Small Efforts Can Lead Nonprofits to Golden Real Estate Opportunities

A blog post by Beanstalk, a Detroit-based, woman-owned real estate company, and a business member of Michigan Nonprofit Association (MNA).

Leaders of non-profit organizations bear a significant responsibility. While dedicated to delivering essential services or addressing community needs, they must also cultivate their organization's culture, maintain focus on their mission, and chart a strategic direction – essentially, shaping their vision. The physical workspace often takes a backseat in their priorities, yet it forms the vital backdrop where their team and mission converge. This encompasses the team dynamics, the desired cultural environment, and the investments being made into the organization. Engaging with real estate – whether through leasing, purchasing, or selling properties, or managing lease agreements as landlords – requires specialized knowledge and can be intricate.

This article aims to guide non-profit leaders on important considerations and common pitfalls in real estate decisions to ensure these choices bolster their mission. It covers various scenarios, from lease negotiations and acquiring buildings to selling real estate assets, highlighting the importance of involving experts and identifying the most suitable professionals for assistance. This includes architects, space planners, interior designers, and brokers, forming a comprehensive team to create the ideal workspace.

Selecting a collaborative partner in this process is crucial – someone who not only understands and respects your mission and vision but also educates your non-profit board on the financial implications, market trends, and the strategic considerations of renting versus buying based on your goals. Key steps include setting a budget, identifying properties or leases that meet your financial and logistical needs (including desired amenities and location), and determining the level of investment you and your board are prepared to commit to.

LEASING SPACE

Lease language is very particular for both parties, and you’ll want not only a good broker partner, but good legal counsel to act on your behalf.  Your focus should be on your rights and obligations, not to mention your risk and liability which can be minimized and mitigated with the proper insurance coverage and indemnification language. 

Major points to help in the decision-making process include:

• Term of the lease
• Monthly rent
• Cost the landlord will contribute to space improvements (carpet, paint, etc.)
• Cost for any operational expense contributions by tenant for things like snow removal, janitorial, taxes, utilities, etc.

BUYING A PROPERTY

If you are purchasing a property, you want to make sure you are not overpaying for the property and obtaining all the appropriate due diligence information necessary, often, your brokerage firm can provide a due diligence service for you (like a home inspection, but on a commercial property).

As an owner, you will also need a capital replacement budget for ongoing maintenance as well as either a staff member that can manage the property, or a good management company.  In the event your nonprofit is a landlord and has other tenants occupying your building, you should seek help with management or facilities and maintenance. This would include dealing with all the tenant leases and issues, defaults, emergencies and being proactive to allow for more cost-effective operations.  A penny saved is a penny.

Engaging a professional at the outset will save you time, money, and headaches.  Beanstalk Property Solutions provides a multitude of services that would help answer the important questions and navigate the murky waters of real estate transactions.  This could include things like the following:

• Helping to differentiate what is unique to commercial leases with nonprofits as a tenant.
• Looking into state and local statutory considerations that could impact the business or deal.
• Mitigating risk and liability

SELLING A PROPERTY

When selling a property, your broker will work to obtain the best price by analyzing other competitive properties to support your decision when an offer is received.  The broker will put together a list of the myriad of things to look out for and to make sure are included in your deals.  They will also help you with timing, marketing, and your next steps.

Legal counsel will be critical if you have tenants to ensure that you have no outstanding lease obligations, deferred maintenance you need to disclose, and coordinate with your accountants on how to structure a deal that works for your organization, financially.

WE CAN HELP

Beanstalk Real Estate Solutions, a Detroit-based full-service real estate firm, proudly identifies as woman-owned and is a business member of the Michigan Nonprofit Association (MNA). Our dedicated team adopts a personalized and distinctive strategy, primarily serving our 85% nonprofit clientele. As a boutique agency, we specialize in assisting nonprofit organizations with their property needs, including leasing, purchasing, or selling property or space.

Beanstalk manages properties like the Marygrove Campus, the Guardian Building and the Samaritan Center and provides due diligence, operating budgets and deferred capital and maintenance plans. 

Our team is here to help!  Email us at info@BeanstalkRes.com