Expanding and Growing: What You Need to Know Before You Buy
(Originally published as an article within ECCU’s former e-publication, Ministry Banking Today.)
Purchasing a new church facility? Buying additional land to expand your ministry? Before you take the financial leap, consider the following:
- Think futuristically. Evaluate the project to ensure it aligns with the long-term vision of your ministry. Will the facility or land support immediate ministry needs as well as future goals?
- Determine what you can afford. Once you've established the type and scope of the project, determine the total cost and how you will finance it. Important considerations: cash for the down payment, capital campaigns and fundraising, and short- and long-term financing.
- It's okay to compare. Ask your real estate agent to pull selling prices for comparables in the area to ensure a reasonable price on your purchase and to avoid surprises when the appraisal comes in.
- Don’t skip the inspection. A building inspection will reveal any structural problems or deferred maintenance. Any issue should be resolved before purchase or negotiated into the price.
- Be environmentally aware. Does the land you're purchasing have a history of uses that may pose an environmental hazard, such as toxic dumping or underground tanks? Obtaining a Phase One Environmental Site Assessment will reveal any issues. These reports are available through environmental engineering companies; ask your real estate agent or lender for a recommendation on which one(s) to use. Also, look into the uses of adjacent parcels and ask the city planning department if they are aware of any problems.
- Stay within city limits. Will the city you're buying in allow you to use the land or building for the purposes you intend? Before purchasing, check with the city on what is permitted. Because this process is complex, consider hiring an entitlement consultant to walk you through the system. The consultant should have existing relationships with the city staff and experience with similar projects in the city.
- Choose your financial partner wisely. Look for a partner who shares your passion for the project's success, has experience guiding ministries through the lending process, and can consult with you to apply the wisdom gained from that experience to your specific situation.