Rehabbing & Flipping Churches - Narthex - Rob Boyer

Mark King:00:00:13

Nobody wants a PowerPoint from JRR Tolkien with bullet points about how to create a fantasy world. They want to hear the story of how he wrote Lord of the Rings. That's why here on Impact Investing Roadshow, we believe the best way to understand and investors craftsmanship is to hear them dig deep into the story of a single investment. I'm your host and tour guide Mark King. On this episode, I am thrilled to introduce you to Rob Boyer, the CEO and founder of Narthex Properties. Based out in Leewood, Kansas, Narthex is focused on something genuinely distinctive, taking historic church properties and re-imagining them as vibrant, kingdom focused community centered hubs. Rob has been leading that mission since founding Narthex back in 2017. Before turning his attention to sacred spaces. Rob spent nearly two decades as the owner of shredded a business services company, which he took from startup through a successful exit. Now. I want you to picture in your mind the kind of businessman that does real estate development with churches and used to own a commercial shredding company. Got it. Okay? Now I'm gonna tell you that Rob is a graduate of the United States Air Force Academy, where he studied Russian. And after graduation, Rob spent a couple of years at the Pentagon as a senior strategic Russian ballistic missile analyst. I'm guessing the picture in your mind just changed a little. Russian nukes are about as far as you can get from real estate development, but it speaks to both his raw intellect and his capacity for complex high stakes work. Two quick things about our conversation. First, Rob and I spent a little less time on a specific deal than usual. We spent a fair bit of time talking about the context, in the American Church that leads to this issue of the need for sacred space renovations. So more background than usual because of the market he is working in. The second thing is, as I mentioned, Rob is a Air Force graduate and continues to be a private pilot. So when I told him to grab his microphone to do this interview, he grabbed his pilot's headset. So the audio's got a bit of a different sound to it. For Rob, it's like one of those YouTube videos where people do interviews in their cars. It's not bad. It's just got a little bit different tone to it. We started our conversation with Rob telling the story of how he made the jump from selling a B2B services company. To rehabbing and flipping churches.

Rob Boyer:00:02:57

I have a background in business. I have operated a number of businesses and been involved in banking and some other ventures over the years. And I sold a company in 2014. And, I was really just prayerfully asking the Lord, what, what's next? What do you want me to work on and what's the next thing? And like literally an hour later, buddy of mine called me and he said, will you come out and take a look at our church and tell us why we're not growing? said, would you come and give us the businessman's, businessman's approach, which. You look at our financials and would you look at our, our prayer and worship and look at our branding and marketing and just give us this top down review and tell us why you think we're not growing. So I grabbed my wife. she has this background in branding and marketing, and I have this operational background from business. And we went out we started doing these kind of top down consulting things with local churches. A lot of strategic planning surveys of congregations, some conflict resolution among staff, looking at the financials, looking at the worship, the branding and marketing. got really convicted about the real estate. My wife and I just kept coming back to estate being this asset that is horribly underutilized, that is costing the church 60 to 70% of their revenue. So a building that sits empty 80% of the time gets used on Sunday morning for worship and maybe some classroom and office during the week, but the rest of the time isn't doing much. And that seemed like a huge problem and it seemed like a huge burden and we really felt like the Lord was drawing us into how do we help the church with church real estate. And we started researching into it. It's an enormous problem. There's 350,000 or so church buildings in the United States, and as we know, there are a lot of churches that have been in decline and a lot of these buildings are really suffering. And we have a heart and we have a passion for sacred spaces. that God created them for a purpose and that purpose is for worship. And when those buildings are falling into disrepair, a problem. And so my wife and I really this on as seeing if we couldn't intentionally figure out a way to help churches and their real estate needs. And here's an interesting question, trivia question for your listeners. Are you familiar with, cathedral architecture? So do you know where the name from?

Mark King:00:05:20

I do, I actually grew up in a Lutheran church that, regularly referred to the Narthex, which I was told as a kid meant lobby.

Rob Boyer:00:05:29

Years old or something, my parents took me on a trip to England to tour cathedrals, and I was just fascinated by the design and layout. But yes, in, in the cathedral architecture, the nave is where you worship, NAR is the gathering space. So yeah, it's the lobby, it's the community space where people come together before they go worship together in the nave. And so I thought that's a great name, because Narthex is going to be about turning churches once again into these community gathering spaces where people come together. And so that's the origin of the name Narthex.

Mark King:00:06:05

I was gonna say, so having seen that problem, and I think most people, if they've driven around either suburban or urban or rural America, I, you know, a big issue. How did you think about attacking it, with your background and your, your wife's background?

Rob Boyer:00:06:22

coach churches how to use their real estate more effectively. So, really two parts

Mark King:00:06:28

I.

Rob Boyer:00:06:28

One was how do we find tenants because we knew there were others out there that needed to use space. So how do we help them find tenants and how do we help them manage the building more efficiently? We were really surprised to find a lot of churches getting ripped off. You think. You'd think that a church would get favorable pricing from an HVAC vendor or an electrician or a plumber, but we actually found the exact opposite was true. They were being charged way too much there were projects marked that I looked at that, they were getting bids of $2 million on a $300,000 repair job. So we started out trying to do these two things well, it was a disaster. Because churches don't wanna be landlords and they don't wanna have tenants. We ran into a lot of conflict and a lot of churches were conflicted about having other people using their spaces and, and it just, that really fell on its face. And so I just said to my wife in 2017, why don't we just go buy a couple churches? Like, let's just go and do this and let's see what happens. Let's just trust in the Lord and let's go and do it. And universally, my friends thought this was a bad idea. Like, Rob, if you wanna waste money on a bad asset, go buy a church because you buy a hundred year old building, that's gonna be a problem. And churches are bad tenants and banks don't like churches. And, but I, we went and did it. We went, my wife and I went out in 2017, 2018, we bought four churches. Literally knew nothing about what we were getting ourselves into. And so we started drinking coffee with pastors and drinking coffee with church planters and trying to find who are all the people that need the space that can use the space? Are there Christian daycares? and, well, we, we discovered very quickly that there was a huge demand for space, huge demand for space, like our waiting list. the end of 2018, had like 70 church groups on it that were looking for space that they could rent. And

Mark King:00:08:25

Wow.

Rob Boyer:00:08:25

over the last just in Kansas City, we're just in Kansas City alone. Our waiting list has been between 90 and a hundred, church groups that are looking for worship space and, and 90% churches. Some of 'em are daycares, some of 'em are Christian schools looking for classroom space. But there clearly was demand. And we made all the terrible mistakes that you can make. we were doing full service leases at the time, so we were leasing space to churches and paying all the utilities and all the expenses and, we were just financially of getting killed in that process. But we, we learned, you know, we, we were recognized that we're doing something, couldn't find anybody else in the country that was doing it. We couldn't find anybody else we could learn from. And so we just, were, were trying, we were just putting our faith in the Lord and just trying to make it work. And, and we, we've done it, you know, over these last years we've. We figured out how to, how to find the right lease that works and how to find the right mix of, of tenants in the right building and how to get them to work together and how to create community and community space.

Mark King:00:09:28

You mentioned a pretty significant disconnect between supply and demand, which always makes me wonder why that disconnect occurs. What was it? Was it the, the potential tenants didn't know how to ask or look, or was it the churches didn't know how to be a landlord or just didn't want, I'm just curious why the disconnect between all that demand when there's clearly a need to generate some income or do something with this real estate.

Rob Boyer:00:09:54

space available, didn't know how to ask for tenants. They didn't know how to find them, they didn't know how to invite that, invite them in. there was a lot of conflict between, let's say, a church of one type of denomination sharing church with another denomination. we've always had a lot of conflict. Unfortunately, churches don't get along very well, and they tend to be a bit judgmental of each other. And so we, we had some conflict and sonar kind of evolved into this role of. Of playing good cop and saying, okay, this is the, this is the defined space that you're renting and this is what you do there and you worship and this is your defined space and this is what you do. And, and you worship there. And, and one of the beautiful things about narthex is we are non-denominational. I have no dog in the fight of denomination. I am big tent. If it's for Jesus, then I'm all in. And I don't have judgements. I have tenets and I have charismatic tenets and I have Methodists and Lutherans and everything in between. And I, and I love all of them and I. Have the, the luxury of not having to pick winners or losers among their different faith traditions. I support all of them. We learned how to bring these groups together and fit. Now why, why do more churches that are struggling not want to sell their asset or get out of the building? That's a tremendous problem. There's a, ego in that. There is, the, the feeling that we are bad Christians if we, if we get out of the building that, that my grandfather helped built or my parents were married here. so churches tend to hang on to their real estate way beyond the point where, where they probably should they just don't know how to get out of the way of it and find the avenues to bringing in other tenants that can help share the space.

Mark King:00:11:47

It's just really sad to hear about. So as you were proving out this idea, you jumped in the deep end, to say the very least with, with four churches. Tell us a little bit about the strategy at a high level. When you think about a property that's underutilized, you mentioned daycare, church planting. What are kind of the generic strategic options that you look at even maybe now, before you acquire a property?

Rob Boyer:00:12:13

When we take a look at a church property, there's a handful of things at a high level that, that we're looking for. So one is, is just the property in general. You know, we, you need, that sweet spot is about 10,000 to 30,000 square feet. So if it's, if the building is less than 10,000 square feet, you're talking about a single use church, and they're probably gonna outgrow the building rapidly. It's too small. if you're talking about more than 30,000 square feet. The maintenance and the expenses are going to be a burden to it. It's just too much space. And you also look at sanctuary size. So 400, 3 50 to 400 is kind of a sweet spot where churches want to be. Sanctuaries of 700 to a thousand, takes a big church to fill that much space and sanctuaries less than a hundred. And it just doesn't seed enough to to, to support the church's needs. So we started out by looking at, at some high level things. And then one of the very first churches, in fact the very first church I bought didn't have any dedicated parking. an, in an old neighborhood of Kansas City, was a hundred year old church in the day when everybody walked to church, walks to church anymore. So this church always had a problem in that there was no dedicated parking. So we learned early on you gotta have some dedicated parking that goes with the building. And then, we also, you know, want the church to be in a reasonable, location with access to good roads and, we've done some work in the inner city. Those are challenging projects to do. Just you, you run into issues of, of crime and, and, safety related issues. And we, we've struggled, with some of that. So these are the high level things we look at. And then we, we take the church and we say, okay, what are all the potential uses here? You know, there's, there's a sanctuary. Someone can worship there, there's oftentimes a chapel. Someone else could be worshiping in that chapel space. You may have a fellowship hall that someone could be using as a commercial kitchen or support a food truck operation if you're zoning allows for it. Or, operation. Then if you have a bunch of classrooms, you know, Baptist churches are great for classrooms and there's such a. Explosion in Christian education post COVID, and all those groups are looking for additional classroom space and, and daycare also devastated in COVID and so daycare space. And so we, we just think about, okay, what are all the potential uses of the space? And then who do we know within our network that wants to be in this part of town or a daycare that's looking to expand into this neighborhood? And how do we fill that building up in a way that makes it so that it pencils so that, it, it makes sense financially, but also so we can make it affordable for all the tenants so that they can thrive in that space and grow and, and nurture.

Mark King:00:14:54

You started out, as you mentioned, just doing this off your personal balance sheet. What was the thought process or what were the proof points that really led you to think that, wow, there might be a, a fund here that we could scale this up to a little bit higher level? What were the initial indicators that, this thing had some legs.

Rob Boyer:00:15:14

The, sheer number of phone calls we started receiving, and not just in Kansas City where we were based, but from around the country. Just, I heard what you were doing and I that in Knoxville, Tennessee, or I need that in, you know, or wherever. It just, and, and all of this was happening by word of mouth and I just kept thinking, wow, I think we, we maybe are onto something here. And then, a, we had a. An early financial success. there was a church in Kansas City was in really bad shape. It was about a 60-year-old Baptist church. The Baptist church that had been there had aged out of it. So they just had, had grown out and not brought in new members, and they had ended up giving the building back to the Baptist denomination. And then they had a, a. had an ice storm in Kansas City one winter, and the pipes froze and burst. And so they had this whole flooding issue in the basement of the church, and there was mold because they didn't get on it fast enough. And then the mold spread out and the, the building was really a bad shape, but externally, a beautiful building. And they had a tenant, a tenant in. There was a, was a Haitian church, Haitian Baptist, church that worshiped in there. So we bought this church from the denomination for a hundred thousand dollars. we went in and we spent 400,000 fixing the mold and the flood damage in the hvac and just bringing this. Beautiful old thing back to life. So we were, we were in it for about half a million dollars. And I had this very faithful Haitian Baptist group that had been worshiping there the whole time. Well then we brought in three other groups. So we had another group worshiping in the chapel. We had a, Samoan Baptist group that was worshiping, on Sunday afternoons. And then we had a, messianic Jewish group worshiping on Saturdays. So we had four different tenants operating in here at the same time. And then the, the Haitian Baptist came to me and they said, well, gosh, Rob, the math on this thing, and if we just take the rents that you're collecting from the other tenants in the building, it'd be cheaper for us to own it than it would be for us to keep paying you rent. And so. I went to my banker and said, Hey, would you give these guys a loan so they could buy the building? And the banker did it and we ended up making, we ended up selling the thing for 700,000. So we made a couple hundred thousand dollars in the deal. And the church was thrilled 'cause their mortgage was paid for because of all the other tenants. And the building was easily worth a million or 1,000,005. And then so they got a great buy on it and everybody won. And it felt great. It's like we're, it's like we're winning. The church is winning and the kingdom is winning. And it feels like, wow, okay, this, this actually is something that we could do this, this could be investible and I could make money for investors and I could do right for the church and I could restore church architecture and bring back sacred spaces and like, feels like a thing. So, that was, that was an early success that gave us a lot of enthusiasm. I.

Mark King:00:18:19

Before we dive deeper into kinda one specific project, give us maybe an update on kinda where you are with the fund and number of properties.

Rob Boyer:00:18:27

We, launched in 2020, our first fund called the North One Fund. was a great idea. Let's launch it. 2020, right in the middle of a pandemic lockdown. but we were buying churches during that time, and we were still working and renovating, and, churches were actually growing during the pandemic. And so we're very excited. We're launching, a second fund, here in the next month. Very cleverly. It's called Narth two two and Narthex two is gonna be a $10 million fund. And, and it will have a nationwide scope. Now, 10 million's, not a lot. How many churches can I buy? That's a interesting question because our average transaction's about a million dollars. So we're, we're buying churches in that 500,000, maybe up to $2 million range. But typically we will buy it for a million, spend about 200,000 in renovation. We'll lease it to a church for two or three years, and then they'll buy it from us for 1.5 million. That's a typical, Narthex type transaction. So by, by raising 10 million, I'm gonna go out and do 17, 18, 19 deals. it's just the next step. So we just want to do some deals on a national basis. And I know the demand is there 'cause I get the phone calls every week and, and then I think we're gonna be ready for something big.

Mark King:00:19:43

You've mentioned, you're based in Kansas City, the initial properties are in Kansas City. Where currently is the portfolio kind of from a geographic standpoint?

Rob Boyer:00:19:53

is still all in Kansas City. We have 12, 12 properties, just in the Kansas City area. But, with this new fund, as we raise some money, we're definitely gonna open our doors to literally doing a deal anywhere in the country.

Mark King:00:20:08

That's great. There are people listening all over the country that are pretty excited about the prospect of NX coming to a local church near them. Speaking of a local church, let's dive down into a specific property that you've worked on. Is there a particular project that you think is a good illustration of the work of narthex?

Rob Boyer:00:20:29

One of the 12 projects we've done in Kansas City is a Catholic church called Our Lady of Lords. It's in Raytown, Missouri, which is a suburb, eastern suburb of Kansas City. It's very close to Arrowhead Stadium. So our Lady of Lord's Catholic Church, was very big in the 1950s. It's, just a a, an example of a Catholic church there. There were so many of them at some point that they started. know, closing some of them and consolidating the different, Catholic churches into one location. And so our Lady of Lords, got emptied by the Catholics and it was actually a compound. It's a, it's a big property on three acres on a really nice corner in Kansas City. It actually had five different buildings on there. It had a, it had a sanctuary hall, a separate fellowship hall building, and then it had a, a dormitory building where they, they used to operate a nunnery at some point. And then, there was a home there, a separate home there for the priest. And then the fifth building was a school, so like a whole, single level, like elementary school where they operated a school in a daycare. So these, these five buildings were on the property. Well, right away the Raytown school district came in and said, we're gonna imminent domain, the school building, and we're gonna take it because we wanna expand the Raytown School district into it. So the Catholic church went out and did a a lot split, and they separated off the part that had the, the school there, and that was sold to the Raytown school district. And so they had the other part of the property that had the, the house and the dormitory, the sanctuary hall, and the, and the, the fellowship, Paul. And so they listed the thing for 1.9 million, which was probably a pretty good price for it actually, for what it was. And they didn't have any takers for a long time. And NAR eventually came in and, and made some offers, around 1.5 million that were accepted. And we found some damage in the buildings and some more things, and we talked to 'em more and more. So we ended up acquiring this property for, 1,290,000 in 2023. And we had a tenant already lined up that wanted to go into the space. The tenant is a great story. They're called the City kc. It's a pretty, pretty well known, I'm gonna give them a, a plug, a pretty well known church in Kansas City, led by a guy named Pastor Armor Stevenson ii. And, armor Stevenson is an amazing guy. His, his parents had started the church and they had, tragically died in an airplane crash when he was a young guy. And so he took over his family's church at age 22. and since then, it has flourished from 300 members to well over a thousand. And they had been worshiping in a, in a high school in Kansas City until the pandemic, and then they, Jackson County and Missouri closed schools down for outside, church groups. And so they were looking for a home and they came to North XX and said, you know, have you got anything out there would accommodate us? And we didn't. And we didn't. And we looked and we looked, and then finally this, our Lady of Lord's property came up and it was. Perfect. It, it has a sanctuary that seats 750. So we've spent all of 2023 just doing renovation work. The property needed a lot of things. It, it, it needed a little bit of love. And so we went in there, it needed a whole bunch of HVAC work typical of an old Catholic church from the 1950s, there was only one bathroom in the sanctuary. So, we had to go in there and add bathrooms and do a bunch of renovation work. And, long story short, we ended up in this project all in for about 2.2 million. Investors put in 1.1 million of equity and we borrowed the other 1.1 million, which is what we typically do. We typically lever a property at 50%. so we're in this thing for 2.2 million. Pastor Stevenson and his group. They rent the church from us for two years, and then they're buying it next spring for 2.5 million. From a, from a numbers perspective, it's a nice, it's a nice deal for Nart X investors. It makes a 15% IRR. We're, we're turning a $1.1 million investment into about 1,000,005, 50% return on cash on a three year investment for, for investors out there. But, but for Armor Stevenson ii, his church, they've grown to now to almost 2000 members since they moved in there. Because they have so much space, gonna buy this property for two and a half million. That might easily be worth 3 million or three and a half million, and. Everybody wins. It's, it's an amazing thing. And the Raytown school district is flourishing on the site. so now it just became this community thing. It was an abandoned Catholic church that, that had, had nothing there but a homeless population that, kept breaking into the building. And now it's evolved into this hub of activity within the community.

Mark King:00:25:28

Tell me a little bit about the search process, just in terms of inbound, outbound working with brokers. You mentioned having coffee with a lot of, a lot of pastors and priests. I'm just curious how that hunting process works.

Rob Boyer:00:25:43

that's a great question. So, nowadays. I would say about half the properties we buy, we find them through commercial methods. They're listed for sale and we can, go out and buy them. But about half the deals we do are, are direct relationships with, the denominations. So we're at a situation now where the Catholics or the Baptists or the Lutherans, or. The Methodist just call us directly and say, Hey Rob, we're about to put this property on the market. Would you like to go and, and see it first? And so we, we do a lot of deals like that at the, at the higher denominational level.

Mark King:00:26:21

And you said our lady was actually listed, or did you get this one kind of directly from the archdiocese, or whoever.

Rob Boyer:00:26:29

had listed

Mark King:00:26:29

But really you were the only bidder.

Rob Boyer:00:26:33

usually the case. It's usually the case that we're because other bidders are gonna be developers that typically will want to knock the church down and build something else. And in a place like Kansas City, that's really hard to do. Communities like their local churches, they don't wanna see them get destroyed or torn down. So, typically an RTX is the only, only bidder that's out there for these properties.

Mark King:00:26:55

As you're evaluating it, tell us a little bit about kind of how, how you put your, I would call it a valuation process or kind of bid development. How do you, how do you go about putting that together in terms of the, the price you wanna pay? I.

Rob Boyer:00:27:09

I a look at, at who could be the tenant in that building and what can that tenant afford, how could it be affordable for them? So if I know that I have a church that's going in this space and they have a budget of $3,000 a month, for example, you know, I could build it, I could build a whole valuation around the, the, the potential rental income stream that can come from that potential property. And then I ba it's basically about a 10 to 12% valuation. So if I think I can generate a hundred or $120,000 in rental income, that supports a valuation of about a million dollars. And, and oftentimes, you know, you, you see a church out there that's, they've got a price tag on it to 4 million or 5 million or or 6 million i'd, I can't get there. And so, you know, we pass on a lot of things and. But I, gotta make the, I've gotta make a pencil.

Mark King:00:28:06

I'm assuming you've got, contractors and whatnot that you bring in to kind of get some preliminary cost estimates. How do you, kind of dig into the HVAC and the bathrooms and all of the various kind of what, for lack of a better description, maybe the technical stuff and the trades

Rob Boyer:00:28:21

have developed a, A cadre of, trusted people that do HVAC and plumbing and, and heating and all those things that we, we work with and call. But, but here's an interesting point about, about churches. You, you know, you cannot go into an old church and start knocking walls down and doing, major renovation. 'cause if you start pulling a bunch of permits and triggering a bunch of compliance related issues, you put an elevator in a, in a hundred year old church, that's not gonna work. Or some cities and counties want sprinkler systems and sanctuaries. And so generally try to keep our renovation work to roof and HVAC and paint carpet and, know, we bring the building back to life. And we've gotten pretty good at figuring out how to do that.

Mark King:00:29:11

How'd the conversation with the city and whatnot? Go for our lady?

Rob Boyer:00:29:16

well this is a fascinating, problem because, so, so the Raytown school district, took over the, the, the school part of that property, but it had no access to the street and so. We had to do these cross easements so that they could drive through our parking lot to get to their building, and we had to have a cross easement so that we could use the playground for our church that the school owns technically. And, and so it was this kind of wonderful, community, private public partnership in which the Catholic church was involved, the Raytown school district, the Raytown City government and Narthex to kind of work together all these legal hurdles and obstacles to bring the project to fruition. It was actually a really good example of government working well to, make that project happen.

Mark King:00:30:12

That's so encouraging. 'cause that sounds like a real rat's nest to say the least. Have you run into kind of city or zoning, speed bumps for lack of better description?

Rob Boyer:00:30:25

So different cities and counties have really strict zoning rules, and so as long as we stick within that, we've never had any problems. I mean, we're not trying to put a commercial business into a church or something like that. It's always church related focus. So, we're, we're always within the zoning rules that the only frustrating thing that we've run into, to be honest, is that. TX is not property tax exempt. So churches generally are property tax exempt in most states around the, the United States. But Narthex because we charge rent to our tenants, and we are not ourselves a church, we are not property tax exempt, so we pay property tax. And you would hope that your local government would say, well, hey, here's an asset that never generated any tax revenue for us before. Now Narthex is paying us some tax revenue. This is a good thing. But we have had a couple of instances where the county has rolled in and raised our property tax by 150% because they've categorized us as a special use asset. And then they just come in with these crazy valuations. And, so we, we have, we have had a lot of battles in some counties with, with property tax valuations. So, we're always challenging property tax valuations. And even as high as the Kansas Board of Tax Appeals, and sometimes you, you have to fight that pretty hard.

Mark King:00:31:52

When the church buys it back though, does it then automatically fall back off the tax rolls?

Rob Boyer:00:31:58

Right. Yep, that's exactly right. The church apply exemption and it gets

Mark King:00:32:05

The tax issue is interesting in that it brings up a question around your exit strategy because you have to have an exempt entity, buying the property to really make that work. Are you finding buyers, once the rehabs in process or beforehand or listing afterwards, how exactly do you think about timing and staging the exits?

Rob Boyer:00:32:26

The way we're structuring, a lot of the deals now and things that we're looking at nationwide, we actually want to, find a church that will wanna buy the building. So the most, the most common thing nowadays is the church comes to me and says, Rob, we want to be in that building right there, we can't afford it today. But that's where we want to be. So Narthex will go and buy that building for them, lease it to them for maybe a period of three years, just like we did at Our Lady of Lords, and then the church buys the building from us. So, ideally we've got a path to exit from the building, help the church get in there, help them to get a loan, to get the building if they need with our loan guarantee services, and, create a way so that we get off of that property tax train before it can get outta hand.

Mark King:00:33:15

Coming back to Our Lady of Lords, that's a single tenant, situation there. Am I hearing that correct or did you find some other folks to cohabitate.

Rob Boyer:00:33:24

tenant.

Mark King:00:33:26

How do you go about underwriting them as a tenant?

Rob Boyer:00:33:31

So we, we look at, in this particular case, we look at things like, how many members of the congregation, we looked at their financials. We look at the history of the church and, and we do some underwriting. But on a startup, for example, or, or a church without that much history, we really take chances on them. I mean, we recognize that, some of them aren't gonna work out and some of them are gonna be enormously successful. And there is a leap of faith, oftentimes with some of these churches that, they'll, they'll get in there and flourish and be successful. That that's not always the case.

Mark King:00:34:02

Any instances where it hasn't worked out?

Rob Boyer:00:34:05

I have, had a, a couple of of churches that, it just didn't work for them. I had one church that moved into a space that just was not consistent with who they wanted to be. It, it just was the wrong space. It was too much space for them, and they really were not a group that wanted to grow and expand their ministry, and it just didn't work out. And, and they left. And, and another group came in there. Had, that happen a couple of different times. So, you know, churches do have evolution of their own and some of them flourish and some of them, it just doesn't work out. And we treat them with a great deal of love. We've never been sued. We've never sued a tenant. You know, these things end on friendly terms because running a church is hard. Being a pastor is a hard job. There's a lot of demands in being a pastor and we try to take the, the real estate part out of it and, and being a good landlord and be easy to work with, that's important for us.

Mark King:00:35:02

Using Our Lady of Lords as an example, what sort of ongoing property management role do you feel? Do you hand that off entirely to the tenants or if at a multi-tenant situation, how do you handle ongoing property management?

Rob Boyer:00:35:15

do our own property management. We go out to every one of our buildings every week. We spend an hour, we walk through checklists. We make sure filters are getting changed out. We. We're meticulous. And the, and the tenants are great as well because they're very good about finding things that need to be fixed and letting us jump on it before it becomes a problem. So I would say the property management part is a partnership between us and the tenant. But we try to be very forward thinking and very, you know, we're not ever trying to avoid fixing problems. We wanna make sure the building is functional and safe and that the air conditioning is working and the heating is working. And a and a lot of our tenants, they do volunteer work on the buildings, which is great. I mean, you'll, you'll have a church that maybe has somebody that mows the grass that we don't have to pay for or does snow removal or, you know, just fixes some things on their own because maybe they've got a skilled craftsman in their congregation that does some things. So, a lot of it is, is done in partnership. And, and that's, kind of a heartwarming part of the story, I think is how we lovingly maintain these beautiful old buildings.

Mark King:00:36:18

What would you say the biggest things you've learned about the process or this particular asset class in the last four and a half years?

Rob Boyer:00:36:25

I love, I love the buildings. I love them. I love to. I love to walk into a church. You know, there's a smell associated with that, all church buildings have. And I, I love to feel the history of it and the, I feel, I feel God at work in those spaces and just sit quietly in the sanctuary and just feel the history of it in the, the baptisms and the weddings and the funerals and the, the story of that community. That's what I love is the, I love the preservation of these buildings in these sacred spaces and, yeah, we've learned a lot over the years about, you know, what really works and what doesn't work. what comes back to me is a, a goddess, been very faithful. He always shows up, when I feel moments of despair, like, God, I don't see how this is possibly gonna play out. And, you know, just like this, this church bellaco that, was a tentative of ours for a long time. I mean, I mentioned about this church that decided they were in the wrong space and they literally just sent me an email one day and said, we're, we're leaving on Sunday. We're out. We're just, this not working for us. We're leaving. And I was like, wow, okay. Alright, so here they go. And then like, literally a day later, I get a phone call from a church that says, we just get kicked out of the space we're in. We have 300 members and we have nowhere to worship. And I'm like, well, hey, I got a spot that's open. This weekend and they moved in and they, they were there for four or five years and they, they doubled or tripled in size. And you know, there're just, there's so many stories like that of, God showing up and, and working through the spaces. And that to me is really rewarding.

Mark King:00:38:11

How has your relationship with your own church building changed over that period of time? Has it changed how you walk in on any given Sunday morning?

Rob Boyer:00:38:21

I'm always bouncing around to different churches and I like to worship with our tenants, and I like to, know, if we're thinking of, of, of buying a building, I like to go worship there and feel that. And so I think I've become broader in my own view And, and, my, my relationship with the Lord's never been stronger, but my tie to one specific church is probably less than it's been in my, in my life.

Mark King:00:38:47

That's just great to hear that the breadth of your experience with these different churches has really led to increased depth in your own spiritual life. Speaking of that, that breadth though of your experience with these different churches both growing and declining, what have you learned about church growth and church decline, as you've interacted with all these different congregations?

Rob Boyer:00:39:12

Talk to a lot of churches, mark, I spend, an hour a week doing a consulting for some church somewhere in the country that's in decline. And they're trying to figure out what's the way out for us. I have five things on my declining church list, and I see them over and over and over again. 'cause these churches are going through the same path and they're making the same mistake. And that is when the church begins to struggle. So when things are just beginning, they're not growing, they've lost some of their momentum. They've lost some members, first thing they do is they start to defer maintenance. And so the building starts to get tired and feel old and they start to lose more people because it doesn't feel fresh and new. And then. They cut hours of staff, so full-time become part-time the staff get burned out and start to leave and more people leave with them. And then churches do this thing I call the Hail Mary renovation. They think if we just had fresh looking spaces, maybe, maybe we'll start growing again. And so whatever money they've saved over the years, they throw it at this renovation, but they don't think it through quite right. And they end up spending money where they shouldn't spend money, or they decide, let's build this huge teen ministry deal because we'll start attracting teens. But that may not be in the DNA of the church to be that kind of ministry. Or you, you may have one, member of the congregation that hijacks the renovation there's a church, that I bought in Kansas. They'd spent a million dollars putting in, an elevator, big enough to hold a coffin because, they had a member of the congregation that wanted to make sure that, they could have their funeral there, but it, they spent a million dollars on the oversized elevator and it ate up all their budget. So the Hail Mary renovation gets done, but it, doesn't always align with their needs and they usually spend too much money and when they should just be doing some paint and carpet and make it look fresh, they start building on and, and it gets outta control. And then. As the church continues to decline, you start eliminating positions completely, and staff get terminated they take more people with them. And the church is just, it's just in this spiral. Downward, downward. And then the last thing they do is they go for the, the pastor Hail Mary of let's just find a, a new charismatic pastor. And basically it's a church plant all over again. The ones that are growing, what are they doing? They have great preaching. They have great music. They have a kids program that's based on safety. So the kid, the parents feel safe taking them there and they preach a message of love. It's not guilt or shame. And they work locally. So they're trying to make an impact and, and make a difference locally. And this is the universal way that I see the tenets of mine that are flourishing. is what they do.

Mark King:00:41:57

Rob, you've described the mission of Narthex as being part of a larger redemptive real estate movement. Give us a little background and kind of explain what is redemptive real estate and how does narthex fit into that.

Rob Boyer:00:42:11

Your listeners are probably hearing a lot of discussion about redemptive real estate and, it's basically a nationwide effort. To use Kingdom real estate more efficiently to maximize it for kingdom purpose. I think there's, there's two parts of that. I think one is use the space more efficiently, so use it for more purposes. But I think the other part is the generation of revenue. This is a, a different mindset. know, I think a lot of churches had the mindset forever. Well, it's a community space, so wants to use our space, we shouldn't be charging for that. And I think what the redemptive real estate model interjects into that is this opportunity to generate revenue from other spaces in the building. And this is where we get a lot of phone calls at tx, like, how do we get another tenant in here to worship and pay us some rent? How do we get a daycare, that can come in here and flourish? These are all great partners. And the more people you bring into the church, the more activity. When, when a quiet neighborhood all of a sudden cease cars coming in and out of the church and people in and out of there on Sunday, it has a, an, an effective of bringing vibrancy to the community. It, it restores people's hope and it creates the church as a community center. It's the, and, is what I love,

Mark King:00:43:26

well Rob, thank you so much for taking the time to talk. It sounds like you're up to just some amazing stuff I'm sure some folks might have a property for you, but potentially, may have some folks that are interested in investing or getting involved in some way. What's the best way to get ahold of you and learn more about Narthex?

Rob Boyer:00:43:43

best way is just to go to our website, which is Narthex.com, N-A-R-T-H-E x.com. There's an investor page there. There's a, a reach out page if, if you're a church out there and you just want to talk about your building, what the possibilities are, what you're thinking about. I'm happy to talk to anybody. I want to be a knowledge base, and I want to give away everything I have for free to anybody. Could you use that information? If you have a building you're interested in, in selling, if you have a building you wanna buy, I'm happy to, to talk you through that. Narth.com is the place to go, and I'm so grateful to you, mark. I just, is, to me, it's a new and emerging thing and it's, I think it's so important and I think it's such a, a hopeful ministry that we can bring real estate solutions to local churches and help them thrive and help them flourish. And I just thank you for highlighting that today and for, for taking the time to, let me share what I'm passionate about.

Mark King:00:44:43

Rob, thanks again. It's been great to have you on. If something Rob has talked about is of interest and you would like to reach out to him, his contact information is in the show notes of this episode, which can be found at impact investing road roadshow.com/nar x. And again, NAR XX is N-A-R-T-H-E-X. I do appreciate you taking the time to listen to this episode, and since you've made it all the way to the end, I assume you're somebody that's interested in impact investing. I would love it if you would reach out to me with your suggestions about other funds that would be interesting to profile. I would love your suggestions about impact investment fund managers that are doing interesting, innovative work that would be willing to come on and talk with us. About a specific deal and dig deep into their model. So thanks again. I appreciate it. And until next time, I am your host, Mark King, reminding you that if you want to move the impact needle, you've gotta step on the gas.