How a fixed-rate, stabilized strategy delivers passive income and tax advantages for busy professionals.
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Show Notes:
On Mission Matters, Adam Torres interviews Stewart Heath, Founder & CEO of Harvard Grace Capital, on building passive income through stabilized commercial real estate (suburban/medical office, retail, storage) along the I-65 corridor. Heath shares his conservative playbook—fixed-rate debt, high occupancy, no ground-up or heavy value-add—and explains how investors benefit from cash flow and bonus depreciation. He also previews a Q1 fund launch targeting “boring but beautiful” deals.
About Stewart Heath
Stewart Heath founded the Harvard Grace Corporation in 2010, which has since expanded into Harvard Grace Capital. HG Corporation still provides fractional C-level executive services to clients as well as general business consulting. Heath also 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. He now runs Harvard Grace Capital, an idea that’s been close to his heart for a long time, in an effort to provide stability for investors and to engage in his community.
About Harvard Grace Capital
Harvard Grace Capital is an extension of Harvard Grace Corporation, founded in 2010 by CEO Stewart O. Heath, CPA. Harvard Grace Corporation still provides fractional C-level executive services to clients as well as general business consulting. It has long been Heath’s dream, however, to combine his financial expertise with his history in property management to create a more accessible investing option for those who can’t or don’t want to purchase an entire asset and manage it themselves. With the goal of creating stable and recurring cash flow, Harvard Grace Capital exists to help families build wealth at minimal risk.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest in the show, just head on over to mission matters.com and click on BR Guest to apply.
All right, so today’s guest is Stuart Heath and he is founder and CEO over at Harvard, grace Capital. Stewart, welcome to the show. Thanks, Adam. Really appreciate it. It’s an honor to be with you today. Alright, so we got a lot to talk about here. So we’re gonna get into real estate investing and how you’re helping entrepreneurs and executives invest in real estate passively.
But before we get into that, how’d you get into the business? Like when did you get into real estate? Well, I got into real estate for myself way back in 2000. Just buying a duplex here and a rental house there and things that, you know, a few condos along the way. And, yeah, I’m a CPA. I was doing that all while I was running my practice and really found out that I loved real estate a whole lot more than I’d like accounting.
So from there, i, I, just continue to have the desire to do bigger projects. And so now, today we do commercial sized properties and we syndicate our equity from other investors to invest along with us. And so that’s. That’s kind of how we, got here 25 years and down the road, so.
Wow. That’s amazing. what areas of the market do you focus on and also geographies, if you will. Yeah. Being a bean counter I like real estate because it’s easy to make it, it’s either to say whether or not I’m really interested because it, it will pencil or it won’t because to me it’s all about the numbers because the cash flow is the is the end goal here tax cash flow and tax benefits I should say.
Mm-hmm. So. our geography is basically from Nashville, Tennessee down to Birmingham, Alabama. I call it the i 65 corridor. it’s where I have lived and grown up, you know, my entire life. Uh, We’ve got properties in a suburb of Nashville called Spring Hill. I’ve got four properties in Huntsville, Alabama, and three in Birmingham.
and that’s just sort of the corridor. It’s where we, it’s an area that we know that we live in. We do our own property management of the assets. And the assets that we target are, you know, we like to say anything that cash flows. Anything commercial. So what we have currently is office, suburban office, medical office some retail and storage.
multifamily is typically the queen of commercial real estate, and, and we do love that. We follow that market pretty closely. But, i’ve never found one that I could make pencil at a price that the seller was willing to take. So we do underwrite an awful lot of deals, but you know, we haven’t done a multifamily deal yet.
But, but never say never. Interesting. Wait, you mean in the 20 some years you’ve been doing this, you haven’t on one that penciled. Recently, you mean? I was just double checking. I understood that correctly. I was gonna say how, well I, I’ve only been chasing the bigger deals since 2021.
I’ve found some and, and I make ’em pencil and then I say, here’s my price. Ah, based on what, they’re selling. And, and they won’t take, you know, they’re the multifamily. Market is so crowded, there’s always somebody willing to overpay because you know, they wanna do the value adds and that kind of stuff.
That’s great. I’m not gonna pay you for what I have to do. So I don’t pay the seller for potential. ‘Cause potential is another word for work on my part. and so I’m the one that will. That will make that potential work. So yeah, it’s always a tug of war. and so interest rates has a big place to, to play in that lower interest rates.
so it sounds to me like what I should ask you would, you say that you have a bit of a more conservative approach to real estate for your investors and yourself overall?
I have our approach is well actually we put it on all of our marketing materials that boring is beautiful. Mm-hmm. And in that, a, a stabilized property, just like a mature company, you know, like a great big food production company or something like that. They’re stabilized, they’re mature.
they throw off cash and you can do, lots of things. You can use that cash to go. By other companies or in, in our case, other properties. But the investors that we have attracted to what we do are mainly interested in recurring cash flow. They want better than CD level returns.
They want stability beyond what the public markets can provide in both equities and bonds. And they’ve, most of them have come to really. Appreciate the tax benefits that come with direct ownership in, in real estate. Mm-hmm. we package that up and shift all of the tax benefits to the investors themselves, of which we are investors, as well as we have our own cash in the deal.
Uh. Mm-hmm. but our rules are, you know, one, we don’t do floating rate debt, even if you’re at the top of the market and, you know, rates are coming down. I don’t do floating rate debt I don’t do value adds or development. Mm-hmm. Ground up development and. It’s not that I’m against those, I have done those.
But that’s where all the risk is. And so we try to eliminate all risk except for vacancy risk, which really nobody can control. Sometimes you want your tenants to go away and sometimes you can’t. Make them stay, you know? So that’s just part of dealing, part of owning property is, is a vacancy risk and mm-hmm.
And we believe that if you keep the property up nice, you make sure everything works, that the grass is cut, that the flowers are pretty and that there’s the, the parking lots are lit and everything stays clean and you address all the tenant’s needs, then, then they want to stay. And, and that, that works pretty well for us.
So we’ve got a, across our portfolio, we’ve got a 98% occupancy percentage through the end of Q3. So, Hmm, I wanna circle back to the investors type side of things, because that is, Pretty specific. When you wanna, like, you mentioned the investors that want cash flow, like go, go further into that.
Who’s typically, ’cause at the end of this, I do want you to leave your, you know, website or social or however you want people to catch up. Sure. who’s typically a good fit to work with your team?
Well that’s the kind of question we ask ourselves every week. What’s our marketing avatar? Mm-hmm. I mentioned earlier I’m a CPA and I try to, I think of my investors or people who would’ve been my clients in the 20 years that I had my own practice. And, and so they’re high net worth individuals and or they’re, successful entrepreneurs whose businesses are throwing off a lot of cash. And I always encourage entrepreneurs to diversify into multiple streams of income beyond just their, core business because we don’t know what we don’t know. And just multiple streams of income is just security. I mean, you don’t generally take everything you got and buy one stock with it.
you buy multiple things with your investible dollars. So, you know, that includes, and doctors and dentists and, even attorneys that are successful professionals. who want to get. Like I said, again tax benefits and recurring cash flow. But generally it’s gonna be high net worth people and, and you, we, we generally call those accredited investors.
that’s what the government calls them. Yeah. Well this has been great having you on the show today and learning more about your background. Well, what’s next? Like, what are you guys looking at? What kind of properties? Like what, what’s on the agenda to close out? Let’s just say we’re recording this in 2025 for everybody listening and beyond, like, well, what are your goals going up, going forward?
Well thank you. we actually have a board meeting the next few weeks to sort of discuss that. That’s good. I’m getting, I’m getting you some prep on that. Done. There you go. See, yes, you are. You weren’t expecting that. Come on, go ahead. Wasn’t expecting go public with it, but Yeah. Yeah, exactly.
So we just closed we just closed it. Premium deal down in Birmingham about two weeks ago. And I mean, it is just a textbook example of what we like. and I sort of sworn off any more acquisitions the rest of this year because holiday season capital raises or no fun. but we’re getting ready for 2026.
we’ve been talking about really since. The end of COVID and really since the fall of 22, that it’s gonna become a target rich environment with sellers needing to sell in combination with falling interest rates. And let me tell you, the lenders out there are already anticipating the lower interest rates.
Mm-hmm. they’re getting aggressive with their rates even beyond what the, 10 year trading bond market is doing. So it’s been really attractive. Our last three AC acquisitions. So we are actually, we, everything we’ve done is, a single asset transaction. We raised for that particular deal.
We are putting the steps together to Form a fund, which we will launch in Q1. And there’s three or four deals we’re watching right now. We may try to put them under contract in December to close in Q1 as well as raise for our fund. So that’s really what’s next for us. The fund will, parameters will be pretty much exactly what we’ve been doing.
Boring cash flowing deals that passes out pretty great. Tax benefits, ’cause everybody should know, any investors should know by now. You know, we have a hundred percent bonus depreciation. And so that, at the very least, that will shelter all your income from a deal like this for about three years.
So you’ll get six, eight, 9% cash on cash on a tax free basis. And you know that, that really. Should be looked at as a 12 or 13% return versus something else you might be looking at. So, but that’s what we’re working on for Q1 next year. You are busy. How do people follow up? How do they connect?
You are busy. The best way to get me, or to any of us is go to harvard grace.com and you can find my Calendly link there. I will talk to anybody about real estate all day long. You’ll find great resources there. you’ll be able to look at the properties that we are. Either working on or that we’re already operating.
So that’s really our best central source. You can also find me on LinkedIn, Stuart Heath at Harvard Grace Capital. I think I’m on Facebook too, but frankly, I have a. content people who handle that. ’cause I’m not a big social media guy. All right, well for everybody listening, just so you know, we’ll definitely put some links in the show notes, so you can just click on the links and head right on over.
And speaking of the audience, if this is your first time with Mission Matters and you haven’t done it yet, hit that subscribe or follow button. This is a daily show each and every day, bringing you new content, new ideas, and hopefully new inspiration to help you along the way in your journey as well.
So, again, hit that subscribe or follow button. And Stuart. Thanks for coming on the show. Thanks, Adam. It was fun.
