Welcome to the Managing CRE Risk podcast with Jeremy Goodrich. Join us in this episode as we chat with Stewart Heath, the CEO of Harvard Grace Capital and a seasoned commercial investor. Discover valuable insights on investing in customer-facing offices, creating an effective proforma, and managing risks through property management.
Learn more about Stewart and his story at shineinsurance.com/managing-commercial-real-estate-risk!
“We have a hard line that we’re going to maintain 6 months of reserves in our syndications.”
01:46
Stewart initially ran his own CPA practice and witnessed the success of his real estate clients. Inspired, he started investing in duplexes and condos too, and eventually had almost 200 residential properties in his portfolio. Unfortunately, during the 2007-08 financial crisis, he lost a large portion of his portfolio.
When Stewart started over, he decided to invest in retail properties instead of residential ones. His advice for anyone starting a business is to include six months’ worth of operating expenses as reserves in their business plan. This way, even if the business experiences high vacancies or low profits, it can still survive for a year.
“We do the property management ourselves. It is the only way that I can guarantee that I’m delivering on the proforma as much as possible.”
09:56
Stewart mainly invests in Alabama and Tennessee. He prefers investing in stabilized properties and avoids multifamily investments. His preferred asset class is customer-facing suburban offices.
To manage real estate risk, Stewart emphasizes the importance of property management. The tenant selection process is a crucial factor that can make or break a property’s success.
Aside from his primary investments, Stewart also invests in self-storage, which is a profitable asset class and has a strong correlation with multifamily.
About our guest, Stewart Heath
Heath sits on several boards, including HGC, Winsome Truth, The Shepherd’s Call, and Second Chance Sober Living. In 2016, Heath was recognized as a finalist for the Nashville Business Journal’s CFO Awards. Currently, Heath holds several fractional CFO positions.
Heath previously held positions as COO and CFO for companies in retail, real estate, manufacturing, corporate services, entertainment, and digital media. He earned his CPA license in 1987 and has since held several senior financial and operating positions. Heath also holds a B.S. in Business Administration from Auburn University.
Mentioned in the show:
- https://www.harvardgrace.com/
- His LinkedIn
- Shineinsurance.com
- www.shineinsurance.com/managing-commercial-real-estate-risk
- Jeremy’s LinkedIn
Need an instant insurance ballpark for your next Multifamily deal?! Answer 9 simple questions and we’ll give you a sense of what insurance should be. Visit us here for everything you need to know: https://www.shineinsurance.com/ballpark/
Special thanks to Stewart Heath for taking the time to share so many great insights with us
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