I am actively in the process of buying a church. So, I’ve been thru steps 1-8 thus far. One day soon I’ll create a post dedicated to why I’m stuck/repeating steps, but until then, enjoy your step-by-step guide to church ownership.
Step 1: Research properties daily
My go-tos over the years have been commercial real estate apps (Loopnet/Crexi), Facebook Marketplace, and Instagram accounts like @CheapOldHouses. Set alerts for ‘Religious Properties’ in any areas you’d consider purchasing in.
Step 2: Tell your realtor
Many churches only advertise the fact that they’re for sale via a sign on the lawn. Your realtors are always out and about, driving thru small towns you’d never think of. But if they don’t know you’re looking for a church, they’re obviously not going to send it your way.
They next steps you’ll likely do on repeat until you find your property.
Step 3: Schedule a Showing
It’s one thing to browse carefully selected photos on your phone, it’s another thing to see it with your own eyes. Most churches on the market are OLD. Original roofs, asbestos, abandoned restoration projects, ceilings falling down, foundation issues, black mold, and vermin are all things you may see/smell in person that you wouldn’t necessarily see via the listing.
Step 4: Bring your Contractor
If you LOVE it and don’t see anything glaring that would hold you back, it’s time to bring along a trusted partner. Ideally someone you’d be giving the business to if you did close on the building. Trusted contractors can be more realistic than someone blinded by a dream (me). I’ve heard repeatedly, “There will be other churches, Lauren.”
Step 5: Get Preapproval for a Commercial Loan
If you have the cash for your offer, congratulations! I, for one, don’t. So my only option was trying to secure a commercial loan. Local, regional banks are likely your best.
I had to submit my personal financial statement (PFS), all of paperwork to back up my PFS (bank statements, investment account statements, most recent pay stub), my taxes for the last 3 years, everything you’d expect to submit for a regular mortgage approval. What was different from the regular mortgage process was the need for an income and expenses worksheet and business plan for the church.
Some banks will require an LLC for this process, some won’t. All banks will require you to have an attorney for this process, ideally someone who specializes in real estate law. Lean on your realtor to secure a real estate attorney if you don’t already have one.
Step 6: Make an Offer
If you love a church, your contractor is up for the challenge, and you have the funds secured? It’s time to make an offer.
Questions to consider when crafting an offer:
How long has it been on the market?
Are there other offers/potential buyers in the mix?
It’s always a no if you don’t ask! Even if you make an offer that’s too low for the seller, they can negotiate.
Step 7: Get an Inspection
If your offer is accepted, it’s time for an inspection. A great inspection is key in your church buying journey. You should anticipate a handful of issues; I’d be shocked if there was a church on the market that would pass with flying colors.
My recent inspection revealed a number of needed repairs and issues to address. Some are obvious but some are not so obvious. For example, mine revealed knob and tube wiring in the attic, something I’d never even heard of. It was a wiring system popular in the late 1800s thru the 1950s.
It’s just a matter of if you’re able and willing to do the repairs necessary in order to get the space up to code.
(If you happen to be in the Central New York area, my inspector Mark Harlander from Marked Inspections created a thorough, color coded inspection, complete with drone photos of the property which he sent to me that same day.)
Step 8: Renegotiate the Offer
Depending on what was revealed in the inspection, the seller may be willing to renegotiate the sell price or offer a credit at closing for repairs.
Step 9: Wait Patiently / Decommission the Church
Ideally, when you renegotiate and agree upon the new offer, it’s time to close. The time it takes to close on a property can vary depending on several factors, including the financing method, local regulations, and the efficiency of the parties involved in the transaction. All-cash transactions or properties purchased with pre-approved financing may close more quickly, while transactions involving financing contingencies or complex legal issues may take longer to finalize.
If it’s an active and operating church, it’s going to take much longer. The church will have to go thru a decommission process, outlined below.
- Notification: Congregation members and stakeholders are informed of the decision.
- Disposition of Assets: Assets like property and furnishings are dealt with, whether sold, transferred, or liquidated.
- Legal and Financial Matters: Debts are settled, legal documents updated, and tax requirements addressed.
- Final Ceremonies: Final services may be held for closure and commemoration.
- Official Decommissioning: The church is formally decommissioned, often through a congregation vote or denominational approval. This includes approval from the state attorney general (at least in New York), and can take up to one year.
Step 10: Actually Close
If you’re not buying from an active church or if you are and the church has been successfully decommissioned, it’s time to close! Make sure you have your Pilot G2 and obnoxiously big key ready.
If there’s any steps you’d like more clarity on, let me know!