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Church Land Redevelopment Case Study

Posted on September 18, 2014 by Bill Skubik in Redevelopment

Churches often look to utilizing real estate equity when trying to increase revenue to overcome short-term cash flow obstacles. A church in Livonia, Michigan had a dramatic drop in donations due to a church split. The church building, a single-story 12,000 square foot facility, sat on four acres of land. The church property also contained a jetty of land that extended from the rear of the property along a residential road.

This land, measuring 297 feet wide by 165 feet deep, was used only once a year for a softball game and otherwise sat mowed but unused. Religious Real Estate worked with the church leaders to create a plan to maximize the value of the land parcel by creating single-family home lots. In the city of Livonia, zoning minimums for single-family homes was 120-foot lot depth and 60-foot lot width. This sizing allowed for four lots with some room leftover. To create the fifth lot, we approached the owner of a neighboring oversized lot to offer to purchase a 3 ft by 165 ft strip of land. After some negotiations, the neighbor agreed to sell us the land for a minimal price.

The transaction was aided by:

1. The utilities (gas, water, and sewer) were already at the property line
2. The zoning (single-family residential) was already in place
3. The housing market supported single-family construction

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Thus, the infrastructure necessary to build homes was minimal allowing for a higher sale price for the lots. A $4,500 survey was necessary to split the five lots from the church property and split the additional neighbor’s parcel. With a transaction like this, the survey and land split forms need to be filed with the proper governing bodies (i.e. county, township or city). Many survey companies can provide this service as part of their fee. Religious Real Estate negotiated this added benefit.

The property was sold as a five-lot parcel for $345,000 or $69,000 a lot. The need for new home construction was high since many of the surrounding upper middle class homes were built in the 1960s and 1970s. This five-lot development was considered an “infill” development. Religious Real Estate made the deal with Soave Homes, the buyer and developer, built five 2,500 square foot colonial homes on the properties.

The parcel of 300 ft by 165 was just over one acre of land. In Wayne County, any development over one acre required storm water retention. The developer created a three-home condominium development and two separate single-family homes. Thus, the homes were not required to have storm water retention on the site. This saved dollars and allowed for larger backyards.

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Do you think you have a piece of property that could be annexed for a profit? The value of vacant land is dependent upon the future value of what can be built on the land. Are there new homes/apartments being built in your neighborhood? If there is no new construction and the existing housing base is dilapidated then the demand for vacant land may be low. If new homes/subdivisions/apartments are springing up throughout the community then there will be developers lined up to bid on the vacant land. In this case, finding a reliable real estate broker to manage the bidding process is important to maximize your gain.


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