Going from portable to permanent

Lee Stephenson:Welcome everyone to the Unfiltered podcast. Lee Stephenson here, executive director of church planting with Converge, local church planter in Orlando.

Danny Parmelee: I’m Danny Parmelee. I oversee church planting for Converge MidAmerica and Southeast, and we are recording from the Nashville studio, and we are going to start out by having Taylor Swift lead us in some worship.

Lee Stephenson: So go ahead, Taylor.

Danny Parmelee: Aww, man, she just canceled.

Lee Stephenson: That’s what I hear she kind of does occasionally. So at least we’re not high enough on the list. So I don’t want to get sued by her.

Danny Parmelee: Yeah, she is in the neighborhood, but I’ve never seen her.

Lee Stephenson: Yeah, maybe one of these days.

Danny Parmelee: One of these days.

Lee Stephenson: Anyhow, um, part of our conversation today is just that next step for any church plant where I know, as a young church planter, like the next step, I wanted to get out of a portable situation and get the most permanent kind of situation I possibly could. Whether or not that was a long-term lease situation based on your context, like if you’re in a more urban area, that may be your reality, or eventually getting property with the idea of building a building, like, which I love, because that creates a level of like, we’re stakeholders in the community, and people see you as being a part of the community long term. So I do think that there is a power if available, to be able to get into that more kind of permanent property. But there are things that churches and church planters need to watch out for along the way, because you can kind of get yourself in trouble. And so the first question, I’ll just pose to you, Danny, when do you think a church planter is actually ready, either to sign a long-term lease situation or buy that piece of property?

Danny Parmelee: Yeah, um, I think that’s a hard question to answer, again, because of how circumstantial each different thing is. And I would maybe go back because you say, it’s the next step. I think that almost every church planter dreams of the day before they ever even start of when they get into the building. And so I think there’s kind of a split, what I would say is that you should be planning for that from day one. But at the same time, not actually make that your goal. So there’s a little bit of their idol, don’t make that your idol. You know, there’s so there’s that tension, where I’m going to tell a church planter, you need to be thinking of that because it’s going to change even how you’re looking at opportunities, how you’re even making decisions, but you don’t want it clouded to be well, we can’t do this because by this date, we’re gonna have a building or this is the building. So other church planters, they fall in love with some. You know, I had there was an abandoned Lowe’s that from day one, and like, that’s it. God spoke to me, we’re getting that. I mean, we would do prayer walks around that thing, I would envision I would, I would hire architects to you know, put a put a little sign, you know, vision board type of thing. We never got the building. OK, so to this day, who knows? Maybe God I think it’s still empty. It’s been empty for like, 10 years. But um, but anyways, I think there is a little bit of a danger of doing that. But to not say it doesn’t matter at all, because you and I both know that while the churches is the people, it’s not a building exactly what you said, what it communicates, even to nonbelievers about being rooted in the community, security, just all of those different things, a building can be an absolute, huge tool. So this is where I would say, if you asked a question like the when, get a lot of counsel on this, when you get to that point, and get it not from your launch team that is sick of setting up chairs. Or even if you’ve been doing it for many, many years, you can just be so clouded by the like, we just got to get out of here, we just have to do this. Everyone is sick of doing it, because there’s going to be some things where again, where it makes sense, where it’s healthy for you. And it may even be a risk. But there’s still a calculated risk. It’s not, it’s definitely not going to solve your problem. So maybe I could say that: Don’t do it if you think it’s going to solve any of the problems that you have, problems with leadership, problems with attrition of people. It’s not going to solve the problems. It’s actually just going to change and give you a new set of problems.

Lee Stephenson: Because all of a sudden, you attract a whole ’nother herd of people too. That can become problematic. Kind of those church people that are just waiting for you to. Oh, they made it. Now we’re going to come here and bring our problems with us into this situation. Let alone like I think one of the things that oftentimes pastors they don’t calculate the actual cost of owning their own property. You know, when it comes to cleaning, how are we going to structure just the cleaning process, let alone pay?

Are we’re gonna hire it out and hire a contractor or we’re gonna have our own staff. I mean, down to the cleaning supplies to keeping toilet paper on.

Danny Parmelee: Oh, I was janitor for a while.

Lee Stephenson: Yeah.

Danny Parmelee: And lead pastor at the same time.

Lee Stephenson: You do what you gotta do at times. But even to think through HVACs. You know, I think we had to replace within the first three months of being in our property like four HVAC systems. That’s significant cost. And so sometimes you can get so focused in on, man, I just got to get there that you overlook, well, it says in the lease we actually have to replace an HVAC system. So my biggest recommendation to pastors is unless you have a lot of experience in real estate, you’re not an expert. And so find the experts that live in this area, because most landlords or people that are going to be selling property, whether or not it’s land or land with a building or something of that sort. They’ve been in this side of the world a long time, and they’re professionals at this, they know what to do. And they have a different level of boldness to try to win the deal. And so they were removed emotionally, they don’t care about you as a church from that standpoint. They really care more about the dollar. And so it’s a rare thing, if you find an owner that’s selling you because they really want you as a church to help.

Danny Parmelee: They’ll say that though, just so you know, because I hear it from churches. Oh, but they this guy said that, you know, he believes in our mission. I’m like, if he believes in the mission, then that will be reflected in the price. Tell him to give it to you for free.

Lee Stephenson: And I’ve seen so many churches and pastors taken because they knew that the pastor was clouded and didn’t know this area. So they’ll work things into the contract they had no idea were there until it becomes a problem later on.

Danny Parmelee: So let me give a couple of very practical things that go back to your original question of the when. So when I say start from the very beginning, there’s two things. One is that you should have a savings plan built into your budget from day one. So I would even say that if you put 10% away. First of all, you’re kind of just building up your emergency fund, which we called our boiler fund, because our boiler did go out. It was 30 grand, and we were a little young church. It’s like oh my goodness, thank goodness, we have that emergency fund, but you’re building up that emergency fund from the very beginning. But you’re also going to have cash reserves, so that when property does come up, whether it’s leased or owned, because even if it’s leased, there’s gonna be built out and all of those types of things, that you’re even a player that they’ll even look at you because if you’re like, Oh, well, I’m just gonna do a quick capital campaign. No, cash is what talks. You need to be able to show that you’ve got reserves to be able to do and reserves that once you buy it, that you’d be able to handle some, you know, some sort of fix or catastrophe type of thing happened. The other thing goes to what you said, as far as a professional is in the beginning, just even as you’re networking in the community. It’s OK as you meet realtors that, hey, you know, someday, we hope to get in a building. So if you ever see something that you think might work for us come in, let us know, because there’s lots of real estate that exchanges hands before it ever hits on the open market for whatever reason where people want to explore selling things before it’s you know, kind of a public thing or they, it doesn’t look good for them to have vacancy. So if they can get some sort of transition plan where it’s rental space, someone moves out and you move in, and they never have to, you know, put it up as far as a rental space. So just as you network. And it’s not like you’re finding one realtor that their now your buyer’s agent, eventually, you’ll get to that place. But in the beginning that you’re always telling everybody, hey, if you ever hear of things, and this is also how properties get donated for free. So I’ve been part of those even Epikos recently, they were maybe it wasn’t given, maybe it wasn’t gifted, but it might have been. It actually might have been gifted, and the church plant that I’m a part of right now the building got gifted to them from another church that was, you know, going under or kind of changing and transitioning. Another one in Seattle, this was like a multimillion dollar building that got you know, handed over to a church planter. So the more that people kind of know, and you’re kind of making those kinds of, you know, things of Hey, someday, then people will come and contact you. And at the same time, you’re always just looking even when you’re driving around to pick up your kids.

Lee Stephenson: And I would say praying too.

Danny Parmelee: And praying. Gosh, you always have to give the Jesus juke spiritual answer, Lee. Thanks.

Lee Stephenson: Well, our building back in Arizona from our first church plant. I prayed for that for a couple years. I drive by and just said God, if that ever comes available, we would love to have that. And a couple of years later, God answered that very prayer. But it was interesting even in our conversations because we moved in as a tenant. And we leased the space for about 14 months. And then eventually, I was able to convince the owner to sell us the property. But when we were negotiating the lease and even the sale, they brought this guy, and that was their lead negotiator. And he was a business man on 40 properties around the United States. I mean, owned a ranch in Vegas next of Wayne Newton. And I really quick went, I’m way out of my league on this one. And so at that point, I was like, I got to educate myself quickly. And so I grabbed resources on reading blogs, on listening to podcasts, I’m reading books, I’m interviewing real estate people, taking them out to lunch, just teach me and then I, I had a, I built a friendship with a commercial real estate guy and just said, Hey, I need you to walk with us step by step through this. What are we not asking? What do we not know? And that was, I can tell you that was so helpful and beneficial in that whole process.

Danny Parmelee: The other person that I would say get on your team when things start to get serious is to have a commercial real estate attorney. So the money that we paid, and we’re talking thousands of dollars, so maybe like two to three, maybe $4,000 total that we did for a couple of the different properties that we purchased, saved us hundreds of thousands of dollars, and you say, oh, how is that possible? Well, the commercial real estate person, even if it’s someone that you know, is a friend is in your church, or they’re completely not, they still do represent one person—that’s themselves. So they can get the deal done. And, you know, they’re not looking with that extra eye and our commercial real estate person who I have used the same person for all of our different deals, would look at it and find little things here and there that were tied back to city ordinances, whatever, and was able to, like I said, saved us tons and tons of headaches. And so in the beginning, you’re like, oh, man, we need every dollar because we’re gonna, you know, we need that $4,000 to put in the jungle gym for the kids, or whatever it is. And you’re thinking, Oh, we can’t spend it on that. It seems like such a waste. I am telling you having professional legal to look over before you sign any sort of lease and definitely in purchasing of property, everything within environmental factor. I mean, there are just so many things that you can get yourself into serious, serious trouble.

Lee Stephenson: So a couple things, do your homework, make sure you’re setting yourself up financially way before even that day comes. Be ready to raise money, do capital campaigns. When did you guys do your first capital campaign, Danny?

Danny Parmelee: So I on our first building that we bought the old Presbyterian church, I was scared to do a capital campaign. So we didn’t, and we just because we had saved money, we were able to use that. And then we went to Cornerstone Fund, which is, for those that are part of Converge, it’s the lending arm if you will of Converge, which we would not have gotten alone, no bank would have let a bunch of ragamuffin. I mean, we had, I mean, our income was, you know, not that great. And we were just a bunch of ragamuffins. So anyways, thank goodness. So we got that building. But for our second building, we had to do a campaign because of the amount of buildout, needed about $2 million in buildout. And I was so scared to do that. But it was the most amazing thing in the world, it was so much more about vision, the congregation loved that there was no arm twisting, we did that I’m trying to remember because we had it was still even in like we had a contract. But it wasn’t closed yet. Because there was contingencies. We built a lot of contingency. In other words, like, we’re not going to buy this unless, you know, the city removes the raise order, we raise the funds, we get the financing, and we had it so that there were we weren’t also just stuck owning up a building that was actually a liability instead of an asset. So um, one other thing, shoot now I lost my train of thought on it.

Lee Stephenson: Well, while you think of that, I would just say to our church plants out there specifically that are part of the Converge family reach out to Cornerstone Fund based in our Chicago office and engage them. They are more than happy to walk with you and help you know, hey, these are the things we’re going to look for before you could ever get a loan. And so you can actually get ahead of the curve in the way that you do your accounting, your bookkeeping and begin to know what they’re going to be looking for. So that way, you don’t get slowed down in the process. Because I’ve seen churches go, “Hey, we’re in a good financial spot.” They come to try to get a loan and they’ve faced questions that they don’t even know how to answer and it delays the process. You could lose a deal, just because of that delay. And so go ahead and do a little bit of that extra work ahead of time, and I know that they’ll be more than happy to walk with you how, you know, hey, these are the things that we’re going to be looking for, make sure you’re setting yourself up before.

Danny Parmelee: Yeah, OK, I remember what I was gonna say. Yeah, with church planters, a lot of times they think that their goal is to own the building, where a slight change and just understand this is really what you want is freedom in facilities. So when you’re renting in the beginning, like, well, we only get it for Sundays, whether that’s a school or theater, or you’re renting from another church, and you’re thinking, “Man, if we owned a building itself.” What you’re really looking for is the freedom. So there are rental situations where you’re not actually owning it, even when you’re borrowing from another church, maybe they’re on decline. Don’t think in your mind that the goal is owning, it’s freedom. So sometimes you can actually get that freedom without it being an extra cost or an extra responsibility. Because the great thing about freedom of use, so let’s say there’s another church, they’re kind of dwindling down. And you’re like, well, if we own it, then we get to use it on Sunday at 10 a.m. You don’t need to own it. Maybe you have a conversation and say, “Hey, can you switch your times? Hey, can you meet in the youth wing and we get to meet here? Or how about you know XY and Z?” And so you’re trying to really just figure out how you have freedom of use, not how do you have the responsibility of paying a mortgage or something like that. Because then if you outgrow it, then you don’t even have to worry about selling it.

Lee Stephenson: That’s wonderful, good advice. Well, fun conversation, just talking about preparing yourself for that property, whether or not to be a lease whether or not it’s a purchase down the road. I think the biggest thing is trust the Lord, trust the Lord that he’ll open the right doors at the right time, and he’s also shut the doors when they need to be shut and so don’t force something that’s not there. And thanks so much for tuning in. This has been the Unfiltered podcast. Until next time, keep it real.