Real estate investing opportunities align for religious institutions
I’ve written several pieces recently about how the current real estate market in Louisville is lining up well for certain profiles. The current freeze on foreclosures by some of our nation’s largest lenders has muddied the water for getting your hands on capital. But local lenders such as Stockyards Bank & Trust Co. and Republic Bank & Trust Co. both posted healthy quarterly earnings.
I also cited a Wall St. Journal piece that identified Louisville real estate as Top 10 in the nation for investors. Sounds good, right? So maybe you’re not in a financial position to be an investor yourself but likely you know some people who are.
One group recently highlighted by the National Association of Realtors to be ideally suited to take advantage of the current market are religious institutions. That’s right! Sound strange? That’s what I thought until I read about their advantages.
- They have cash to spend most of the time, which puts them ahead of the game for bidding on property.
- They can pay slightly more than most investors and still come out ahead, because they can get free or inexpensive labor from the congregation.
- The right seller might preferentially choose them over another buyer because they want to support their mission.
- You might be able to structure a deal as part donation and part sale price if the seller needs the tax break. (Check with the seller’s accountant on this one.)
- Ready made buyers: If the institution has a member who is looking to buy property in the next few months, they can buy something and rehab it to that person’s specifications. Buyers get exactly what they want, while the institution gets ready buyers.
- Institutions can take a longer view, so even if they need to sit on the property for a couple of years, they can do that without it being too much of a hardship — especially if they rent it out to a member of the group. This gives them the advantage of the rehab plus the benefit for the appreciation that is destined to come in the next few years.
- Timing: They don’t have to buy right now, but they are ready when the right deal comes along. They don’t have another property to sell, either.
All interesting and valid points.
What I take from this is that for any given market condition, whether we’re talking about real estate, the stock market or trading baseball cards, is that there is an angle that takes advantage of the situation and makes good business sense.
Here in Louisville, now is a brutal time to try and sell an expensive home. But it’s an amazing time to be a buyer, especially if you do not have a home to sell.