This blew my mind

Written by Tyler Kastelberg

July 3, 2022

Happy Sunday!

I hope this newsletter finds you in a pontoon boat on a big lake in small-town America celebrating July 4th. This may surprise you, but my pontoon boat beer of choice is PBR. Weekends like this are good for the soul.  

In this week’s newsletter, I share interesting learnings from 1) a conversation about church real estate with Narthex founder Rob Boyer and 2) an interview with CF Capital about how they leveraged brokerage experience to build an investment firm.

Yup – this newsletter is a two-part special. Buckle up, and let’s roll.

Before we get started – if you’re new here, subscribe to this newsletter. I send one weekly email on Sundays with content like this.

Narthex and their unique investment strategy

Last week I connected with Rob Boyer from Narthex (one of our clients), and he shared one of the most unique investment strategies that I’ve heard this year.

Narthex buys church buildings from congregations where the building has become a bigger liability than an asset. The firm then reprograms the space to maximize its revenue potential. Reprogramming typically means leasing unused parts of the church building to other congregations who need space.

On our call, Rob mentioned that he has a backlog of 84 small churches in their markets that are looking for space. 🤯

The strategy is a win/win for churches and Narthex. Churches are able to unlock liquidity to invest in their congregation and local initiatives, and Narthex is able to make returns comparable to CRE development firms.

On our call, Rob shared that Narthex is launching a fund that will allow them to expand into Dallas and a few other markets. Drop Rob a note if you want to learn more (rob.boyer@narthex.com). He’s looking for check sizes in the $3+ million range for a $50-$75M fund.

PS – I’m not affiliated with Narthex or their fund … no kickbacks coming my way … etc.

CF Capital’s unfair advantage

A VC that I pitched when starting Bullpen asked me what my unfair advantage was … I didn’t have a good answer, and they didn’t invest (jokes on them).

However, they had a good point. An “unfair advantage” is something that you uniquely possess that gives you an outsized probability of success when starting a business.  

In the case of CF Capital’s co-founders Tyler Chesser and Bryan Flaherty, their background in brokerage gave them a clear unfair advantage when they launched CF Capital.

Tyler and Bryan, a pair of Louisville ex-brokers, frequently talked about commercial real estate over a coffee or beer. Gradually, Tyler and Bryan’s growing personal real estate portfolios gave way to an alignment of interest in joining forces to create CF Capital. 

Moving from brokers to investors, the young CF Capital team was able to leverage many of the lessons and relationships they had cultivated as transaction experts. 

“Tyler and I were collectively involved in over a billion dollars in transactions on the broker side,” he says. “Investment is just a different seat at the table. We already had all the relationships in place.” Transitioning from sell-side to buy-side meant Bryan and Tyler had to spend some time showing other area brokers that they were now clients, not competitors. However, the benefits in terms of access to capital, deals, and service providers were enormous. 

Not surprisingly, the first deals CF Capital closed were a pocket listing from another broker in CF’s network and a property that Bryan had previously repped himself as a broker.

If you found the above interesting, you can read the full interview with CF Capital here.

My big takeaway … if you want to start a real estate investment firm but lack connections, give brokerage a shot first.

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