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Jul 20, 2008
For most churches the largest financial transaction that most of the members have ever experienced is the purchase or building of a new church building. For those who are the decision makers in the process, one of the most daunting tasks they have is dealing with the responsibility to be a representative for the entire congregation. The reason this responsibility carries so much pressure is that the decisions that are made will likely determine the location of the church for up to three or four decades.

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 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.

Don't make the mistake I see so many churches make; one mention of moving and everyone in the church is out shopping before you even have your budget worked out. Once you have made the decision to move, get a commitment as to how much debt you can carry and get your cash in your hand. These two moves will put you in a position to grab the deals when they arrive.

Most lenders do not understand "Church", because the accounting process in a church is more like that of a commercial loan. Many commercial lenders do not understand because most commercial concerns make a profit, most churches do not. Also, a lender to want to be the bank that forecloses on a church, this can only leads to bad public relations. This is another reason it is vitally important to work 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.

During the application process you will be asked for all the normal information on your church such as, financial history, attendance records, cash positions, equity etc. The lenders use this information to qualify you for a loan, and this will give you a good idea about how much you borrow. With this number you can shop for church buildings with confidence and find the property that meets you needs and have a good chance to close in a timely manner.

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.

So, as in all things prayer is crucial, planning every step along the way and the assistance of church professionals, those who have completed several church projects in the past year, is highly recommended. Follow these simple basic steps and you should have a very successful relocation project. In our next article we will discuss some of the financial options available for you to choose from.
About the Author
About the author: Bill Travis is the producer of ThePastorCast. To get the chance to participate pastor cast and listen to topics that pastors choose to hear that will help churches avoid pitfalls . Pastorcast is recorded live each month on the second Wednesday of the month at 10:00 a.m. CT.
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