't drink alcohol!

My wife and I have just gone under contract to purchase a golf course in Arizona. It is a major decision for us.

We are sitting in the prime situation of having enough income to live off of from our properties. So, it makes sense for us to dive into a business that we love!

It is a full golf course with eighteen holes, a practice range, and clubhouse.

The course is in bad condition with a large investment fund owner that does not seem to understand that you need to put money in to get money out.

There is still a full range of due diligence to be completed but we have done a lot of it already.

Seems that just sitting or goofing around is not in the cards....
 

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AllenCrawley

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Not really wasting away though. Too bad that I don't drink alcohol!

My wife and I have just gone under contract to purchase a golf course in Arizona. It is a major decision for us.

We are sitting in the prime situation of having enough income to live off of from our properties. So, it makes sense for us to dive into a business that we love!

It is a full golf course with eighteen holes, a practice range, and clubhouse.

The course is in bad condition with a large investment fund owner that does not seem to understand that you need to put money in to get money out.

There is still a full range of due diligence to be completed but we have done a lot of it already.

Seems that just sitting or goofing around is not in the cards....
Wow, very exciting. Can't wait to break it in.
 

Mrs. BRKb

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Nice, @SteveO !

I'm eager to hear every detail along the way.
 

Vigilante

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A sideshow to the meet up next year could be a charity golf tournament held at Steve O's golf course
 

YoungGun

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What an investment you have!
Not only are you starting a business and contributing to a great game, the land is a great asset as well!
Good luck to you.
 

MJ DeMarco

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Does this mean you are moving to the SW?

The course is in bad condition with a large investment fund owner that does not seem to understand that you need to put money in to get money out.
A note for some of the younger folks...

I doubt there are many books on how to buy and revitalize a golf-course. Life isn't about looking for the instruction manual first before doing something... sometimes, you just do it, and find your way as you go.

Congrats whether it happens or not, just being able to have it as a choice is freaking incredible.
 

ZCP

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There was an old PC game called SimGolf. Suggest picking it up. LOT of cool ideas on holes, sequencing, keeping patrons happy, creating a story..... deep stuff.

Maybe we could have a secret password for fastlaners coming out to play......
 
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SteveO

SteveO

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Okay. Just an update.

We have sifted through hundreds of pages of reports on, water viability, environmental, and property condition. Fun reading! Have not found any major issues yet.

The bank is on board pending the appraisal. I met with the top bank officials last week. They are even going to loan us 400K on top of the purchase price to do the improvements.

We have not yet put any money into our dd as we are waiting for signatures on the contract. We are dealing with a large company as a seller and they seem to have many layers.

All of our preliminary data is checking out though and we have strong confidence that this it going through. So much in fact that we have put offers on houses in the other city.
 
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SteveO

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Does this mean you are moving to the SW?
Yes, we would be moving.

I can't talk about the golf course or location yet per the confidentiality agreement that we signed.
 
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SteveO

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I doubt there are many books on how to buy and revitalize a golf-course. Life isn't about looking for the instruction manual first before doing something... sometimes, you just do it, and find your way as you go.
Our plan is to do something a little different. We want to turn this place into a hang-out with food, games, and drinks. It is already located in a community so we want to draw people in for the environment.

As far as the revitalization goes, I think it will be easy compared to what I have done with apartments. The first company that I ever started was a landscape construction business. I love gardening and have studied it as a hobby for many years. There are many employees here. A general manager will deal with the issues from them. But, I have many years of experience managing employees to fall back on.

There is a large mechanical component to this job with all the equipment. I worked as a mechanic in an auto repair shop for a period. I also supervised a group of technicians that kept a multi million dollar automated assembly line maintained and functioning.

This project is right up my alley!
 

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ZCP

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What's your handicap?
 
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SteveO

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What's your handicap?
Ha! It varies depending on the frequency of play. Mine will vary between 12 and 18 although I do not track it regularly. I have been taking lessons for the past few months and expect to improve. My wife has an index of 7.5. She outplays me from the men's tees. She is the reason I took up golf in the first place. :)
 

ZCP

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With my boys newfound wealth, they have now begun to take up golf and get me back out on the golf course. Look forward to coming out and playing your course one day!
 
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SteveO

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Just an update.... We are still in the due diligence stage of the game. We have done 80% of our investigation and plan to proceed forward with the purchase.

As a result, we have found a house to purchase that is on the golf course. Our current house went on the market for sale a week ago and is already under contract to sell.

We have all our apartments up for sale. I am considering selling our strip center as well. There is a small possibility that we could own this course "free and clear" of any mortgage. This all depends on the tax hit from the sales. I can only 1031 exchange a small portion.
 

MJ DeMarco

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We have all our apartments up for sale. I am considering selling our strip center as well. There is a small possibility that we could own this course "free and clear" of any mortgage.
Dude, you know what that means? You have secured the F*ck YOU stage! (OK, maybe you're already there.)

:rockon:

Congrats.

 

Get Right

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With my boys newfound wealth, they have now begun to take up golf and get me back out on the golf course. Look forward to coming out and playing your course one day!
I'll fly out there with you for opening day! Go SteveO!
 

ZCP

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Thinking you keep some of your cashflowing properties. Golf is not on an upswing. Feel strongly that you will make this thing profitable, no matter what. Just think I would be akin to keeping some 'other' revenue sources.
 

MKHB

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Dude, you know what that means? You have secured the F*ck YOU stage! (OK, maybe you're already there.)

:rockon:

You must be very real estate savvy. This is very exciting, yet complicated endeavor-you got some big ones.

I just did a reverse with a REIT, where they spun off the operated assets (course/range/F&B centers). They were primarily interested in the build-able rights to the surrounding lots. Would love to hear more as you progress, can't wait for your "lessons learned" post, hopefully minimal of course.

If it helps, I attached a spread sheet for the cost seg component, we used. With the transaction I was involved with, we anticipate an increase of almost 125 BPS (NPV of 700K using a at a discount rate of 10%) to the portfolio IRR using cost segregation and some a more aggressive personal property exchange strategy, along with a combination straight and reverse (construction) exchange. Finding a QI was comfortable managing the improvements in this type of transaction was not easy.

I am trying to devise a fastlane concept that would incorporate cost seg/1031 and 1033s along with re purposing (donation) run the basics on Argus and put it on a website with wigdets, where the end user could enter all the facts and figures and make a go or no go decision. With a guy like you, not needed, but for a HNW or Family office working with a potential buyer it could be useful.

If you ever need any help let me know, I'll do anything for free lessons, I have been playing for 10+ years and still a 20+ hc.

Good Luck

MK



 

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SteveO

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@MKHB
"You must be very real estate savvy. This is very exciting, yet complicated endeavor-you got some big ones."

Nope. All the golf balls are the same size... ;)

So you were able to depreciate over 10M of the 15M purchased assets (not including land) at a faster rate?

I am hoping to do a reverse exchange as well.
 

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MKHB

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@MKHB
"You must be very real estate savvy. This is very exciting, yet complicated endeavor-you got some big ones."

Nope. All the golf balls are the same size... ;)

So you were able to depreciate over 10M of the 15M purchased assets (not including land) at a faster rate?

I am hoping to do a reverse exchange as well.
@MKHB
"You must be very real estate savvy. This is very exciting, yet complicated endeavor-you got some big ones."

Nope. All the golf balls are the same size... ;)

Hah!

Yes, we went ahead and split the personal property into RUL of 5 & 7 years.


We also exchanged like-kind "personal property" from one asset to the other, e.g., inventory, perishables from F&b operations, shop tools, grounds equipment, anything and everything that was used "in the trade of business, to get the most bang for our buck and to avoid any "boot." The criteria is very broad, just make sure if you do this strategy, your RE tax expert (and yes I said Real Estate tax expert, there is a difference) has to make sure all decisions are defendable and in strict accordance with Section 179 as it relates to the cost segregation study and any capital improvements made subsequent to the closing, but prior to the close of 15's books in order to take advantage of any bonus depreciation advantages. Because after all, is sounds as if you will still have some capital gains from the disposition from some of your other holdings, and as you probably well know that depending on your effective tax rate, the combination of the new cap gains rate, the self employment bump and the afforable care levy, you could be looking at a 23% clipp to your pro-forma revenue.


@MKHB
"You must be very real estate savvy. This is very exciting, yet complicated endeavor-you got some big ones."
 

SimonP99

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Our plan is to do something a little different. We want to turn this place into a hang-out with food, games, and drinks. It is already located in a community so we want to draw people in for the environment.

As far as the revitalization goes, I think it will be easy compared to what I have done with apartments. The first company that I ever started was a landscape construction business. I love gardening and have studied it as a hobby for many years. There are many employees here. A general manager will deal with the issues from them. But, I have many years of experience managing employees to fall back on.

There is a large mechanical component to this job with all the equipment. I worked as a mechanic in an auto repair shop for a period. I also supervised a group of technicians that kept a multi million dollar automated assembly line maintained and functioning.

This project is right up my alley!
Seems to me that SteveO may be the guy to write that "How to buy a Golf Course and Live Your Dream" book when the deal is done, the rehab is finished and his business is thriving. How any golfers would LOVE to do what you are doing? Good Luck to you mate...
 
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SteveO

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Just a quick update.

We are set to move on Monday. Our house purchase on the golf course is now closed. Our current house sale should be finalized next week.

Our loan for the golf course has been a challenge. We were originally trying to get an SBA loan. The plan was to borrow $150K on top of the loan. This combined with our reserves would allow us to put $300K into upgrades and repairs. The SBA program had a hiccup when it ran out of funds to be able to commit to loans a few weeks ago. This issue was fixed about a week later but our lender felt that the whole system was disrupted. The thought was that we would not be able to close by our scheduled date. Closing on time is very important to the seller.

We are now looking at this as a standard commercial loan. This changes will mean much more money down and no extra on the reserves. We will be scraping the bottom of the barrel to start the operations. We have two apartment complexes up for sale and one of them in under contract. That will help us with the funds needed.

Only two weeks from the scheduled close date. We are scrambling to get everything setup for large employee jump. We also need to make some large purchases for equipment. The golf season starts in October here in AZ so we will be very busy.
 

SimonP99

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Just a quick update.

We are set to move on Monday. Our house purchase on the golf course is now closed. Our current house sale should be finalized next week.

Our loan for the golf course has been a challenge. We were originally trying to get an SBA loan. The plan was to borrow $150K on top of the loan. This combined with our reserves would allow us to put $300K into upgrades and repairs. The SBA program had a hiccup when it ran out of funds to be able to commit to loans a few weeks ago. This issue was fixed about a week later but our lender felt that the whole system was disrupted. The thought was that we would not be able to close by our scheduled date. Closing on time is very important to the seller.

We are now looking at this as a standard commercial loan. This changes will mean much more money down and no extra on the reserves. We will be scraping the bottom of the barrel to start the operations. We have two apartment complexes up for sale and one of them in under contract. That will help us with the funds needed.

Only two weeks from the scheduled close date. We are scrambling to get everything setup for large employee jump. We also need to make some large purchases for equipment. The golf season starts in October here in AZ so we will be very busy.
FOUR!! Game on, You've hit the rough, chipped out and hopefully in October you'll be hitting the "green" Good Luck man...
 
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SteveO

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We are now living in Yuma on the golf course. Our house in Scottsdale has sold. Things have been so hectic trying to get everything in line for the course take-over which is set for tomorrow.

I will be writing some big checks over the next few days for equipment, supplies, salaries, etc.

Our challenge is to have the course in prime shape for the golf season that starts in October. I emphasized that we needed all the sprinkler heads working so the course would "green up" by the time we took over. It has gotten green all right. The grass is now overgrown and out of control in some parts of the course. It revealed the next bottleneck which is a lack of functioning grass cutting equipment. I have a number of mowers and worker carts on tap right now. They will be ordered tomorrow for arrival in two weeks.

I expect that the next issue will be staffing. We just hired a mechanic that will start next week. Hopefully, he will have all the other mowers working quickly. We will then need to hire more maintenance personnel.

There is a 2-3 week seasonal shutdown that happens here in the desert as we convert from summer grass to winter. It is the busiest time of the year for the maintenance staff.

Don't be surprised if you see a golf course owner riding around on a mower if you come by for a visit.... :)
 

MJ DeMarco

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Gotta feeling this is going to turn into a legendary thread. Would love to hear how your transition goes-- I have no clue what it would take to run a golf course and would love to hear it from someone firsthand, as they go through it.
 

ZCP

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Get tied into the PGM and turf grass programs at the closest couple of universities. Intern labor and first dibs on pros and turf crew.
 

ZCP

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A good online tee time package. An app to order from the grill on the 8th hole (be sure to put up a sign on the 8th green with the phone number for the grill)! Kids play free day.

A monthly membership club has really helped our local course. $30/mo straight to cc. Covers green fees after 2p (still pay for cart) and free bucket of range balls every day. Course stays fun and full.
 

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