connections
I purchased the 
church with my now ex four years ago. My dad happened to be the pastor of the church when it was a church. Because I was always a good listener I knew about the details surrounding the church's purchase from the previous church (this church has been around for more than 100 years, so it's survived more than one congregation). Basically, it was in the church's purchase agreement that the church could not turn around and sell it at a profit (because they were getting such a good deal on it, and the old church wanted to see the new church continue as a church for a good while). So, 10 years later, I ignored the listing price on the church, and made an offer that shocked the realtor. The price was for what the church had paid for it PLUS an estimate of repairs and improvements that had been made over the years.
church with my now ex four years ago. My dad happened to be the pastor of the church when it was a church. Because I was always a good listener I knew about the details surrounding the church's purchase from the previous church (this church has been around for more than 100 years, so it's survived more than one congregation). Basically, it was in the church's purchase agreement that the church could not turn around and sell it at a profit (because they were getting such a good deal on it, and the old church wanted to see the new church continue as a church for a good while). So, 10 years later, I ignored the listing price on the church, and made an offer that shocked the realtor. The price was for what the church had paid for it PLUS an estimate of repairs and improvements that had been made over the years. The realtor was even more shocked when the sellers agreed to the offer.
So we bought it; had to take Rich Dad's advice about trying every bank in town. Finally found a local bank that didn't laugh at us when we said, "We want to buy a church." Had to borrow some money from family, the lender had to do some magic (in-house commercial loan), and we had to really be persistent to make the thing close.
Turned around and rented it. We were trying to get another house rented; the tenant was not interested. I said, "Well, I do have one other property available, but... it's.... well, follow me across the street and I'll show you."
Turned around and rented it. We were trying to get another house rented; the tenant was not interested. I said, "Well, I do have one other property available, but... it's.... well, follow me across the street and I'll show you."
The tenant was thrilled about living in a 4000 square foot old church (crosses still in tact). He promptly filled half of the square footage with JUNK. How do I know this? Because I was a part of the cleanup crew upon his departure.
We love tenants!
A year later we started the process of remodeling the church into a 4plex. An architect friend drew up some great plans for us. We hired a local youthgroup to begin the demolition.
divorce
As we were trying to get financing to get started on building, and to ultimately finish the project, we saw that coming up with the money to get the financing was going to be harder than keeping our relationship together. The two really had nothing to do with each other; I was just attempting to make a clever analogy.
Divorce commences.
He got the church in the divorce. 
He was in Minnesota, I was in Reno, I didn't want it, he didn't want it, he got the movie collection; and therefore had to take the church.
He was in Minnesota, I was in Reno, I didn't want it, he didn't want it, he got the movie collection; and therefore had to take the church.Ok, it wasn't exactly like that, but except for still being on the loan, I thought I was done with the church.
I got a call this summer. The ex informed me that he was no longer going to make payments on the church. He was prepared to let it foreclose and watch his credit (and mine) go down the toilet.
Further, my name was still on the title, as the Quit Claim Deed I signed never went through, due to delinquent property taxes.
I really didn't like the idea of bailing on the bank that loaned to us based on our character (and credit), and my family connections (fame and good looks). I also didn't like the idea of having a few thousand dollars in back taxes sitting on a website for all to see.
Oh, the shame! Joking!
construction
Needless to say, the church 
is suddenly my problem. In order to keep my karma and credit safe (and because this church thing just doesn't seem to want to leave me alone) I'm putting blood, sweat, tears, and Mastercard into this aggrevating project.
is suddenly my problem. In order to keep my karma and credit safe (and because this church thing just doesn't seem to want to leave me alone) I'm putting blood, sweat, tears, and Mastercard into this aggrevating project.My business partner and I have been in Minnesota for a couple of months, reviewing building code, insulating, sheetrocking, sanding, plus the whole blood, sweat, tears thing.
Seriously. We had a "nail through the finger" incident today.
We've thrown the architects original plans out the new window we just installed. His plans were for a San Francisco-style apartment complex with loft-style apartments. We did a market analysis, to see what our tenants looked like, what the town wanted, and what was easy and affordable to build.
We also decided to just do one unit for now. If we can finish one unit and get it rented, then I won't be losing so much money every month. I'll probably still be at a loss, but it will be a smaller loss.
We're doing the "easy" unit, in what used to be the lobby of the church. This part of the church was an addition, built in the 70's. The walls are a little bit straighter than the walls in the 100 year old section. This was supposed to be a handicap-accessible unit. A ramp was already there. But, the ramp is not to code. So we opted instead for a 2 bedroom, 2 bathroom character-filled apartment. The bedrooms are connected to the bathrooms; so it's more like we're building 2 master suites. It's designed for roommates.
We could probably rent the whole thing for $600; or rent the rooms separately for $350/each.
Good thinkin'?
I polled several tenants (homeowners did NOT give good feedback, but they're not my target market, now are they?). I asked what the most important things are in an apartment. One tenant had a really intelligent comment, "The good things in a house don't necessarily attract good tenants, but they will keep good tenants."
1. Lots of natural light
2. Storage space
Those were important. Very important.
After one survey I made some big adjustments to our plans. I added a couple windows and a 4'x8' closet.
All the tenants polled LOVE the ramp. It was comical that homeowners and builders thought the ramp took up too much space; and tenants saw it as an easy way to move in and out, as well as an architectural bonus.
demolition
I have to write about 
demolition last because it wasn't something I had any advice on until hindsight came into view.
demolition last because it wasn't something I had any advice on until hindsight came into view.1. Do NOT demolish a building until you have financing in place
2. Do NOT demolish until you have a very very very good idea of what you're building
3. Do NOT let anyone demolish your building withOUT your supervision
4. Go to a home improvement store and memorize prices; THEN begin demolition, keeping in mind that EVERYthing in your building has value
Value can mean that items can be resold, reused, OR you're going to have to replace it. In other words, everything has a positive or negative value. Try to reuse as many materials as possible, so that you get the positive value. You may be able to resell some items, but chances are you'll be too busy with building to be able to market and sell doors, windows, decorative trim, etc.
now
In some ways I may have been better off using my credit line to pay off the taxes and get my name off of the church property. But then I would still have the loan to deal with. And while it is possible to clear up bad credit, I'm not looking forward to that route. So, I will keep you informed on the future of my real estate investing endeavors.
May God bless me and keep me sane.
-Gertie
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