If you know me at all, you know that I love to play golf. I don’t get out as much as I used to, but it’s still fun to get out and chase that white ball around for a while. Now, I do enjoy playing golf very much, but I also enjoy scoring well (I’m a little competitive), so to get my practice in, I often attend the local driving range. Here’s the problem with just practicing however. I only spend money, I never make it. Here are some ideas for creating passive income from a driving range:
The Passive Income Concept Set-up
This past summer, my brother and I went to a new driving range, and it took us a few minutes to figure out the whole operation. At the usual range, there was an attendant that took the money, handed out the balls, and got in the golf ball picker once in a while to refresh the stock.
At this new driving range, there was absolutely no booth for an employee to sit. Instead, there was a token machine and a golf-ball dispenser. So, I inserted my $5 and out popped my token. I then grabbed a basket, put it in the next machine and inserted the token – in no time flat I had my basket of balls and I was off to hit some balls.
The only employment this business needed was someone to give the range a quick mow, to move the ropes, and to pick up the balls at night and load them back into the machine.
Crunch the Numbers
This sounds like a pretty slick passive income operation doesn’t it? Well, let’s find out. It’s time to crunch the numbers.
Fixed Costs
The big expense is obviously the land. In my area, I could buy a 15 acre plot of land for $100,000, but I understand that land is cheap here, so let’s say it would cost $200,000. Add the ball-retriever ($5,000), golf ball dispenser ($5,000), and token dispenser ($3,000), and lawn-mower ($3,000) and we’re looking at an initial investment of $216,000.
Variable Costs
The day to day operation costs will be the employment ($30/day) and the maintenance of the range (property tax, machinery, grass seed, water, flag sticks, etc.). I estimate a yearly expense of $15,000.
Income Per Golfer
At most driving ranges a basket of balls will cost about $6. I’d say that on average, each range will see at least 20 golfers per day, which would yield a revenue of $120 a day, which equates to $3,600 a month.
In my area of the U.S., a driving range can only be open for about 6 months, so the expected revenue for the year is $21,600.
The Final Numbers
After the large investment of $200,000, the driving range business isn’t all it’s cracked up to be. While it is quite passive, the yearly income (after expenses) is only $6,600 before income tax. It would take about 50 years to recoup the initial investment!
For me, I could buy the land for cheaper – somewhere around $100,000, and if I could average 50 golfers a day instead of my estimated 20 golfers, then I could recoup my initial investment in about 4 years! Hmmm… I think it might be time to open up a driving range!
Have you ever thought about opening up a driving range for passive income? Would it be worth it for you to try in your area, or is land too expensive?