The Investor's Guide to Buying a Church for Sale
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This article was updated on 8/01/2023.
You may not immediately think of churches when you hear “commercial real estate,” but church property can come with unique value of its own. No matter where your spiritual values lie, buying a church for sale can reap long-term rewards of which you'd be unknowing otherwise. It all comes down to your long-term goals and investment strategy.
Some may purchase a church for sale to lease to congregations looking to expand; others may purchase to renovate the church and turn it into a home. The savviest of investors may buy a church and partner with real estate developers to build on any urban land that came with the property, as some churches are now doing to combat declining revenues.
The Benefits of Buying Church Property
No matter your investing goals, buying a church comes with unique benefits as well as unique challenges.
#1 – Make Money Through Ground Leases
The Coronavirus Pandemic changed the way people worship. Now, it's common to see churches incorporating live-streaming into their services, allowing patrons to view the service from home. This, on top of the decreasing number of Christians in the United States, are costing churches donations and other sources of income.
As a result, churches need to diversify their income streams. Cities that are experiencing shortages in affordable housing tend to approach churches about developing more real estate on their large plots of urban land. This not only fills the gaps in housing but builds the church's revenues.
Via ground leases, you can profit from your own church property, expand your own sources of income, and help your local community provide affordable housing for its residents, all at the same time.
#2 – Turn It into Something Else
If the idea of leasing or developing your church property doesn't interest you, you can always buy a church for sale, shut it down, and turn it into something else. Flip your church into a single-family or multifamily home, a warehouse, or anything else you think you'll be able to sell for more.
You should stay mindful, though, of:
- Zoning Laws: Zoning laws govern what property owners can and cannot do with their land. Before you start renovations, you need to make sure you're allowed to do so by checking the zoning laws that apply to your property.
- Site & Facility Conditions: Does the facility and its land warrant renovations and/or real estate development? Has it passed a Phase I Environmental Site Assessment? These may not affect the actual use of the church in its current state, but if you plan to renovate, you need to keep these in mind.
- Accessibility: Make sure that, when you renovate, you're keeping everything up to code and accessible to residents who may need special accessibility accommodations. Does the facility have ADA-compliant bathrooms? Is there wheelchair accessibility?
Always do your due diligence and research before you pull the trigger on buying a church for sale that you plan to flip.
#3 – Lease Out Unused Space
Maybe you want to buy a church for sale but leave the property exactly as it is. In that case, you can still generate income from your newly acquired church property by renting out its unused and/or underused space.
Lease your church to a nonprofit business and retain tax-exempt status on its earnings, or lease to a for-profit business without tax-exempt status but with the potential to earn more and comfortably pay raises in rent.
The Challenges of Church Property
There is money to be made by owning church property, but owning such property comes with its unique set of challenges.
#1 – The City Is Watching
If part of your investment strategy involves renovating your church or turning it into a residential or multifamily housing unit, you should make sure you have a sound legal team and plenty of cash to pay them.
Anything and everything you do to that property is going to be observed by your local municipality for code compliance and zoning. Don't be surprised if you get multiple visits from several departments trying to claim some type of fine.
Most of these claims can be resolved with a letter sent by your lawyer, but others may not be so easy to get rid of.
#2 – Random Property Liens
Church buildings are historic buildings. Some have likely been around for centuries and have seen all kinds of development and financial activity. While more than likely a less common occurrence, you may experience the occasional visitation by someone trying to claim a property lien against your church for free landscaping they did 20 years ago.
This is another reason why you want to make sure your legal team is sound before buying a church for sale. Generally, you should have a real estate attorney present for commercial real estate transactions, anyway.
#3 – Curious Pedestrians
Be wary of curious pedestrians if you decide to renovate or flip your church into something else. Unless you really buff out your church building so its structure no longer obviously resembles a church, most people who pass by will think it's still just a church and may get curious. Don't be surprised if you see more people peeking through your windows than you're comfortable with.
Some people may even try to claim a right to your property because of their family, their previous attendance of that church, or because they know someone who used to work there. Again, sound legal team.
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