For most churches the purchase of a new church building is the largest financial transaction most of the members of the church have ever been involved in. As a result the process is one that can become intimidating to those charged with the responsibility to represent the congregation. It is a serious responsibility that in most cases will determine the location of your church for the next 30 - 40 years.
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.
When I meet with the church leadership for the first time I almost always suggest that they get a church friendly lender on board in the very early stages. Here’s why. When you start shopping for land to build on or an existing church building you need to have a good understanding of what you can spend. By getting the banker on your team early you will save yourself a lot of time and put yourself in position to get the deals when they are available.
If you have a church building to sell, and you want to move in the next 24 - 36 months you need to get your building on the market now. Most churches don’t want to do this, they want to find a new church first, but you need to have your money ready first. To solve the problem of making your church homeless, agreements can be structured that allow you to stay until you have a place to go.
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.
Many lenders will want you to have around 25% - 35% equity in your new building. In order to raise money, many churches will run capital campaign. This is another area that many churches try to take on themselves. Typically when churches do higher a professional to come and manage the campaign the professional campaign will usually raise about 2 - 3 times the amount of the money that an “in house” campaign can raise. It is a good idea to speak with multiple capital campaign companies, and find one that is a good fit.
This article really just scratches the surface of the topic of church finance. This is why you really need to pray, plan step of the process with the church professionals so they can help you with your successful relocation process for your church.