Am I Wrong About Churches?

[Terrel L. Shields]

Church comps are relatively easy to vet. They are fairly easy to judge quality-wise, and you infidels can visit during a regular service ...I think I've been to most local churches for a funeral or wedding over the years. The biggest problem is GBA, since many are not measured by assessors.

 

[Stephen J. Vertin MAI]

I use to worry about GBA and stopped when I started seriously talking to my inspection contacts (who were the buyers and sellers of these facilities). I do not know how many churches you appraise but it took me at least 25 if not more to realize most buyers and sellers were not concerned with GBA. Some guys are a lot faster than me so it may have hit them earlier. Talking to brokers does not help with most insights. Most only sold one or two in their their life. After about the 10th time of hearing the same thing I realized most market participants actually purchased these based on usable area. It does not matter if it above or below grade. In fact you will find very few successful ministries that do not use the basement. They all do (if you think about it).

You are correct that the assessors do not have sizes since most are not taxed. No reason to keep the data since they are not valued. So I started using Google Earth Pro to measure. The bigger the facility the better (or should I say accurate the software). If the basement is used I consider it usable area. When I was using GBA numbers would be all over. They did not make sense When I started using usable area the numbers came within closer ranges. See if it works for you. Further Google Earth Pro is free now. For years we paid $600 to $400 annually (it kept going down). The only thing the free version does not have (at least that I use to use) compared to the paid for version were traffic counts and speeds (plus it use to have demographics within a radius which was great for adjustments) but it still measures larger buildings fairly accurate once you particle awhile. Try it and you may see the job as much easier.

 

[Terrel L. Shields]

capacity is a decent alternative proxy for size.

 

[Eli]

capacity is a decent alternative proxy for size.

And amenities and location. We have them from little shotgun houses built in the early 1900's to mega churches that seat about 7,000 on a few hundred acres and have several worship services a week. They go from the ghetto to the rich suburban areas. There are a ton of churches in TN in ghetto areas and they are definitely a stabilizing factor. The Lord said the gates of hell won't prevail against My Church and He meant it.

Now the rapture may be coming any day where the church is gone. It will just be an empty building except for those left behind.

When the devil realized he couldn't beat the church, he joined it. There will be some left behinds.

It would amaze you the little bittie churches in low income areas in TN. What would amaze you more is some parishioners have bullet holes in their homes but their faith is well founded.

 

[Eli]

And please don't argue over whether they are churches or "house of worship"...I could give a rat.

You do have a little backbone. LOL

The Lord's church is not a building. It's a body.

 

[Eli]

Anybody valuing a church based on collections when they pass the plate is way off base when it comes to valuing real property. That is bad and could bite them in the butt. That income is not attributable to the real estate.

I can't even imagine somebody doing that. That is crazy, They don't know what they are doing is all I can say. They are incompetent.

 

[Terrel L. Shields]

Anybody valuing a church based on collections is way off base when it comes to valuing real property.

That is the premise of http://www.shenehon.com/wp-content/uploads/2013/04/Church.pdf
is that you can use the income approach. I've never tried, but from the article I learned Lutherans and Episcopal members are cheap skates

 

[Eli]

That is the premise of http://www.shenehon.com/wp-content/uploads/2013/04/Church.pdf
is that you can use the income approach. I've never tried, but from the article I learned Lutherans and Episcopal members are cheap skates

I don't care what they think or how much they collect when they pass the plate. I'll try to witness to them. But I am valuing real property. Unless the church is in like a strip retail center, which I am seeing more and more of, the income approach is not applicable.

The collections are not attributable to the real estate. Anybody who thinks they are is ignorant and don't know what they are doing.

 

[Meandering]

capacity is a decent alternative proxy for size.

Except if there is an on-site cemetery.

My experience is the cemetery is a negative contribution. Requires maintenance into eternity with no funding of that maintenance setup, and plot prices that were low compared to commercial cemeteries.

If using the Income Approach, watch for things that are not accounted for, when "volunteers" are relied upon to prove services that should have been expensed against income.

.

 

[Stephen J. Vertin MAI]

No argument concerning capacity. It is a viable alternative to those not feeling comfortable with sky key measurements on Google but if you have been using it for years you realize it is fairly accurate. I have never thought of using capacity but I believe it passes the smell test (good think outside the box).

As far a collection plate I am with Eli, while I would not go as far as calling them incompetent, I would say it is unorthodox with little to no backing in theory. I hesitate to say anything new is immediate grounds for expulsion (because it tends to limit presenting new ideas) but as a whole this is not a very good new idea. In all truthfulness I do so many of these thing the thought of completing an income approach this way has cross my mind. But it was quickly dismissed for the reasons given above but who ever is doing it is probably not the first to flash the concept.