Cash Flow With Purpose: Passive Investing The Kingdom Impact w/Zane Schartz
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Episode Description
Welcome to the Freedom Point Real Estate podcast! Pro hockey player turned real estate investor Zane Schartz shares how his faith shapes the mission of Freedom Commercial Real Estate, why they focus exclusively on investor-grade tenants, and how their unique model supports both financial and eternal freedom—including funding global missions.
Zane Schartz is the President of Freedom Commercial Real Estate. Freedom focuses on 100% passive cash flowing real estate investments. They manage 70+ properties and 400+ active investors. Zane's biggest goal in life is to create a non-profit organization that funds Christian missionaries around the world.
CONNECT WITH ZANE SCHARTZ!
LinkedIn: https://www.linkedin.com/in/zaneschartz/
Website: https://www.freedomcre.net/
Email: zane@freedomcre.net
CONNECT WITH JEREMY DYER!
Website: https://startingpointcapital.com/
Instagram: https://www.instagram.com/startingpointcapital/
LinkedIn: https://www.linkedin.com/in/jeremydyer
Facebook: https://www.facebook.com/startingpointcapital
Book a Call! https://calendly.com/startingpointcapital/discuss-investing-with-jeremy-dyer?month=2023-12
Summary
Tip #1: Focus on Investment-Grade Tenants
"Our difference is that we only buy investment-grade tenants from publicly traded multi-billion dollar companies."
Zane’s approach of selecting only investment-grade tenants—like Dollar General or CVS—sets his firm apart from other commercial real estate companies. By targeting large, financially stable businesses with long-term leases, he ensures a consistent and reliable income stream. This strategy minimizes risk and positions the portfolio for long-term success.
Tip #2: Leveraging Current Market Conditions
"We're getting very good deals on properties that I don't think would typically be trading at the price that we're acquiring them at."
Zane recognizes that the market conditions, including higher interest rates, create opportunities to acquire properties at lower prices. This tactic allows his firm to lock in favorable deals, capitalizing on market fluctuations. When interest rates drop, the properties purchased now could see an increase in value, further boosting profits.
Tip #3: Deal with the Challenges of Higher Interest Rates
"The spread between the cap rate and the interest rate is not as big as it used to be."
With interest rates rising, Zane discusses how the spread between cap rates and borrowing costs has narrowed, affecting cash-on-cash returns. Despite these challenges, his firm has adapted by securing favorable deals and focusing on properties with strong fundamentals, ensuring long-term profitability.
Tip #4: Choosing Properties Based on Real Estate Strength
"Our worst case scenario is an auto zone has five years left on their lease...then the strength of the real estate is what we fall back on."
Zane emphasizes the importance of strong real estate fundamentals when choosing properties. Even if tenants don’t renew their leases, a well-located, high-demand property will always attract new tenants. This ensures stability and security for the portfolio, even in uncertain market conditions.
Tip #5: The Importance of Lease Renewals and Tenant Stability
"How many times has the tenant renewed their lease?"
Zane’s firm evaluates tenant history closely to determine the likelihood of lease renewals. A tenant with a strong track record of renewing leases adds value to the property, providing a predictable revenue stream. This helps mitigate the risks associated with tenant turnover.
Tip #6: Understanding Market Demand and Competition
"This Dollar General has been here for 25 years...it's the only grocery store within 25 miles."
In markets where there’s little competition, tenants like Dollar General become indispensable. Zane’s firm looks for properties where tenants fill essential roles in the community, ensuring long-term viability and low risk of vacancy.
Tip #7: Diversify Your Portfolio with Essential Services
"Groceries are essential...We go to Dollar General all the time that's our grocery store."
Zane’s strategy includes investing in properties that house essential services, such as grocery stores, pharmacies, and other community staples. These businesses are less likely to be affected by market shifts, ensuring steady demand and stability for his real estate investments.
Tip #8: Have a Long-Term Vision for Real Estate Investments
"Our end goal in mind is to roll these up and sell them to a publicly traded REIT."
Zane’s firm is strategically positioning itself to sell its portfolio to publicly traded REITs in the future. This long-term vision provides a clear path for growth and exit, aligning his acquisition strategy with the potential for a lucrative sale down the road.
Tip #9: The Power of Networking and Learning from Others
"The more you learn, the more you earn."
Zane stresses the importance of continuous learning and networking in the real estate industry. By connecting with experienced professionals and constantly refining his knowledge, he positions himself and his firm for ongoing success and growth.
Tip #10: Align Your Real Estate Investments with Your Personal Mission
"My goal in life is to give away a billion dollars to fund missionaries around the world."
Zane integrates his faith-driven mission with his business goals. By combining profitable real estate investments with his mission to support global Christian missionaries, he creates a legacy of both financial success and charitable impact. This alignment of purpose and profit is key to his personal and professional fulfillment.
