Investing in a Church

13 Replies

There are a few church buildings for sale in my area, and the listings have grabbed my attention since many of the buildings are nice and in good condition - for whatever reason the parish has moved into a larger building or closed up. Has anyone ever purchased a physical church building and leased it to a religious organization or done a creative remodel and used it as office space or for something else?

Any good suggest stories with numbers?

I have no personal experience buying/leasing/converting a church, but I found these two reads interesting.

http://baltimoreguide.com/http:/baltimoreguide.com/local-fitness-guru-establishes-a-new-kind-of-sanctuary-in-fell%E2%80%99s-point/

and

http://articles.baltimoresun.com/2013-12-18/entertainment/bal-baltimore-theater-communitys-most-memorable-experiences-of-2013_1_baltimore-performance-kitchen-ian-tresselt-baltimore-rock-opera-society

Most churches would not pass my tenant screening.

Imagine getting an application where the source of income is: "I just ask a bunch of people to give me some money every week" ;)

But I've always thought it would be cool to turn one of those unused sanctuaries into a performance space. Even started looking into it once, but the overhead was killer.

@John K.

Churches fall into that speciality real estate category that requires a lot of specific knowledge and experience to properly execute. Converting the space is a whole different story however let's focus on maintaining the space for a religious organization. Your goal would be to purchase, renovate, and lease churches around your area correct? How many deals are out there? I would imagine there aren't an abundance of deals to be done. Also it is my understanding that most churches are owned not leased. There are a lot of churches that lease space however they are generally a part of a different type of real estate (school, event space, hall etc etc). So I think the actual number of leased churches is rather low. So maybe that's an opportunity? Lease to own? Seller finance? If you go down this path you would need to be really dedicated to learning the business and networking within the religious community.

You are going to run across a lot of challenges.

  • Financing is very difficult on this type of real estate. Local banks finance churches among other speciality lenders however a vacant church will be hard to finance. You could purchase cash then refinance after you lease up the space.
  • Are you massively networked in the religious community? I think you would need to be to find prospect tenants. There are very few leasing brokers that handle this type of transaction.
  • How are you going to underwrite the tenants? Probably like anything else....look at past financials, credit of the main pastor, attend church on Sunday??? I would speak to a lender that funds these types of transactions to see how they underwrite the loan on an owner occ basis. That should give you some insight into the process.

You could start your own religion and fill up the pews .

I don't think I would personally go near one, but I'm curious if anyone has successfully renovated one into something else. @Daniel DiGiacomo -interesting article where someone turned one into a fitness studio, what a great idea!

Originally posted by @John K. :
I don't think I would personally go near one, but I'm curious if anyone has successfully renovated one into something else.

Yes! We were looking for a new location for our business, but available properties on the main road through town were few and far between. A church had built a new building in another part of town, so we bought the old one and completely remodeled it.

This is what it looked like when we bought it -

And this is after the remodel -

The inside changed even more than the outside.

@Sylvia B.

Awesome job at repurposing the church! What was it like negotiating with the church? Or was there a realtor involved?

Also I'm fascinated with the gold/silver/rare coin business. Do you value and pay for your properties in gold and silver?

Originally posted by @Chris Winterhalter :
@Sylvia B.

Awesome job at repurposing the church! What was it like negotiating with the church? Or was there a realtor involved?

Also I'm fascinated with the gold/silver/rare coin business. Do you value and pay for your properties in gold and silver?

We dealt directly with the church board - no realtor. There was actually very little negotiation. They asked a fair price.

We pay for our properties with cashier's checks. ;-) Escrow companies tend to freak out about anything out of the norm. We do know people who have bought RE using gold, though.

That brings up an interesting possibility. Gold and silver American Eagles are legal tender coins with face values of $50 & $1 respectively. A buyer and seller could exchange approximately $4000 in gold coins (80 $50 coins) or $5200 in silver for a property worth $104,000. (If the buyer picked up his gold coins in the late 90's, he only paid about $17,000 for them.) Of course both would have to deal with considerable capital gains in the future, but some are not concerned with that.

That is a small church building. Here I have seen repurposing of larger warehouses and an old Kmart for what we call these mega churches.

These young pastors do a church startup up with music and youtube sermons for the hip crowds and pack the kids in. That is the trend I am seeing versus an older church just needing more space or wanting to move to a different location.

I was involved in a deal before where a seller had a cell tower on a main road and 2 additional acres. I represented him and he didn't want to deal with the church next to his property. The church wanted to get a bigger parking lot buying his land and build a bigger building. Keep existing building where the services were for Sunday school and build a much bigger church. The church board told me they wanted a bigger size church with more amenities so they could increase the amount of people coming and offering day and night services more often would increase collections coming in.

My seller still owns the land and didn't sell to them ( they were just too far apart for me to bring them together and the church said they might just move across the street). The land is on a commercial highway frontage and the church wanted to pay for current raw land use at a cheap price. My seller was already making good money off of the cell tower. It's been about 4 years ago so I would have to check in an see what's a happened if anything since then.

Originally posted by @Joel Owens :
That is a small church building.

Yes, but it made a nice big store for us. :-)

Ours is a small town, population about 2100, but we have about 20 churches within the city limits and at least that many in the surrounding area. You won't find a mega church here!

Oh yes 2,100 is very rural town here in GA.

Our MSA area of Atlanta has about 27 counties. Traffic counts daily on the low end here are 20,000 plus.

With that pop you must definitely know almost everyone there...... : )

I Just checked my county of Cherokee GA for comparison. Our population level is 210,529. We would be considered suburban and not urban core which is closer into to Atlanta.

Yeah, I always get a kick out of people who talk about "small towns" with a population of 30-40,000. They don't know what small is.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here