Out-of-State Investing Made Easy Through Turnkey Real Estate

Aviva (00:00)
This week's listener of the week is Money Melissa. Melissa, thank you so much for leaving us a five star review. And for those of you listening, if you leave us a five star review below, you might be next week's listener of the week, week, week.

This week on Commercial Real Estate Secrets, we have Zach LeMaster. Zach is the founder and CEO of Rent to Retirement, the nation's leading turnkey investment company. Zach, thank you so much for being on the show today.

Zach Lemaster (00:35)
Aviva, thank you so much for having me. This is pleasure to be on here.

Aviva (00:38)
Zach, you have a pretty impressive bio. Can you introduce yourself, who you are, where you come from, and how we got, what you do today?

Zach Lemaster (00:49)
Yeah, absolutely. So as you mentioned, and thank you for the intro, Zach Lemaster founder, rent retirement. we are the nation's leading turnkey investment company, meaning we scour the market to find the best deals across the country and make those accessible to our investor community where we handle everything for them. So you have the access to, you know, invest in different parts of the country that may offer better returns, meet your goals where you're not having to manage the properties from a distance. But I started my real estate journey. Actually I have a background in healthcare, nothing to do with real estate.

My wife and I are both optometrists by education. I went to school and then was, commissioned as a captain in the air force because I was on scholarship. That's where I started investing. used to be a loan to buy, my first primary residence, which was a duplex. Lived in half and rented out the other half fell in love with real estate. This is probably about 15 years ago at this point. And from that point, just can consistently invested in real estate. There was this pivotal moment though, that really changed the trajectory of our business and our lives. And that's where.

You know, we started to look out of state because our local area was not the most conducive place to invest for our goals. And so we started to be more intentional about, you know, investing in markets that had better returns, more affordability, better upside and growth potential. And so that really allowed us to scale our portfolio quicker to the point where we were able to replace our active income, as professionals, which didn't happen overnight, but happened over period of time. And that was also the birthplace of, of rental retirement, which is.

You know, basically finding, finding markets that meet our goals and offer good returns with all the teams and systems set up and a lot of friends and family and colleagues were like, Hey, we want to invest in real estate. We don't know where to start. We don't have the time. Our local markets are expensive, whatever the case was. And we really just started to serve, you know, the people that were in our networks and then grew the business to what it is today, which, know, we work in about 18 different markets. We'll do probably six to 800 doors annually on average.

help people invest in the best markets and build their, investment portfolio. So that's about as quick of a story as I can give you on my background.

Aviva (02:51)
It's impressive to say the least. You're a captain in the US Air Force. Thank you for your service. Incredible. So can you explain to me what turnkey investing is?

Zach Lemaster (02:57)
That's correct. Thank you.

Certainly. So the first thing to note is it's a buzzword. A lot of people mentioned turnkey and you know, they have different opinions or they may not know exactly what turnkey is. What turnkey means to us is, you know, the first thing we do is identify markets that make sense to invest in. cause there's a lot of markets that do and a lot of markets that probably don't depending on your, on your goals. We want to be in areas that have landlord friendly legislation, low taxes, affordability. try to be below the $400,000 price point, which is a median house price point in the U S or, know, we average average property is two to 300,000.

We mainly focus on new construction houses. So build to rent single family and small multifamily. But the first thing we do is we identify the market. We go into that market and build our teams and systems in place to be able to offer an investment product to our investors where you're the owner of the property. You know, we're not raising capital. We're helping you build your own investment portfolio. that meets, that meets your goals where we handle everything for you from, you know, the lending, the management, the insurance, helping you build out that strategy and plan.

We have real estate specific attorneys and CPAs, if you need to set up an LLC, whatever the case is, our goal is to help you build a strategy and plan to either get started in real estate, get started, you know, out of state and to help you scale your portfolio over time, efficiently investing in the different parts of the country. And we do all sorts. don't know if I'll have time to get into this, but we have all sorts of unique things that we offer to our investors where they can be more strategic and creative on their own. An example of this would be we have lending options where you

put as little as 5 % down on a new investment property. Most people think you need 20, 25 % down. You know, we have local credit unions where we can buy multiple true investment properties with this little as 5 % down. have builder incentives because we, both build properties, but we also have relationships with large national and regional builders where we were able to negotiate wholesale type of pricing because as a community we're buying, you know, a significant amount of homes. And so we can get properties.

A brand new construction property in a class area where you can get a 10 % basically credit on the house where on a, means like on a $300,000 house, you can get an immediate price reduction. So have immediate equity at 30 K. You can also get that back at closing as actual cash, which will cover half of your down payment. Or if you're using a 5 % down loan, actually in theory, you know, cover all of your down payment plus some. So these are just a few examples of some of the unique things we do, but turnkey to us means first investing in a market that makes sense.

Aviva (05:12)
Hmph.

Zach Lemaster (05:26)
with all the teams and systems set up where we help guide you to build an investment strategy.

Aviva (05:31)
top three markets you prefer to invest in.

Zach Lemaster (05:36)
And I'll preface this with saying the right markets that I will mention, because we work all across the country, mainly Midwest and Southeast. That's generally where the numbers make sense from a cashflow and appreciation standpoint. But, you I will say whatever the best market is for one person may not be the best market for the next person because they have different goals, timeline criteria, et cetera. But the markets that I see as having the best opportunity right now, I would say two of those are probably in Alabama. We really like Tuscaloosa. That's where the U of A is at. We like Huntsville, Alabama.

That's a growing market with a lot of diverse industries like NASA government tech is moving in to that area. So explosive growth, but still affordability and can cashflow well. And we really like central and Southwest Florida. areas surrounding Orlando, not directly in Orlando, going down to like Tampa and Fort Myers, this, these areas we see high demand. These are areas that have an undersupply of housing. they're still affordable being below that $400,000 price point.

And so there's high demand for rental and resale properties, which allows rents and home prices to grow consistently year after year. And it's still allow you to cashflow. So those are just a couple of examples, but we work in areas like Texas, Alabama, Georgia, Carolina, Florida, we work in the Midwest, Indiana, Ohio, Missouri. Those are just some of the markets that we're rather active in.

Aviva (06:53)
Let me ask you, you talk about purchasing new builds and I have heard the quality of new builds can be questionable these days. Is that something that you are seeing to be true? And if so, are you able to combat that or because it's a rental property, it's not your biggest concern?

Zach Lemaster (07:15)
Well, I would say that the quality of build always goes back to the builder, right? Regardless of any point in time, there's certainly regard. I mean, there's certainly builders that build to certain standards that, and this would be true at any point in time, but the builders, I mean, we have internal standards that we build to based on code. And I would actually argue the opposite that today's code standards are immensely greater than they were 10, 20 years ago to be specific.

Aviva (07:37)
Hmph.

Zach Lemaster (07:44)
And this is the problem we hear about insurance being increased, you know, lot across the country and certain issues. Usually it's older homes that see those dramatic increases. We have not seen more than a 10 % increase over the past five years on any of our homes, especially in the Southeast. That's the first thing that people go to when they talk about Florida is like, about insurance costs? These houses are concrete block homes built to withstand 150 mile per hour winds. had 800 projects in Southwest Florida where there was two hurricanes that just came through.

Aviva (07:51)
Hmph.

Zach Lemaster (08:12)
We didn't have a single insurance claim on any one of those. don't build in flood zones. You know, so really comes down to the builder, of course, but I would argue that building standards today are much greater than they were previously. And some of the builders that we work with their wholesale divisions, which allows for these steep discounts that investors can't access on their own. Because again, we're, you know, as a community buying hundreds of houses and able to negotiate those types of deals. These are from national builders, DR Horton, Toll Brothers.

LGI, Lenore, are award winning builders that have, know, 10 year warranties on the homes as well. So, you know, those are important things to point out.

Aviva (08:47)
Sure. Well, that's good. So how did you get to being a doctor to buying homes literally in wholesale? It's zero to how many doors do you set a year up to 800?

Zach Lemaster (09:05)
Yeah, with our community, of course, yeah.

Aviva (09:08)
Can you talk to me about how that all works, how it started, what that looks like?

Zach Lemaster (09:13)
Yeah. So, I mean, I, I got into real estate investing, not having the vision or anticipation of building this, business that we have today. We've been very fortunate, but it really, the impetus came from us just wanting to invest ourselves. My wife and I in real estate, we liked real estate. We know real estate made sense to us. We like the tax advantages. know, our goal is to buy enough real estate to offset all of our taxes from all sources every single year and do that consistently. We own a lot of commercial as well, which we've traded up over time.

through 1031 exchanges, you know, cutting our teeth in single family residential, which I think is a great place to start. But, I mean, we just started investing in real estate and enjoyed investing in real estate and continued to invest in real estate. And I still worked as an optometrist. mean, I was, I think close to seven years active duty air force. moved out to Colorado after that. you know, just, and I worked in private practice here for, for multiple years. And then I slowly just cut down my hours. Now, I mean, we work in, we're still licensed. We work in a volunteer basis.

but we're able to have a more global impact internationally. set up cataract clinics in underserved countries and able to do that and have a passion for that because of what real estate has allowed. And so just, I mean, the simple fact of just learning about real estate and how you can compound things using the leverage and the tax benefits and reinvesting your equity and doing some of these creative things to scale over time allowed us to create a lifestyle that we wouldn't have otherwise been able to just working in.

the healthcare setting and we never were people that disliked our jobs. I never was something like, want to replace my income. just, that happened over time, multiple years of consistently investing in the, in the most, or the most strategic markets where we saw the best returns and in doing that again over time. Right. And then reinvesting in real estate. But I would just say it's, it's kind of interesting to look back. mean, my first goal investing in real estate was just buy one house, right. And then the next year is buy two houses and, know, eventually like cover our expenses and.

We just, we just kept going. I, know, we just never stopped. So it's been a journey.

Aviva (11:10)
So who is the turnkey investor? Are they accredited? Are they full-time, part-time? Who is your turnkey investor profile?

Zach Lemaster (11:22)
I think turnkey can make sense for a lot of different people in different settings who we generally see as our typical demographic. Well, first you do not need to be an accredited investor because you're buying a house. you know, you're the owner of the house. We're not syndicating deals. We're not raising capital. We're helping you build like your portfolio, which you have a hundred percent ownership and control over strategically diversified across these different areas where they offer the best returns and make sense for you. But generally we see.

Investors that are either new investors and they need a little bit of handholding to get started. They want to avoid those common pitfalls. investors that live in expensive markets where maybe the local real estate doesn't make sense for them. I mean, we live close to Denver, right? But we, really don't invest here, for, residential because it's hard to make the cashflow numbers make sense. So we, our money can go further in different areas. So newer investors, people that live in expensive areas, people that are first time investors out of state.

We have a lot of investors that are just busy professionals. mean, we started with healthcare professionals that, you know, love what they do. They earn good money. They want to maximize tax benefits. They want to own real estate. They don't want to manage them. and this is an easy way for them, but, you know, to acquire, to get started and to acquire and grow their portfolio strategically while not having to buy themselves another job. Right. We also have investors that are full-time real estate investors, and they just want an easy way to diversify across different markets.

Because again, their time is involved in their active deal. So it really just depends on the investor and what makes sense for them. But this is an easy way to operate more on. I always say not completely passively, but more on the passive end of the spectrum to still diversify and scale quickly using the tax advantages, the unique lending options I talked about and just accessing, you know, some of the best deals across the country, regardless of your experience level or, or where you live.

Aviva (13:06)
I want to talk about investing outside of your city state because obviously, like you said, for context, for the listeners, Zach and I are both in the Denver Metro, which is a really difficult market to pencil.

I'll be transparent. I only transact in the Denver Metro. I go up north. You know, I'll go as far as Greeley down south, as far as the Springs, but I have always stayed when it comes to investing, brokering, managing within the confines of somewhere where I could get in the car and drive there within an hour without traffic.

Zach Lemaster (13:52)
That's the caveat, yeah.

Aviva (13:54)
Talk to me about investing out of state and how you do your due diligence to ensure it's the right deal and that it pencils correctly.

Zach Lemaster (14:04)
Yeah. And I think I'll say that while we don't do a lot of residential in Colorado, we do own, we have 11 commercial retail centers here, also going down to the Springs up north as well. But you know, those have done okay. and we have some high-end short-term rentals in Summit County and the mountains here as well. but residential, yeah, it's just hard to pencil out. And so what we've, this is really, I mean, again, going back to the beginning of our investing, I was stationed in North Dakota at the time with the air force.

Okay. Cashflow market, not a real growth market and not, not an area that we're like, Hey, we want to build a robust portfolio here. so we started looking out of state very early on. And what we found is that, and I think this would be true for a lot of people. And let me say too, that there's no problem with investing locally. If you can find a good niche, right. That works for you. and most people do start locally just, just as we did, but what we've found over time is that when you open up.

like your mindset to investing in different parts of the country. There's a lot of opportunity, that you probably, or may not have access to in your local area. Right. And a lot of people, think that live in different parts of the country, like it may be inaccessible for them to get started investing in real estate, or it may just not make the most sense. Right. We want to be strategic about where can we get the best return on investment. And so when you start to look at some of these areas where you pay attention to supply and demand and growth areas, like there's a lot more upside potential, maybe better landlord.

Aviva (15:14)
Mm-hmm.

Zach Lemaster (15:27)
legislation, better tax structures. So when you combine all those things and different loan options, when you combine all those things, it can really help you to build, more strategically a, a bigger portfolio quicker. and also just diversify. do believe that everyone at some point in time, it probably is prudent to diversify across different States just for simple diversification standpoint, as well as,

Aviva (15:32)
Hmph.

Zach Lemaster (15:50)
Different asset classes is as well, but how we actually identify markets. talked a little bit earlier about from a macro scale, right? We want to be in areas that have all the check marks, right? We have our fundamental criteria. We obviously want to have positive cashflow. we really boil it a lot down to like supply and demand because we know if there's another supply of housing in an area and you know, we're building houses in that area, then they're probably going to have large tenant demographic pool, large buyer pool, and have strong growth. But we do, I mean, we

We attend city planning meetings. we take it really down to the ground floor level where jobs being created, where's transportation and looking at areas. One thing we've really done well Aviva that is focusing on secondary markets and tertiary markets. These are areas like outside of a 20, 30 minute commute outside of a large Metro area. Orlando is a perfect example where Orlando it's highly regulated. It's highly taxed.

Aviva (16:30)
Thank

Zach Lemaster (16:42)
it's very hard to cashflow in Orlando. However, you can be just 20 minutes outside of Orlando where the rents are still extremely high. Home prices are a fraction of the cost and there's an under supply of housing because a lot of people are moving to these areas where they can still commute to the metro area if they need to for your work or whatever. But the home prices are just more attainable and there's more upside. so that kind of makes sense. So like Polk County or an area called points the on outside of Orlando would be an area where, know, we can buy a.

Aviva (16:42)
Hm.

Zach Lemaster (17:11)
$250, $300,000 house is going to rent out close to the 1 % rule to really maximize cashflow. And this is on an A-class new construction home. Like that's unheard of in a lot of the markets that we may be familiar with, which is more of the Metro areas, but we really want it. have boots, boots on the ground teams and each one of these areas to handle management and construction maintenance to do market analysis. So, I mean, there's, could talk all day about how we strategically go through and evaluate these markets, but at the end of the day, I also want to say.

It's not overly complicated, like have fundamental criteria. Like we do below the $400,000 price point, you know, legislation taxes, these things grow. These things are all important diversity of industries, not just an area that's relying on say oil or gas or something like this. But at the end of the day, a lot of it is driven by supply and demand. Right? So if you can be in an area that has an under supply of housing, this just happens to be a lot in the Southeast where populations growing and construction cannot keep up. you have a pretty good chance of having good upside meeting your cashflow numbers, having.

rents increase year after year, our average rent increases 6 % per year, which is double the national average. We're still seeing double digit appreciation in some of these areas, even over the past two years. So that's, mean, just being conscious, I think of the different markets can really help you be a more strategic investor.

Aviva (18:17)
Wow.

Cool, I'm impressed, I love it. How are you finding your local property managers and just your local help?

Zach Lemaster (18:34)
Yeah, a lot of it will early on, it was a lot of trial and error, which, you know, school of hard knocks. but we have a systematic approach now, which really helps us to ensure that best practices that we've seen across, across the country are implemented and utilized by everyone. I mean, not just management management is a huge piece, right? Because you can be in the best market in the country, but if you don't have good property management, that property is not going to perform optimally. but as far as finding property management, you know, at this point we do.

Aviva (18:47)
Hmph.

Zach Lemaster (19:03)
just because of the relationships we've built, we have relationships with both national and local property management teams that we've helped them refine their, their managerial, procedures as far as tenant screening, rent collection, just all the things that we've been able to really increase the overall performance of management. Sometimes they are hyper local. Like when we first set up a market, that's where the most time intensive part is where if we don't have a national team that we can bring in and build actually a team there.

that's much quicker standup process and we'll have to partner with a local team. A lot of that is just, running, you know, analysis on them. want them to be, managing at least 250 doors, be in business for 10 years. look at their eviction rates, their average occupancy times, average vacancy periods. So like we've just run checks and balances, but at the end of the day, it's trial and error, right? So we, we invest with them and we actually use them as our own property management team to ensure that they're going to be.

Aviva (19:46)
Well.

Zach Lemaster (19:57)
doing the job that they need to do.

Aviva (20:00)
Yeah, it's a good property manager, is hard to find, and pays dividends in the long run. So, Zach, what makes you happy with what you do every day in real estate?

Zach Lemaster (20:07)
Certainly.

I just love real estate. I, let me preface this with saying, I don't do any investing outside of real estate. think it's Warren Buffett who said invest in what you know and nothing more. And I mean, we just held true to that, you know, so I don't do any stock commodity investing, anything else. I just, I, I know real estate. love it. We're hyper focused with real estate, but we're very diversified within real estate. you know, we're diversified in different geographic locations, different asset classes. And I think that really is, is allowed us to scale our portfolio, but

Aviva (20:24)
Hmm.

Zach Lemaster (20:38)
I love real estate. I'm passionate about helping people understand real estate and use it strategically to improve, improve their, their lifestyle. Because I truly believe that real estate is the most predictable way to wealth for the average American. And it doesn't happen overnight, right? Regardless of what online gurus may say, but, it also doesn't take a lifetime, right? Within a few short years of dedicated, intentional investing in the right markets.

You can become financially independent and you can create generational wealth, but you just have to stay committed and you have to be strategic about investing in the, you know, the good markets with the good teams. That's really what it boils down to, but I love, I love real estate. love the tax benefits, real estate provides. love the strategy with using lending creatively to help you scale and stretch your dollar further. And I love teaching people about that and seeing their success. Real estate is not all sunshine and rainbows like this takes work.

And you'll have tenant issues, but if you can stay consistent to this, think you can really accomplish. Huge, huge strides in a relatively short period of time. You do not have to work your whole life to hopefully be healthy enough to retire at 65, but into 401k. Right? So that's just, that's my passion.

Aviva (21:49)
I think that's why you, me and all the listeners are here right now. So Zach, where can the listeners find you, follow you, contact you, et cetera?

Zach Lemaster (22:00)
Yeah, we always want to drive people to our website. That's rent to retirement.com rent to retirement.com. have a robust podcast, YouTube channel. put out a lot of information about just market analysis. So if you're curious just to learn about different markets or some of these creative loan options, I mentioned where you can put 5 % down on multiple investment properties. That's all information publicly available. We just want to give out to educate you. you know, if you're interested to learn about these markets, possibly invest in turnkey, we'd be happy to set up a consultation with you. If you're listening to this.

audio, can also text REI to 33777 and set up a time with our team. And we'd be happy to help you however we can.

Aviva (22:40)
Zach, thank you so much. This is fascinating. We really appreciate your time today and for everybody listening, we'll see you next week.