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

[SteveO]

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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[MJ DeMarco]

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.

 

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[SteveO]

The transaction is now closed. We own the course!

 

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[SteveO]

I scattered this post by posting the last update in another thread. https://www.thefastlaneforum.com/community/threads/what-do-the-doers-do.63859/#post-498790

Anyway, here is the next update.

I finally fired the superintendent. It took me a while. He has knowledge of the course that I may not have access to. But, I will figure it out.

All the maintenance employees have been assigned more specific jobs with job descriptions and detailed instructions. They start at 5:am to get work done ahead of the golfers. I have been there every morning at the start. I am in need of seeing some leadership come forward to take on some duties. Until then, I am it...

It has only been a few short days but I feel like giant leaps of progress have been made. It is amazing to me that the two irrigators have been disassembling and cleaning our sprinkler heads for a couple of years. I did not catch this in the dd and it did not show up on my radar until the overseed process began. At that point, I quickly became an irrigation specialist. I feel that I have learned enough to surpass the guys that have been doing this job for 15 years and the "sup" who was in charge here for years.

For a while, I worked unclogging heads daily to get water to the new grass. I kept asking for investigation and looking for the "root cause" of the plugging. I was being told that algae was growing inside of the pipes. I looked into this and found that it is possible for it to "build or crust up". But I decided that it was time to do my own investigation.

I went with the irrigation team when they did pipe repairs. All I saw was large globs of algae laying in the bottom of the 8 inch pipes. I was alone in the belief that is was coming in through the lake but it was soooooo apparent. I kept requesting for the team to open the filter but the process was continually delayed. It was a heavy 12 inch diameter chunk of iron that took three people to lift. Since it was built over top of an array of large pipes, it was difficult to deal with. As with other processes, I had to demand that it be done in a forceful fashion.

The filter was completely clogged with the slimy algae. So it was now apparent to all that it was coming from the lake.

Part of this story is very complex and I don't want to write too many more paragraphs. The summary is not complete.

We have two irrigation lakes. Both of the systems were plugging. One had the filter that was plugged and the other had a severely damaged filter that was non-functional. I ordered a new one but the only place that I could find said that it would take 5-8 weeks. I had one of my employees that worked in an auto body repair shop attempt to straighten the filter. It worked. We were able to put the assembly back together with a full seal!

I have not been able to find the inlets from the lake to the wet well yet but am trying to borrow a boat to assist in the search. In the meantime, I rigged up a metal screen with 200 feet of ropes, floatation devices and weights. We dragged the likely areas and removed over 1000 lbs of plant life from the water. Initial indications are that our pipes are cleaning out. It is a long process to clean miles of pipe that starts at 12 inch diameter but indications are looking good!

I contacted the people that do most of the work on our wells. They told me that they could rig a vacuum to a pump to allow us to dredge around the well inlets. This should solve our problem.

I have been putting resources into our equipment for parts and the mechanic is making incredible progress on getting our equipment up to speed. I took his blade sharpening duties away from him and had him train the individual operators on sharpening and setting mow heights. Now that the operators are learning what a pain in the a$$ that it is, they are being more careful with the machines. They are not requiring as much adjustment.

We have 72 carts that are used for toting customers around the course. They take a high level of maintenance and a lot of time to move around. We also have over 25 engine driven pieces of equipment in the maintenance shop. Most of these have wheels and are driven. We have put some new rules in place for accountability on the maintenance which should cut our overall time down in a significant fashion.

We also have filled the golf shop with retail items for sale, hired a part time cook, and have an inventory list for supplies.

Overall, we now have processes with ownership for most of the golf course duties. This was lacking when we took over.

Customers are coming back to the course and singing praises for the turnaround. I constantly hear that the course has never looked this good. I have heard these positive feedback from hundreds of people. More than twenty people today alone. At least 40 homeowners have grabbed me on the course or come to the pro shop to give us this feedback! That is what I have witnessed. The staff is hearing the same thing.

I am not satisfied yet. Not even close!

The money income appears to be significantly ahead of last year. It is hard to tell with memberships and such. Our expenses are higher right now but a reduction is coming.

I am so busy that it is difficult to provide updates. It may be a while before the next one comes out.

 

[DeletedUser394]

When I grow up, I want to be like SteveO

 

[SteveO]

We are in the process of preparing for the winter season. It is the busy time of the year for us.

The course is now being over-seeded with rye and bent grass seed. These are temporary grasses that stay in place while the Bermuda goes dormant. The cost is incredible. Just the material (seed, fertilizer, and applicants) cost 90K. That does not include the labor and massive use of equipment.

Last year we spent about 35-40K on the process. We are doing it up this year!

Our business has increased significantly. We are up over 100% in revenue for September compared to last year. Our total summer was up over 40%. Literally over 100 people have told me how much the course has improved. Some have said that it has never been this good.

We are all in at this point!

 

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[SteveO]

Well... The winter season has progressed very well for us. I'm still having fun 4-wheeling in the desert. I have 2 trips to moab, a trip to Wyoming and Montana planned this spring/summer. Mostly to visit family but with fun built in.

All the issues that I talked about through this thread have been primarily solved. We have a great mechanic that keeps our equipment and pumps in shape. We basically purchase a couple of big ticket items each year.

The muck that was plugging up the sprinklers had been reduced to a maintenance program. Turns out that the protozoa was growing in the "wet well" portion of the irrigation system. We maintain it with chlorine and similar chemicals.

We have owned the course for about 4.5 years now. For the first 2.5, I worked 7 days per week from 4:00 am until after dark. Got a lot of issues resolved. Then I got sick.

The last 2 years I have had to work on my health. I developed diabetes and the dizziness/nausea problem discussed earlier.

Went through different diet iterations to get the diabetes under control. I am currently eating a high nutrition diet that does not include any processed foods. The result has been great as I was able to get off of the insulin injections. Was shooting 28 units of insulin a day into my stomach. Now none, and the blood sugar is staying under control.

The next hurdle is with the nausea. After 2 years, 3 doctors, and many doctor visits, I may be zeroing in on what is going on. Someone suggested that I go see a chiropractor. It was cheap enough so I did. He found that my head was not on straight. Literally... The skull and top couple of vertebrae were seriously out of alignment. He made the adjustments and I felt great for a few days afterward.

I have been 4 times with similar results. What may be happening is that the blood flow to the brain is being reduced. Not sure yet though but have a battery of tests coming up to look at the area.

The golf course will be paid off in September so there will not be any mortgage payment.

Looking forward, I don't plan on jumping back in on the heavy workload. My efforts will be on planning and cost reductions. Time to finetune the income and expenses.

 

[SteveO]

It has been one year now.

A coupe has occurred. We have hired the director of golf and the course superintendent from our closest competitor. They came to us because of the direction that things are taking at our venue.

We did not turn a profit the first year and did not expect to. The plans were to have the course in good shape in two years. We accelerated this and the course is almost fully up to speed. The addition of the super is major. I was able to plow though most of the issues and get the grass moving in the right direction. The equipment is also fine tuning. But, the small details on the flatness of the greens, speed of ball roll, and other nuances need to be dealt with by a professional. I looked all year but was not able to find a suitable person, then one just waltzed in!

 

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[SteveO]

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....

 

[SteveO]

The golf course is officially listed for sale. It could take months or years to complete a complex transaction like this.

The initial gross income for the business was $975K per year. Last year, we were up to $1.6M. This year is tracking slightly ahead of that. Weather has slowed us down a bit this year. Colder and wetter than normal.

Looking for retirement at this point. Probably spend time on note investing and land deals. Low stress and limited time types of things.

 

[SteveO]

Update.

We are solidly in the summer months. Temps are going to be 110 degrees today. We still had around 60 golfers.

Our summer play is increasing significantly over last year. We are seeing many new faces and hearing solidly positive reviews.

Our projections show an increase in income. Our expenses have increased as well. We will probably not make money this year but the future is looking good.

We spent the last 2 months cleaning one of the irrigation ponds. It was a ton of work. There are still improvements that need to be made to it but it is much better. It will likely take a couple of years for the water to clear naturally. Removing the cattails was a major part of the job. They like to grow back so it will be ongoing for a while.

Equipment is still tough also. Our schedule of purchases looks to be somewhere around 70K/year just for maintenance equipment. We have it built into our budget but it is a big number. Our energy expenditures are much higher though.

I have attached a couple of random pictures. Not really the better holes, I just randomly snapped these recently. The irrigation leak was just a small crack in the pipe but it put out a gusher of water. The break was four feet deep in the ground.

 

[MJ DeMarco]

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.)



Congrats.

 

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[MJ DeMarco]

How many folks here can claim to have owned millions of dollars in apartment units? And then sold em only to go on and buy a golf course?

This outcome personifies a Fastlane destination, AND a Fastlane beginning.

Marked GOLD. My simultaneous congrats to @SteveO as well as an apology -- this is long, long overdue.

 

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[SteveO]

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.

 

[SteveO]

Okay, okay... It has been a while.

The course is in great condition. There is grass in places that have been bare for years. The greens are in great condition. We added tee boxes, took out a problematic lake (still have 7 lakes) and are about 75% of the way though the sprinkler repairs. Our ponds were overrun with cattails. We have removed all of them. That was a large undertaking that involved hundreds of hours of labor. It was necessary though. Pump stations have been mostly rebuilt for efficiency.

The sprinkler project has primarily been fixing damaged wires and perimeter heads that have been neglected.

Our course used to be the worst in the city as far as playing conditions. It is now rivaling the country club which has historically been the best. Some of their members are buying annual passes with us and leaving the club.

Income is up around 30 percent. We are expecting a strong winter season this year also.

Expenses have been high. The cost of the sprinklers and pump stations has been over 600K. Labor costs have skyrocketed. We have 29 employees with the majority at the minimum wage level. Half the jobs are retirees looking for extra income. The minimum wage jumped considerably.

We are not making money yet but getting close.

 

[SteveO]

MJ asked for the story that I touched on in another thread.

We have an annual winter grass over-seed to prepare the golf course for winter play. Our summer grass goes dormant in the cooler weather. About $60-70 thousand dollars worth of seed and a couple of weeks of prep by the entire maintenance crew goes into this process.

We still allow play but carts cannot drive onto the fairways or anywhere around the greens during this time. Each person is told this as they check in, the carts have signs, and there are other signs stating this.

Last fall as we were in this process, I spotted one cart that had driven up close to the greens. So, I went to inform the driver that he cannot park off of the cart path while the new grass was growing in. He drove away from me as I was talking to him. I let it go as I was sure that he had heard enough.

A couple of holes later, I spotted him in the middle of the fairway. I approached him again and started talking. He cut me off, stuck his finger in my face and said "Now you listen to me....". I cut him off and said "No, you listen to me. Get off my golf course".

He actually refused to go and told me that he would only go if our GM told him to leave. I told him that the GM would not override my decision and that he needed to leave.

His group left. They went to the clubhouse and complained a bit to the GM. Have not seen them back.

This guy owns a large law firm in town. Talk went around the golf community. A number of people asked me if I really removed him from the course.

 

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[SteveO]

More pictures.

 

[SteveO]

Been a while since an update.

We raised our prices this year. Although we have a lower round count, our income is up. That is desirable because cart traffic and other wear factors take a toll during the winter months. The plan was to keep the players that are willing to spend for quality. Seems to be working.

My maintenance superintendent retired at the end of 2021. We replaced him but quickly released the new one. So I am back to filling that role.

I hired a couple extra workers and gave out some decent raises. Using a couple of the crew members to run parts of the crew and take on new responsibilities. Don't know how this will work out yet.

The medical issue was fixed about the same time that the manager retired. So I'm able to work again.

Four years of significant discomfort disappeared in one day. I said in another post some period of time back that the problem was gone. It was only temporary. At that point, I still did not know exactly what was wrong but it went into a lull.

The problem was the atlas was out of place and was cutting off blood flow to the brain. Was also pinching nerves that were affecting other parts of my body. The doctor tapped it back into place. Instant relief.

I have to go back in on occasion to have it realigned. We are working on muscle strengthening as a long term fix.

This guy specializes in this issue and treats a lot of patients for this. Funny how it took nine doctors and four years to find the solution.

Anyway, I'm very enthused and energized at the moment. Really want to make a significant impact at the course.

Looking like revenue will be up this year. Spending also. Let's see which one wins. My costs are going through the roof!

 

[SteveO]

What a fantastic thread!

SteveO, how did you get the capital to get started with apartments? And what made you venture outside your comfort zone to a, seemingly more risky, golf course?

Btw... I lost 10m one time and had nothing left. No credit, no money. But I found a way to bounce back. During that process, I figured out how to cast fear aside.

 

[SteveO]

Everything is still going well. Income is still climbing every year. The course looks better than ever. I only spend a few hours a week working. Now that the business in Phoenix is sold, I can redirect the focus. Diddle on the golf course and plan the home build.

I stated that the home was going to be on 30 acres. I am buying up more of the land, splitting lots, and shaving 3, 3 acre parcels off of the 40. They are on the other side of a ridge so I won't be able to see the houses from my lot.

Fun!

 

[SteveO]

 

[SteveO]

More pics

 

[SteveO]

Update. We had a good winter season.

The majority of our cashflow comes from January through March. Very short season. But the books are filled all day every day though this period. The only exception is cold, rainy, windy days. Sometimes the course gets shut down completely. So we don't like bad weather days during the winter.

Unfortunately, we had more than our share this year. But on the bright side, we were still ahead of last year by a few percent. Even though last year was near perfect for weather.

Still marching ahead.

 

[SteveO]

We decided to do an overhaul of the golf course.

One of issues we deal with here in the desert is warm and cold season grasses. The majority of our play comes during the winter. Our summertime bermuda grass goes dormant with the cooler temps. The grass basically looks like straw and stops growing during the months of December and January.

So, 99.9% of the golf courses in the desert overseed with winter rye. The cost of this is around 150k each year and rapidly rising. Weather changes up in Oregon and Washington are resulting in less seed availability.

Through some research and the hiring of a consultant that specializes in the subject. He recommended that we install an expensive grass on a couple greens and fairways. The idea is that the grass uses less water, handles wear and tear better and does not need to be overseeded.

It still goes dormant but for less time.

In my infinite wisdom, I decided to do the entire course at once.

Some issues came up as we evaluated this process. The primary obstacle is that with the slow growth would lead to much faster greens during the winter. Our greens have way too much slope and undulations. They would become unputtable and we would not have enough locations to place the holes without dramatic wear and tear.

The solution to that is to enlarge the greens and change the slopes.

The fairways are much simpler. The issue with them is that we direct the cart traffic off into the rough while trying to get the winter grass established. This caused our rough to wear out significantly and angered our customer base. They would need to park off the fairways and walk to their ball for about a month.

The solution is to install a different type of turf and widen them out. This turf uses 30 to 40 percent less water and does not wear out as bad. With this and no overseed, the traffic would not need to be redirected.

There were some areas on the course that trapped water and were frequently muddy. They would get torn up and cause grief for the golfers on occasion.

We decided to fix these areas as well. It involved a lot of tractor work, tearing out grass and running new sprinkler wires and pipes. Fortunately, I had purchased a large backhoe to build a road for a property that I was developing and have been able to use it for this project. The golf course has a tractor, but it is not near as powerful as the backhoe.

We also needed to take out a bunch of large trees for the fairway expansions. I got a quote of 30K to do this, so we decided to remove these ourselves.

Another issue is that our customers like to see the nice, lush, dark green winter grass. We will solve this by using dyes. The dye will serve a couple purposes. It will keep the course looking lush, but it will also retain heat and allow the grass to regenerate a bit more during the winter.

The transitions from the grass changings have been such a crazy ritual. We fight like crazy to get the winter grass established. By the time that it really starts to look good, we are applying chemicals to take it out. It will overpower the summer grass and take a lot of it out. Then we spend the summer trying to grow it back. The entire process never seems to make sense.

Thanks to advancements in the hybrid grasses, we seem to have evolved to the point of being able to change this. Our town in Yuma has a slightly warmer winter climate than the rest of the desert. This change over makes more sense for us. We are one of the early adopters of this and are a bit of a Guinea Pig. I get a rush out of this type of challenge and feel strongly that I can make it work.

We have a couple of contractors that are reshaping out greens and tee boxes. We chose not to hire an architect to direct the changes in the greens. I feel that we have a strong batch of expertise on our side. This is all the greens shapers do. Our general manager has been a main player in the development of a couple of golf courses. He is driving the changes and shapes of the greens.

Because of the major changes on the greens, the irrigation has to be completely redone. I am driving that along with one of our irrigators. The crew did not want to take on the massive changes with the irrigation. They wanted us to contract it out. I told them to put their big boy pants on and get to it. We are also making a major change to the controls for the green's irrigation. I want individual controls for each sprinkler head. They are currently setup for three heads per station. I want each to be on their own control. So, we are running many more control wires from the greens to the satellite controllers.

Our schedule calls for seven weeks to make these changes. Half the maintenance crew is working on this. They are working valiantly and are on schedule. Hopefully the stress and pressure will not get to them too bad. It is getting to me a bit. 110 degrees out here right now. Probably 600 feet of trenches for pipes and wires so far.

Running a golf course has never been easy. Low margins and lots of work to do. This project will either be a feather in my cap or not.

We are about 1/3rd of the way through this. I will post a few pictures when I get a chance. Seven days a week for me right now.

 

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[SteveO]

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!

 

[SteveO]

Hey All,

Just an update on the golf course.

I had it listed for sale during the past year. Had some interest but nothing that caught traction. We took it off the market because of the disruption it was causing. Many of the employees were concerned. Even the high level management made concerning comments about whether they would still be there next year. We did not want to lose anyone at this stage.

There are still people interested but that may not happen.

My overall goal was to fade off into retirement. I have basically done that but not really by choice.

The course is doing well and making money. We are still putting it all back into the business but that is a choice on our part. Gross income has improved by 60% since we took over 4 years ago. It continues to do well.

Expenses have gone up as well though. We keep a healthy staff of 30 employees. Many of them are minimum wage or just above. Minimum wage went from about $8 to $12 during our ownership. Tough increase to absorb. Thankfully we have been able to do so.

My wife still works full time on the course. I stepped out for health reasons. I get dizzy and nauseous daily. Can't really do the kind of physical labor that I was doing under these conditions. I have been to a number of doctors/specialists without a diagnosis. I know that it is not vertigo as that has been ruled out.

It does not stop me from doing fun things though. I have all my time filled with things that are enjoyment based. Lots of hiking, 4-wheeling, traveling in my motorhome, etc. I love the beach and Moab, Utah. Spend lots of time in those places.

All in all, things are looking really good.

The course looks better than ever. Looking forward to another great year.

 

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[SteveO]

Picture taken this morning by one of the maintenance team as the sun is beginning to peek its head...

 

[SteveO]

My guy is standing on top of the concrete inlet after we located it. I am on my way back to shore.

 

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[MJ DeMarco]

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.

 

[SteveO]

Maintenance shop. This is just a sample of the equipment.

 

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