I have a client (local church) that has a dream of buying a school from the Public School District in my area. Because California's budget is so screwed up, the church thinks they might be able to purchase a school that will be closed next year. It's going to be up to me to approach the district and negotiate a sale. My question is, how do you value a school property? What kind of comps could be used?

The church will convert the auditorium into a sanctuary and use the classrooms for a Christian Elementary School. The feeling is, zoning shouldn't be an issue and neither should parking. Has anyone here been involved in turning a public school into a church/private school? Are there potential issues that I should be aware of?

Zoning shouldn't be an issue; but sometimes it is. There might be some interesting aspects for you in the following:

http://www.agentsonline.net/forums/ubbthreads.php/ubb/showflat/Number/237658

how do you value a school property? What kind of comps could be used?

typically by using the cost approach...which means you need to hire a certified general appraiser to do the valuation.

The problem with appraising schools, and churches alike, are that they usually sell as distressed properties, for alternative uses, or for land value only. I've have appraised many, and often find that without the contents, the real estate is just another masonry building with 12 foot high ceiling at best. Therefore, it limits the utility. However, if you are in a good metro area with solid growth, you will find some good market sales. You should also be able to find rents for a solid income approach. Yes, many of these building are leased. If the building is older, the cost approach is going to be your weakest approach, and may not even be applicable. Our data sources include my own files from over the years, co-star, loopnet, contact with other MAI's with whom we share data, and specialty publications. Frankly, unless you have a ton of time on your hands, and $$$$$ to pay for the data, it's worth a few grand to pay a commercial appraiser. Obtaining and verifying the data is the biggest expense, and we pay several thousands of dollars a month for all of our data sources.

One more question. Who would be the best person to approach in the school district to inquire about a sale?

Yeah, I'll be careful not to promise anything. This church went out and bought a big piece of land, thinking they would build their campus/church. They had an eye opening experience when they found out the cost, and the hassle of getting permits for their usage. It was going to cost well over two hundred grand just to get plans and permits, with no guarantee that anything would get approved. They are better off just using that money to upgrade an existing infrastructure.

So I'm looking for something already built and zoned for what they will be using it for. I doubt they could find a better time to offer money to a school district under financial siege. If there ever was a good time to get a school, now is that time.

I'm excited because if I can help them pull this deal off, I'll also get to list and sell their vacant lot as well.

Indeed; but better yet, you could have an opportunity to become known within the Congregation, Parish, Fold, Flock, Assembly, Temple, or other Membership of the Religious Group. Don't expect any immediate reward but; "As Ye Sow, So Shall Ye Reap”, as long as your heart is in it for the purpose of helping them.

Just make sure you Do your best Work; because you know Who is watching. I've never regretted any time spent helping a Church, and I've helped Baptists, Catholics; UCCs, Adventists, Buddhists, Jews . . . . and one group will refer another, regardless of their denomination. That's a whole lotta People.

Special use properties including churches can be very costly to get zoning or special use permits to allow the use in my market and experience. Unfortunately many uses that benefit the community do not always get approved. In my market, there has been a mental health facility that is in a flood plain that has not found a replacement property due to zoning. To allow overnight stays at a new care facility it would cost well over $100,000 in permits before retrofitting the building with washers, dryers, adequate plumbing per room, escape access (for fire/emergency), ADA access, Sprinklers etc.

Worship facilities and schools often fall into the grandfathered clause for their current use because they have been in operation before many new health & safety regulations had been implemented. For example a new use in a 1970's constructed school building would require a complete asbestos abatement, fire sprinklers and ADA accessibility to allow a church to in as per my local zoning regualations. This adds to the cost of getting the building ready with large TI costs before the use gets approved.

As far as the best way to get the value, have an appraiser appraise the school at your client's expense if they are serious. This way you have something concrete to present to their lender and the county if you present an offer.