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by: BillTravis
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The purchase of a new church building is the largest financial transaction most church members have ever been involved in. The process thus results often times in intimidating not only the congregation but especially the committee members.

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.

Money talks in real estate transactions and most churches have their cash tied up in their current building. If you plan to move in the next 24 to 36 months you need to get your building on the market now. Get the building sold, don't worry about making your church homeless, lease back arrangements can be made to make the transition to your new church home go smoothly.

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.

It is important that the lender you work with is one that truly understands church; understands that you don't make a profit. Most banks are accustomed to dealing with for profit businesses and are clueless on the ways churches work. You are far ahead of the game by working with lenders that have successfully financed churches in the past year. Just like the analogy of the doctor, it's best to deal with a church friendly lender.

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.

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

Author Bill Travis can help you with your help churches avoid pitfalls. Pastorcast is live each month on the second Wednesday of the month at 10:00 a.m. CT.

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