Reprinted Articles

The purchase of a new church building is the largest financial transaction most church members have ever been involved in. The process thus results often times in intimidating not only the congregation but especially the committee members.

One of the most important tasks that the church will take on is selecting those who will help the church through this process. Many times a church will try and use real estate agents or bankers from inside of their church. The problem with hiring someone like this is that, most times, they are not specialists in the church field. Whether you are going to buy an existing building or you are going to build, it is important that you choose a team of church professionals, people that understand “CHURCH”, church finance, and professionals that have a lot of experience in this process. Let me ask you a question. If you had a heart problem and needed to go to a doctor, would you go see a dentist? No, why not? But they are both doctors, right? But the dentist is not an expert in the field you need. You would go to a cardiologist, because that understands your problems.

This is one of the first things that I ever mention to a church; is to find a church friendly lender and do it very early. This is so important, because at you as you start shopping for land to build or an existing church you need to know exactly how much money you can spend. You can save yourself a lot of time and heartache and put yourself in position to gets a deal done when they are available by getting your banker on your team early.

If you are planning to move in the next 24 - 36 months and you need to sell your current location in order to move, then you really need to put your building on market now. Most churches shy away of this idea because they want to find a building to buy first. But even if you find the perfect building, it will probably be gone by the time you sell your building so you can pay for the new one. Many times churches worry about selling their building and not finding a new one, leaving them homeless, but you can structure an agreement that will protect you from this situation.

Many churches head out to find a building as soon as they first consider a relocation, and then once they have found one try to figure out how they can pay for it. Sellers of both land and buildings usually will not wait long for you to sell your existing church building and arrange a loan. You will be in position to get the best deals if you have all your money in hand, including the equity from your building and any loans you need.

Most lenders do not understand “Church”; they can’t look at you as a “personal account” so you fall under the commercial lending area. Most commercial concerns make a profit. Most churches don’t. Lenders almost never foreclose on churches (bad public relations to be the bank that closed the church) so they have to qualify churches differently than most other commercial accounts. In my experience you are light years ahead of the game by working with lenders that understand church, and there are many that do. As mentioned above, it’s best to deal with church professionals.

I suggest that you speak with several church friendly lenders to determine with whom you can gain a comfort level that you could work with them. This is a relationship that will be with you for a long time, it’s worth putting in some work to make the right choice.

Now you have narrowed the field to a small number of lenders that fit you, you are ready to begin the application process. In this process you will learn from the lenders how much they can loan you. That information plus the equity and any campaign funds you have collected will allow you to make offers in confidence. That confidence is important to the sellers you will be working with.

Typically most lenders will want to see that you have 25% - 35% equity in the new property. This is just a guide, although it is seldom less, it could be more. Many churches will run a capital campaign. Some will do it themselves, “in house”, others will use professional fund raising companies. In my experience the lenders prefer the professionals for two reasons. One, the professional campaign will usually yield 2 - 3 times the amount of money the “in house” campaign will and secondly the actual amount collected will be higher. Again it is a good idea to speak with a few professional companies to find a good fit for your church.

In summary, pray, plan every move well with the help of church professionals that have successfully completed church projects and can partner with you for a successful relocation for your church. Next time we will discuss some of the financial options available for churches today.

Tags: Finance