buying church property

Critical Steps for Buying Church Property

Market Insight

From The Religious Real Estate Review, August 2020
By Marcus Daniels, Ed Luckett, & Terry Rogers

Whether you’re just starting a ministry or your church’s congregation has outgrown its building, it’s likely that you’ve had to take on an unusual new role: that of a real estate expert. Although faith leaders understand how to preach effectively and build a community of believers, not many are equipped with the knowledge for buying church property. From evaluating the value of the property to gaining zoning approval to inspecting the facility, there are many steps church leaders need to go through before signing on the dotted line.

But church leaders are not the only ones who lack familiarity with the process of selling or buying church property. Many commercial real estate brokers also lack the familiarity with laws and regulations unique to religious properties.  Consequently, many lack the vision and strategic guidance to thoughtfully lead you through this process. Matters regarding church real estate require a specialized approach that should include an adviser who has both real estate expertise and experience working with churches.

If you are considering buying a church building or purchasing a nontraditional property to convert into your congregation’s new home, here are four critical steps to position your church for success.

ALIGN CHURCH LEADERSHIP
Before you can even think about selecting a site, everyone from your church administrators to your congregation members need to be aligned in terms of your long-term vision and how the new building will help you achieve the objectives and goals you have set. An experienced church broker can help shepherd a congregation through conversations about location, property-specific issues and design decisions to avoid a disconnect within your congregation.

KNOW YOUR RECENT HISTORY & WHERE YOU STAND
Get your business documents, attendance and balance sheets for the past three years and keep your financials safe and secure to be prepared to create a financial plan. Make sure your financial and organizational records are in order. You should be able to produce financial statements for the past three to five years, information about any existing debt obligations and current assets, as well as tithes and offerings. Additionally, review your articles of incorporation or bylaws, and determine who is going to be the signatory for the execution of the documents.

CREATE A FINANCIAL PLAN
Next, you need to create a financial plan for how the congregation will lease or purchase the property. If you choose to lease, make sure you understand the real market value of the property so you know if you can handle lease payments. If you choose to purchase, you will probably use a combination of funding sources, such as a capital campaign, donations and bank loans. A good rule of thumb: Churches can borrow three times their annual giving.

LOCATE THE APPROPRIATE CHURCH PROPERTY
There are many spiritual, emotional, and congregational considerations when selecting a site, and it’s helpful to remember that the “perfect property” doesn’t exist. Church leaders need to be flexible. For example, many churches are leasing or buying nontraditional church buildings because there is a low inventory of existing churches for sale. If you have identified a potential building, investigate local regulations and conditions, including easements, parking and zoning regulations, and utilities, to determine if the property can be used for religious purposes. Additionally, gain a clear understanding of what it will cost to convert the building into a suitable church.

Unfortunately, without the aid of an experienced church broker, many churches purchase buildings that aren’t zoned to be churches or that they ultimately cannot afford because they did not account for how much it would cost to repurpose or renovate.  If you do find an existing church building in a good location that fits within your budget, make sure it suits your needs and is in good physical condition, so renovations required are more cosmetic than infrastructural.

Unlike a traditional real estate agent who must string together the professionals necessary to complete the purchase of a property, an experienced church broker offers a full turnkey solution. It pays to find the right partners who can connect you with church lenders and capital campaign leaders, organize documents and reports, manage the zoning process, oversee the inspection of the facility and the construction process, seek congregational approval, negotiate the deal, and hand you the key.

This article is an excerpt from The Religious Real Estate Review, a newsletter providing the religious community with up-to-date news on real estate development specifically by houses of worship in the Washington DC Metro region. Each issue provides updates on recent transactions, real estate development, religious news, and upcoming community events.

Marcus N. Daniels, Ed Luckett, and Terry Rogers of NAI Michael are the editors and publishers of The Religious Real Estate Review and have over 30 years of combined experience in commercial real estate sales and leasing specifically with churches and houses of worship.

Click here to view the latest issue of the Religious Real Estate Review.

UMD social distancing pushes need for more housing

UMD Social Distancing Increases Need for Housing

Market Insight

UMD social distancing requirements push the need for more off-campus housing. New construction is underway for both on- and off-campus housing. Developments still progressing despite COVID-19 slowdown. The latest issue of the PGCRE Newsletter: Upper County is available! James Miers and Stephen Catalano discuss the latest news in College Park and the surrounding area. Read more below or click here for the full newsletter.

UMD SOCIAL DISTANCING INCREASES NEED FOR HOUSING

When the University of Maryland, College Park reopens on August 31st, social distancing rules will force changes in daily life: masks will be required in university buildings, students will be asked to wipe down surfaces they use, and classes of over 50 students will be entirely online.

Meanwhile, the university expects to house “more than 75%” of students who applied for on-campus housing, despite converting all triple and quad dorm rooms to doubles. Some dorm lounges will be converted to residences – a change that began prior to the pandemic – and some on-campus lounges outside of dormitories will be closed entirely.

The decreased density of on-campus housing means there is more demand for off-campus living. Private student housing living quarters tend to be less dense buildings already: accommodation per square foot is higher and the number of students using each bathroom and toilet is lower. For these reasons, it is likely that the demand for off-campus housing will increase in the short term as the pandemic reduces on-campus availability more than it has reduced demand for enrollment. According to one property manager at a student housing complex, phones have been “ringing off the hook” after the university first clarified its fall semester living guidelines and classroom rules on June 15th.

DOWNLOAD THE FULL PGCRE NEWSLETTER SUMMER 2020

Ironworkers Trade Former HQ Buildings

Deals & Transactions

The Ironworkers Union had already moved to its new quarters in Largo. Now it has sold the property it left behind.

The Union turned 9100 Old Marlboro Pike over to the Baltimore Washington Labor District Council, in a $3 million deal just closed recently. The sale included two buildings, totaling 14,020 square feet, one that served as office and union hall, the other as a training center.

The Ironworkers Union, which includes the fearless folks that walk the steel beams on skyscrapers, had bought 9301 Peppercorn Place in Largo in early January, for $5.25 million. Marcus Daniels, Ed Luckett, and Terry Rogers at NAI Michael repped the Ironworkers on Old Marlboro Pike, while Andy Mayr at the same firm brought the Labor District Council.

Studio 3807

Multifamily Project Promote Route 1 Density

Company News

According to real estate data giant CoStar Group, this year over 800 multifamily units have been delivered in a market covering everything in northern Prince George’s County from the Beltway to the District line, and as far east as Greenbelt. Apartments in this market show 5.7% vacancy and 3.2% rent growth. These numbers are better than what industry experts have expected.

The effect on value is profound. Properties with the right mix of location, zoning, and size for multifamily construction are selling historically well. Access is crucial and proposed projects need parking or dense walkability. Many developers are still looking for streetside properties, either for current development potential or as long-term hold properties.

While some are asking if the market is in a value bubble, there are structural changes that will support density and greater values in the future too. Two new grocery stores along Route 1- Whole Foods and Lidl- are backing multifamily expansion as do offices like the WeWork near campus and music venues such as the Hall CP. The Purple Line is currently under construction. It will form a unique transit connection between Prince George’s and Montgomery Counties. This connection will promote denser development in each.

CLICK HERE FOR THE FULL PGCRE NEWSLETTER: UPPER COUNTY

New Hotels in Prince George’s County

Market InsightMarket Reports
One of the new hotels in Prince George's County, The Hotel at UMD.
The Hotel at the University of Maryland in College Park

The hotel/hospitality market in Prince George’s County is expanding. Since 2016, 11 new hotels have developed in Prince George’s County including MGM National Harbor, The Hotel at the University of Maryland, and Cambria Hotel & Suites in College Park. Those few alone added over 1,500 new hotel rooms in the county.

Additionally, other new hotels are delivering in late 2019 and early through late 2020. These include the Hyatt Place at National Harbor, Homewood Suites in Largo and the Residence Inn by Marriott at Ritchie Station.

The hotel sales market in Prince George’s County continues to outperform most similar jurisdictions across the United States. It is projected to continue to thrive with over $3 billion in economic development projects over the next five years.

To learn more about the new hotels in Prince George’s County and to read the full Hospitality Market report, click here.

This report is prepared by Marcus Daniels, Terry Rogers, and Ed Luckett of NAI Michael.

High end residential at Editors Park

High-End Residential Development Thriving in Maryland

Market Insight

High end residential development is thriving throughout northern Prince George’s County. New projects, representing over 2,000 units, are underway at all points in the development process. Demand is keeping pace with development.

Multifamily development has been a major force along Route 1 for years, especially with the development of student housing starting in 2011. The pace of construction reflects renewed interest in living around College Park. This means more traditional residential development – apartments, condos, and townhouses – is growing too.

Developers work hard to bring options to high-earning professionals by building luxury homes that they can’t keep on the market. Townhomes are under contract nearly as soon as they’re completed. As three representative projects – Greenbelt Station, Riverdale Park Station, and Editors Park – show, developers have been able to sell new townhomes at a range from $214 to $385 per square foot. This equates to around half a million dollars per unit.

To learn more about high end residential development in Prince George’s County, along with other area news, view our full Route 1 Route 295 Corridor Newsletter.

Click here to view the spring edition of the Route 1 Route 295 Corridor Newsletter.

College Park

College Park is Development Hot Spot

Company News

College Park is undergoing a rapid transformation. Many new restaurants, such as Burton’s Grill at Riverdale Park Station and Vigilante Coffee, have recently opened in the College Park Route 1 corridor. Additionally, new developments are planned for the area. The Clarion Inn on Route 1 sold to Lidl for redevelopment, and Bozzuto is to begin construction on a mixed-use center in College Park.

To learn more about College Park development and other commercial real estate news in the area, please check out our Route 1/Route 295 Corridor Newsletter.

VIEW THE NEWSLETTER HERE

Office Demand Picks Up in 2017

Market Reports

Office demand in the Washington DC market picked up over the course of 2017. Lease rates increased, and recent 5-year statistics show growth and stability in the market.  Suburban Maryland’s office demand is keeping pace throughout Prince George’s County, Montgomery County, and Anne Arundel County. These markets are all offering attractive lease rates and absorption.  New office construction has increased in the DC market, with 2018 construction forecast to outpace other U.S. metro areas.  The Prince George’s County Office Market is expected to achieve positive net absorption in 2018 after adding of several new office buildings scheduled to deliver in the fourth quarter.  The Washington DC market’s office demand is supported by a vibrant economy and a labor pool of well-diversified government and non-federal employers. Office sales volumes began to rebound in 2017 and are forecast to continue in 2018. Federal government facilities and related leases have contributed to the stability of the market, which gives office investors and landlords confidence.

For the full report, please click here.

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