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The price is right
Glossary of golf
appraisal terms
18-hole design options |
| The income approach | ||||
| Accountant books | Appraiser income statement | |||
| Revenue | Revenue | |||
| Food & Beverage | $300,000 | Food & Beverage | $300,000 | |
| Green/car fees | 900,000 | Green/car fees | 900,000 | |
| Merchandise | 100,000 | Merchandise | 100,000 | |
| Other | 5,000 | Other | 5,000 | |
| Total | $1,305,000 | Total | $1,305,000 | |
| Expenses | Expenses | |||
| Cost of goods sold | 225,000 | Food & Beverage (includes cost/goods & payroll) | $275,000 | |
| Payroll | 620,000 | Golf shop (includes payroll) | 165,000 | |
| Supplies | 100,000 | Course maintenance (includes payroll) | 400,000 | |
| Management | 50,000 | Merchandise cost/sales | 75,000 | |
| General & administrative | 80,000 | Management | 50,000 | |
| Clubhouse/utilities | 20,000 | General & administrative (includes payroll) | 50,000 | |
| Marketing | 20,000 | Clubhouse/utilities | 20,000 | |
| Property taxes | 20,000 | Marketing | 20,000 | |
| Depreciation | 50,000 | Property taxes | 20,000 | |
| Interest on mortgage | 70,000 | Insurance | 15,000 | |
| Total | -$1,240,000 | Depreciation | 0 | |
| Interest on mortgage | 0 | |||
| Taxable income | $65,000 | Total | -$1,120,000 | |
| Principal payments | -40,000 | Net operating income | $185,000 | |
| Capital replacements | -20,000 | |||
| Net | $5,000 | Principal payments | 0 | |
| Replacement reserve | -25,000 | |||
| Cash flow before debt | $160,000 | |||
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The net operating income is $160,000 after reserve, and the capitalization rate is 11 percent. The income value indication (the net operating income divided by the capitalization rate) is therefore $1,454,545. |
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