What To Know Before You Build A New Church
by Nathan Artt, on February 2020
Building a new church is an important step toward growth. Many congregations will benefit from having a new and improved space. From sheer necessity to upgrades, church buildings require a lot of consideration. As you make decisions, there are several areas you will circle back to. These are the basic things you need to know before you build a new church.
It's Not About the Building
Real estate developers are not construction workers. They are also not bankers or architects.
The most successful developer I know who builds millions of square feet of Class A office space in the most expensive areas of Atlanta won’t (or can’t) tighten a screw in his own house. So why is it that the people or companies who build the largest buildings in the world, or even the Class C retail strip centers, are all finance guys? Isn’t there an interesting irony there?
The reason for this is simple. Even in the real estate business, it’s not about the building.
Finance people run the world of real estate. They do so by seeing buildings as assets. These assets are evaluated based on how they pay for themselves. For a pastoral team looking to build a new church, this is relevant. It’s relevant because—to maximize your investment—you should not see the building as the end goal: you should see it as an investment that can provide a return.
There Should Be a Cash Flow
Real estate developers aren’t judging aesthetics or how easy it will be to build. They see the bottom line. For a project to be successful, it has to have a cash flow. This is enormously helpful to consider as you approach financing a new church building.
Developers know if a bank is going to finance a project long before plans ever get drawn up. They go into the project knowing how much money they can borrow, how much square footage is needed, how much equity is required and what types of liabilities have to be taken. This knowledge predates renderings or plans. And, projecting this understanding in advance transforms your financial opportunities.
What Does the Building Need to Be?
After the initial, financial strategy has been articulated, other players enter the picture. These are people like your architect, construction company and banker.
Developers never hire an architect up front to answer the question “what do we build?” Never.
Developers already know what the building needs to be. They also understand the framework that goes into the finished product, which includes how to:
- Put the funds together
- Attract investors
- Work with bankers and attorneys
- Assemble a project team that designs and constructs the asset based on the financial and strategic objectives of the project
Successful developers build buildings around financial strategies, not financial strategies around buildings.
If a Building Funds a Ministry
What if we looked at church buildings as assets that fund ministry?
How would that change our perspective in our approach to identifying the right project, how we hire a project team, and how we make financial decisions regarding our church’s largest capital investments?
Of course a building needs to look nice and have engaging architectural elements. Of course someone highly qualified needs to build it. But this is the last step, not the first.
Throughout the course of your church building project, you will work with construction companies, who know how to build buildings but don’t know anything about finances. You will work with bankers, who know about finances but nothing about architecture. Each specialty will be good at what they do, but the church leadership (and consultants or project managers) are the ones who hold the vision. They also hold everyone accountable to the vision. This is the initial financial construct and building goals that you established.
Questions to Ask Before You Build a New Church
While some of this thinking may feel unconventional or unfamiliar: it works. At Ministry Solutions, we’ve worked with countless churches to start (or start over) at the right point. Once this calibration happens, everything falls into place.
Here are the questions you need to ask:
- How does the building pay for itself?
- How quickly do we get a self-sustaining property or get our money back so we can take our profit and move onto the next project?
- What do we build?
- Based on our market data, who are our customers/tenants and how do we attract them?
- What is the ideal location for the type of building we’re constructing?
- How much density (square footage) do we need in relation to cost/income/risk?
- How do we mitigate risk?
- How do we protect ourselves if things don’t go exactly to plan, the market turns, or we get hit with unforeseen events/costs?
We hope these questions have given your church a head start into your season of growth. If we can serve your church in any way, please reach out to our team.