Making the Most of Your Property
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How ministries can avoid missed opportunities to maximize their space
Tom Campbell has over 30 years of experience leading commercial real estate firms, working with publicly traded organizations and nonprofits. Tom currently leads the LCEF Real Estate Solutions team, strategically guiding ministries through their real estate journeys.
What is the most overlooked area of ministry property that can lead to major liability if it’s ignored?
Tom Campbell: The common thread I’ve observed is that deferred maintenance can lead to liabilities if left ignored. It essentially becomes a “ball and chain” for congregations and schools, making it difficult to make ends meet month to month. In some cases, struggling congregations sell a portion of their property to temporarily lessen the financial burden. Then, a few years later, they find themselves back in the same position with no more property to sell. It’s all about making wise decisions on where to spend and when.
Deferred maintenance can build up over time and then it’s almost impossible to catch up. I have seen cases where this created major structural issues that in turn increased repair costs twofold.
How can ministries use their excess property to generate revenue in a mission-compliant way?
TC: Excess property can bring significant revenue opportunities when done strategically. We look at ministries with excess property through four lenses: How can the property (1) help people, (2) build community, (3) enhance ministry and (4) create an alternative source of revenue for long-term sustainability?
Our teams take it a step further to ensure the ministry vision—through which the Holy Spirit is leading the congregation—aligns with the highest and best use of the excess property. It’s important to have alignment on long-term vision when making property decisions to ensure the most effective outcome both now and in the future.
For example, at Immanuel Lutheran in Crystal Lake, Ill., we partnered with them on a solution to retain partial ownership—rather than sell outright—and use the club house to further ministry while creating an alternative source of revenue. That real estate revenue gave Immanuel Lutheran the chance to finally start design work on a new sanctuary they had waited to build for almost 20 years.
When it comes to long term planning, how can a school ministry accurately assess its true capacity for growth and building expansion?
TC: There’s a lot that goes into properly planning for a school expansion, but the most important step is a feasibility study that uses real data to create a sound plan with financial justification. In my experience, two common problems occur when planning isn’t done well:
- An organization builds too large and struggles to make the mortgage payment; or
- An organization builds too small and has to expand again in just a few years.
Quantifying your market, including competition, enrollment and tuition trends, is critical. Creating a concept design that meets enrollment growth and curriculum needs is also essential. Finally, accurately quantifying hard and soft construction costs is key to evaluating feasibility.
What role does the congregation play in a new development on their surplus property when it comes to management and maintenance?
TC: The congregation can be involved as much or as little as they want. Generally, we see congregations retain LCEF to advise them through feasibility stages. Once the project is constructed, property maintenance is handled by a third party, not the congregation. This is similar to cases where the landlord may own the property, but they wouldn’t be the one to fix every issue that arises. They would hire a third party for this. Accordingly, LCEF can set congregations up with a reliable third-party professional who would support the maintenance of the property.
What could happen if the congregation or school does not hire an owner’s representative?
TC: Unfortunately, I’ve been brought in to help congregations after they’ve already retained a design and/or construction professional only to discover key items weren’t negotiated fairly. In one case, the design professional quit and refused to allow the congregation to use the nearly completed construction drawings. In this case, the congregation lost a significant amount of money and had to start over. When it comes to engaging an owner’s representative, the earlier the better in order to mitigate risks and steward funds well.
When finances feel uncertain for a ministry but there is a property need to be met, what recommendations would you give to move forward confidently?
TC: If there is a need to be met, don’t let finances hold you back from reaching out for support. It’s not up to us to decide how God chooses to work. If there is Kingdom impact, LCEF will walk alongside you to determine a path that’s right for you and His glory.
