Church real estate isn’t for the faint of heart.
In fact, this may be one of the most substantial expenses your church will ever incur. Get it right, and the new location will fuel the mission of your church for decades. Get it wrong, and your church may never recover.
No pressure.
Despite the high stakes, many churches navigate the church real estate gauntlet with the confidence and experience of a 15-year-old student driver. Frequently tasking a staff member or a church committee—often with no experience in real estate development—to find a property.
With that in mind, we’d like to provide five steps to follow when looking for church property.
1. Find the Right Partner
A seasoned leader’s first call should be to a commercial realtor who specializes in working with churches. But, you’d be surprised how rarely this happens. Instead, most leaders start by leveraging one of these three resources:
- The most prominent realtor in the church
- A local commercial broker whose name they discovered on a vacant property sign.
All three have varying degrees of risk.
Hiring an expert to help you navigate the journey will help your church discover possible new locations and represent you well against that cutthroat seller who’s hoping to get rich.
2. Ask the Right Questions
In the real estate world, it’s rarely “what you know” that knocks you off balance. In fact, one of the biggest challenges that you may face is knowing what questions to ask in the first place.
Again, this is where the right agent pays off—especially one that specializes in church real estate. An agent who specializes in helping churches should help you determine things like:
- What’s the minimum acreage or square footage you’ll need at the new location?
- Will you buy or lease?
- What’s your strategy for funding the entire project?
- What’s the timeline for the completion of the project?
- Is the new location strategically appropriate for the people you’re trying to reach?
3. Count the Costs
Many churches don’t often consider leasing and renovating existing spaces. The mindset of most churches is that they need their own undeveloped piece of dirt so they can build a new building exactly the way they want it.
On the surface, many people inexperienced in development think raw land is the cheapest option because the price per acre appears low compared to the purchase price for developed property. But typically, that’s not the case.
When developing a working budget for a new site, it’s important to think broader than a price per square foot. A new site means you need to provide utilities like water, sewer, electricity, stormwater, and possibly others (gas, cable, phone, etc.) to the site.
That might also mean you have to widen the road, provide sidewalks and a turn lane, or even add a traffic light. This will cost a significant amount of money.
Is your site wooded? That’s beautiful, but it also means you’ll have to clear a large area for building pads, parking lots, ball fields, etc. This will also cost a significant amount of money.
Is your site hilly or rocky? It may be picturesque, but that also means lots of grading (cut-and-fill) and maybe even blasting or drilling rock to make areas level enough for parking lots and the building pads and foundations.
And again—that will cost you.
You get the picture.
A site that is already developed (or even partially developed) should already have most, if not all, of these things in place. Maybe you’ll need to expand parking, or expand the building, but in general, there has already been a significant investment made by someone else that you get to use without having to take it out of your construction budget.
4. Get Permission
Ever heard of “entitlements?” These are the approvals you need from the authorities with jurisdiction over the piece of property or building you want to buy. In many jurisdictions around the country, churches must beg for permission to exist by way of Conditional Use or Special Use Permits and approvals.
The dirty little secret is that most jurisdictions don’t like churches to buy property because they don’t pay property taxes. So they often make the approval process cumbersome, costly, and time-consuming.
The right partner will help you know what you’re getting into before you pull the trigger on a property and also how to best plan for approval.
4. Analyze The Opportunity
Don’t forget the top mantra of real estate agents: location, location, location.
Real estate is a little more nuanced when working with churches. People are willing to “hunt” for your church if you give them a good reason to come, but the location still matters.
Ideally, you would have both accessibility and visibility, but if you have to choose, accessibility is generally more critical. A church with excellent visibility from the interstate might sound great until you have to go five miles past it to the next exit and then navigate back to it through a maze of country roads.
Pay attention to population density and market penetration. “Penetration rate” is a retail term that looks at how many people “shop” at your store compared to other similar stores in your community. So, if you’re looking at two “equal” properties (related to the quality and costs), and Property A has 200,000 people within a 20-minute drive radius, while Property B has only 100,000 people within a 20-minute drive radius, then Property A is the better location.
Also, don’t sell demographics short. If you’re looking at properties in different areas, analyze who you’re currently reaching and who you want to reach. Will these people come to the location you wish to purchase? If not, it’s not a smart move to buy it, no matter how good the deal looks.
Maybe searching for property seems a bit more overwhelming than it did before you read this article, but the good news is that with the right team members, the right attitude, and the proper process, you can successfully navigate your church to the best location.