Top 10 Things to Know Before You Lease a Church Building | Church Realty

Top 10 Things to Know Before You Lease a Church Building

By | Real Estate Resources

We often get calls from churches asking for lease space. Most of the time, churches don’t know how much space they need or how much spaces cost in the marketplace. There is also a great deal of information regarding building codes, finish-out costs, and securing permits that are unknown to those who call. Before you lease a church or start shopping around, we advise the church to get an understanding of your space needs and your budget. The following are the top 10 things that a church must know before they lease a church building.  

Most church plants and multisite campuses start in a one-day a week space or a leased facility. The list below outlines critical factors to consider as you look for space.

Lease a Church in Texas with the Help of Church Realty | Church Realty | Houston and North Texas

Get a Clear Understanding of Ministry Needs

Get clarity around your mission, vision, and values before locking up space.  

  • Minimum requirements: To seat 150-175 and have three to four classrooms and a foyer, you will need at least 4,000 square feet.
  • Ideal Space: To seat 250+ and have several classrooms and offices, you will need at least 6,000 – 10,000 square feet.
  • If you have young families, you will need to have clean/safe classrooms. For example, the floor should be carpet and not tile; otherwise, you can bring in an area rug.

Ensure a Certificate of Occupancy

A church falls under Assembly use. The building inspector will require specific improvements for a space to go from office to Assembly.

  • Assembly use will have specific requirements for doors, fire safety, restrooms, etc.
  • Will you have access to enough parking? Do you need a parking agreement?

Check for Fire Sprinklers

Does the space have fire sprinklers? 

  • If not, will it be required? If the space is over 5,000 square feet, it will most likely be required. If the space is already a church, it might be grandfathered in.
  • What will it cost? Does the property have a large enough water line coming to the building to have the right amount of pressure? If not, this expense will be significant.

Keep a Margin in Your Budget

Church plants need to save money for future facilities. Whether preparing to buy or leasing additional space, you must save cash.

  • Between facility rentals, staffing, and programming, make sure that you are saving cash for future facilities.  
  • Consistently pay a specific amount to a designated account over and above your current facilities’ payment. This will show that you can afford more payments then you have, and it creates a fund for future facilities.
  • If you have a “deal,” do not get used to having a small facility payment. Having a below-market payment can hurt you down the road when a lender looks at your history.

Explore All Options

Define your target area and know the market. If the market is too expensive, then stay mobile and live lean. A building may not be the right answer.

Keep Proper Financial Records

  • Preparing for the future means keeping proper financial records from the start.
  • Find a local CPA that understands churches or a volunteer member who has a solid financial background.
  • If you use a volunteer, make sure you have controls in place to protect the church. We’ve all heard stories where the church member that was in charge of the finances takes money from the church.   

Don’t Allow a Paster to Co-Sign or Guarantee a Lease

  • Some landlords will require a personal guaranty for the lease. I have a rule that says, under no circumstances will a pastor co-sign or guaranty the lease. Why? If the church is in default, then the Landlord will expect the pastor to pay.
  • Solutions include re-paid rent or having a sending church guaranty a portion of the lease.

Know the Lease Rate

Most lease rates are quoted as an annual number.

  • If the agent quotes the space as a $12 per square foot lease, that translates to a 4,000 square feet space that will cost $48,000 per year or $4,000 per month. Under that scenario, the space could be quoted at $1 per square feet as a monthly number.

Investigate the Lease

  • NNN – This is an additional $ amount that covers Property Insurance, Taxes, and Common Area Maintenance
  • Gross – The lease rate covers the additional expenses in the quoted rate
  • Industrial Gross – The additional expenses are included in the rate but will have a base year, and the tenant will be responsible for increases.

Get Professional Assistance

  • The landlord will likely have a real estate professional on his/her side. Get a real estate professional on your team, too.
  • A lease is a legally binding document, and a real estate agent is not an attorney.  When signing a lease or any legally binding contract, seek the counsel of a real estate attorney.

Lease a Church in Texas with the Help of Church Realty

Many of the items on this list have stories that go along with them. We have seen a fire sprinkler issue cause a church to lose their security deposit, and they were never able to occupy. Not keeping proper financial records and not having cash set aside caused a church to miss the opportunity they had been pursuing. If you need help preparing for future facilities, email us for a free consultation.

Top 10 Things to Know When Buying a Church Property | Church Realty

Top 10 Things to Know When Buying a Church Property

By | Real Estate Resources

In a previous article, we discussed the Top 10 Things to Know When Finding a Facility for your Church Plant. That post addressed the things you need to know when leasing a space for a church plant. After growing in a lease space for a season, many churches look for a permanent home that they will own. This first purchase is often comparable to a starter home for a young family.  This facility will serve as a place to expand ministry opportunities without overstretching the budget. Before you shop for space or start calling on signs, we advise the church to get an understanding of your space needs and your budget. 

The following are the top 10 things that a church planter must know before buying a church property.  

Whether you are purchasing an existing church building, a building to convert, or land, the following is a list to guide you as you evaluate options.

Buying a Church Property Takes Research | Church Realty

Budget

Understand what you can afford.  Is this a cash purchase? Will you get a loan? If so, what is your loan capacity?

  • Market Capacity: Understand what it costs to buy a building in your market. Costs and Supply and Demand vary from market to market.
  • Loan Capacity: What is the amount that you can borrow?  Just because a lender may loan you $2,000,000, you may have an internal limit. Know before you shop publicly.
  • Cash Reserves: Many lenders will require 20 – 30% down, but they also will want you to have six months of operating capital in the bank.

Ministry Needs Guide Your Facility Needs

A building is a tool for ministry.  Your ministry should dictate the facility you need. If you have an adult Bible Study on campus, then you need more classroom space. If youth and sports are a vital ministry, you will need a gym. Before you owned a building, there were vital ministries that were important, and a new facility should not change that to the detriment of your church.

  • Define your ministry needs
  • As you consider your facility needs, consider how many services you will run and how you can staff volunteer areas.
  • Consider multipurpose spaces? If you build a gym, can it also be used for Sunday morning ministries?

Ingress/Egress

As a church grows, more people usually come to your building. Accessing your property can be a real issue as growth occurs. It is critical to have a minimum of 2 points of access. A church site larger than 5 acres with a seating capacity of more than 500 will need more than two access points. 

  • Ingress – In other words, how people can get into your site. Median openings allow people to travel from 2 directions to turn into your site. Deceleration lanes can help reduce traffic on the road as cars turn into your property at the high traffic times. Remember that by design, many people come to you at once; being able to access your property is essential. 
  • Highway Locations – Many churches want to be on the highway. Having frontage on a service road or highway can limit the points of access.  It is essential to understand where your curb cuts are in relation to on-ramps and off-ramps. If the off-ramp misses your access point, then people either must pass you and turn around, or they must exit at an exit before they see you.
  • Egress – This is how you exit your site. This is critical, especially if you are doing multiple services.  Can people leave the lot while others are diving into the parking lot?  

Parking

One of the critical things for church properties is making sure you have enough parking. Many old church buildings are on small sites, less than 2 acres, and often have limited parking. If the building was built in the early to mid-20th century, then many people may have walked to their neighborhood church.

Parking requirements differ from city to city. Be aware that the city requirement may be woefully short for your actual needs. A city that allows one parking space per 5 seats in the sanctuary is not helpful to a growing church. Today, some families may bring 2-3 cars to church based on when family members need to arrive. Be aware of what your congregation needs for parking.  

  • Some cities base parking off seats in the sanctuary – 1 space per 3 seats
  • Some cities base parking off square footage – 1 space per 250 sqft of building 
  • Parking spaces may cost $2,500 per space.
  • Offsite parking can be acquired by agreement or easement.

Capacity

Capacity can be looked at in two ways: current seating capacity and growth capacity.

  • Seating Capacity – What is the ideal sanctuary size for your church? Today I see more churches with 500-600 seats with multiple services as the solution as they grow. If you are a church-planting church, then a smaller sanctuary with multiple services may be more appropriate than seating 800-1,000.     
  • Growth Capacity – Before building or buying a facility, think about what your growth plan will be. Are you in a position to be a megachurch? Are you going to plant new churches when your current church reaches a specific size or is multisite in your future? Often a church has outgrown its children’s space before outgrowing the sanctuary. Growth can come to a halt when support space reaches its capacity. 

Land Development Costs

When buying land, you must know what it will cost to develop the site before you commit to the purchase. Some sites are “great deals” because utilities and roads are not near the property. A cheap site can become an expensive site when you find out your first phase is to spend $500,000+ to bring the necessary utilities to the site. Utilities like water, sanitary sewer, storm sewer, electricity, and gas are critical. A water line could be onsite, but it might not be large enough for commercial development. 

Zoning

In many cities, church use is allowed by right. Other cities may require a Special Use or Conditional Use Permit. A city is not allowed to keep a church from using a property with zoning. The Religious Land Use and Institutionalized Persons Act protects churches in this situation. If a city is citing zoning as a reason, a church cannot use a property; you need to understand your rights.

A church real estate agent should help you consider the current zoning before making an offer on the property. Zoning actions like a Special Use Permit does require additional costs and help from an architect, engineer, or zoning specialist.

Change of Use Requirements

When a church buys a building to convert it to church use, the city building inspection department will be vetting the property under an Assembly Use. This may change the building and code requirements for the finish-out. Items like fire sprinklers, fire alarms, exit doors, ADA are all items to consider.

When a church buys an existing church building, many code items may be grandfathered in. If you spend $50,000 in renovations, you may be required to bring things up to the current code. Get a clear understanding of this early in the process.

Audio Visual Costs

Understand the audio and visual costs. The AVL budget may be critical. I have worked with churches that determined the most important thing was that they wanted to ensure that people would hear and see the message. AVL is sometimes overlooked early in the process. New spaces may need a sound system designed for that space.

There are purchase and lease options for AVL equipment. Get quotes from multiple professionals.

FF&E (Fixtures, Furniture, & Equipment)

These are the items that fill your space. From the lobby to classrooms and offices, all these items cost money. I have seen churches that have selected the things they want for the room and then allowed members to tour the space and choose the items they would like to buy for the building. When moving from leased space to a larger facility, there is often a need for additional furniture and fixtures. Include this in your budget.

Contact Church Realty for Help Buying a Church Property

If you need help preparing for future facilities, email 4phases@churchrealty.com for a free consultation.

Thoughts on Reopening Churches in 2020 | Church Realty

WE are the Church: Thoughts on Reopening Churches

By | Real Estate Resources

The Church is not a building. 

This is not breaking news or new information, but it is more real in the Spring of 2020 than ever in recent history. Around the world, the Church is growing in places where there is not a physical building. In our western culture, we are viewed as a “real” church when we have a building or physical location. But now, here we are in 2020 not able to meet in our facilities. 

More people are seeking answers about their existence, people are hurting, and the Church is shining the light of hope as bright as ever. More people are viewing services online than average attendance pre-shutdown. Pastors and church leaders are working more hours than ever during this crisis. Now, talk has begun about how we will go about reopening churches. How we will gather again once social distancing is behind us?

We are the Church: Thoughts on Reopening Churches in 2020 | Church Realty

Church During a Crisis

Before this crisis, I and many others were skeptical of “online church.” 

I may have said that wasn’t church. Some chose not to venture into online church because of their convictions. Their theology said, “We, the Church meet in person, gathered together, to worship or participate in sacraments.” 

But now 10 weeks into COVID-1, we are all meeting online. During this crisis, the Church has continued to meet while not being allowed in our buildings. 

We “go to church” in our living rooms.

We gather in small groups on Zoom. 

So now, churches are all weighing the decision to reopen. This decision and pressure weigh on the church planter and the pastor of a giga-church equally. But just as there is not a cookie-cutter approach to multisite or church planting, the decision to reopen and the path taken may be different for each church. 

Questions to Consider for Re-Opening Churches

Consider the following questions as you and your leaders discern and develop your plan to reopen:

  • How does our theology inform our decisions about gathering?
  • What is essential for us as the Church?
  • When we meet, what is our purpose; to gather for worship or to unite with our friends?
  • What do we need to do differently from the past?
  • Are we talking about gathering to worship, or are we just talking about programming?
  • We know some people will not come back immediately. How will we continue to connect with our online audience?
  • How will we engage the online audience to be functioning members instead of an audience of numbers?
  • How do we need to change our space to meet in this new paradigm?
  • What steps do we need to take to be considerate of others as they join us?

The Right Timeline for Your Ministry

Part of the pressure that pastors are feeling is that some percentage of our communities are ready to open back up and shake hands as we did before. But, others need time and space. 

Balancing the needs of people will not be easy. Weighing your decisions based on your beliefs is a good line to hold to. Consider everything from your gathering to your online services and discipleship pathways. If a solution does not fit within your theology and convictions, then throw that option aside. 

There is a great harvest and revival ahead. We must be the Church and let our theology guide how we engage those that join us. 

This may mean we need more members of the body to personally disciple their families and their neighbors in their homes and local communities. This may look different to a senior citizen who may not come back for 8-12 months, or a new believer who has never been to church. Yet, through it all, we the Church must remember the Church is not a building; we are the Church!

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