$150k Free Equity and Cash Flow from New Construction with Zach Lemaster of Rent To Retirement

Zach Lemaster: [0:00] We are building both duplexes and single family houses right around that $300,000 price point. Those houses today are, if they were completed today, have a market valuation between 400 and 430,000, and they rent out at $2,500 a month. And so those that's positive cash flow on a brand new build house in a good area that has immediate equity.

Dan Austin: [0:21] Like, can't build a house in our home market for that, that rents for that. I mean, that is that's those are great numbers, to be honest.

Mike DeHaan: [0:29] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business. On this guest episode of the collecting keys podcast, we have Zach Lemaster, who's the founder of Rent Retirement. Zach is an absolutely savage investor who was house hacking and wholesaling kinda like way before it was cool, back like 2008, 2009 before, you know, BiggerPockets was even really around and, you know, all those guys were talking about it. And he took his success from that and went and started a business called Rent to Retirement, which is a nationwide turnkey provider. Zach has a wealth of knowledge, and we had a really great time having him on the show. Make sure you listen to the end where he talks about his build to rent program, where he's helping investors get into properties that are not only cash flowing and brand new, but they also have over a 100,000 in equity from the moment it's built. Typically, you do any new build stuff, you don't really have any upside on the equity, but he's figured out a way that every investor can go in and have all the benefits of real estate right from the get go. So definitely make sure you listen for that. And then please give us a five star review and share this episode with anyone who might find it interesting, especially if you or anyone you know is interested in becoming a real estate investor but not wanting to do any of, like, the dirty work, like buying fixed ruffers or marketing, doing any of that sort of stuff.

Mike DeHaan: [1:58] What Zach's in Rent Retirement offer is awesome. I actually purchased some properties with Rent to Retirement as part of a ten thirty one exchange a couple years ago. The process was super simple, and I highly recommend it to anyone, especially if you're looking for, you know, cash flow properties or you live in a market where it's kinda hard to find opportunities. He really has a lot he can offer you. So anyway, guys, I hope you enjoy this chat with Zach Lemaster, and enjoy the show. What's going on, everybody? On this episode of the collecting keys podcast, we have Zach Lemaster. I said that right. Correct?

Zach Lemaster: [2:29] You're right. Right, Lemaster.

Dan Austin: [2:31] Yep. Yes. Lemaster. Lemaster. Lemaster with

Mike DeHaan: [2:34] rent to retirement. If you've listened to BiggerPockets, you've probably heard his ads. Probably seen him on the BiggerPockets forums. You've been around for quite a while. And and fun fact, I've actually one of your customers buying one of your turnkey properties number years ago now, I guess, two and a half years ago out in Minnesota during a 10/31 exchange. But you turnkey properties, you've wholesaled, you're doing these build to rents now, you're a broker, you just said. You're kinda just all over the place. You're like a true real estate entrepreneur, which is exactly what what we like to hear. So maybe just give us a little bit of your background, you know, kind of where you started, what you've done, where you're going now. Give us all the good stuff.

Zach Lemaster: [3:14] Dan, Mike, appreciate you having me on here. This real estate, I mean, we we love real estate. Right? And we're super passionate about real estate. That's why we're all here. And I think similar to you, left a former profession to invest in real estate full time because we believed in it. This is what we were passionate about, and this is what we were ultimately successful with. But just a little bit of cliff notes, I guess, about my story, Mike and Dan. I mean, I started in the healthcare profession. So I'm an optometrist by education, so is my wife. That's where I met her. We, you know, went down that path. I was on air force scholarship, was in the air force for, well, close to seven years if you count the scholarship time. And, basically, that's where I started investing in real estate. First house I bought was a duplex, house hacked it, rented out half, lived in the other half, and then moved out of that one and did the same thing again, and then continually bought more and more real estate. One thing I tell people is, and this was probably about fifteen years ago at this point, but ever since that first duplex, which was our first investment property, we've bought more and more real estate year after year, and that's just really allowed us to scale our portfolio. We really enjoyed real estate from the simple fact of we could basically replace our income. And that's the point that we got to at some point many years later is basically being able to replace our optometry profession through real estate. We retired from that. We still practice, I mean, on a volunteer basis now, but we're pretty much full time into real estate.

Zach Lemaster: [4:32] We took the leap similar to you, this learning how to invest out of state, and for us that was very much of finding the best opportunity locally, and we live in Colorado now close to Denver, so I mean, it's actually a very challenging market to find cash flowing properties in residential space. We don't buy here for residential, we invest in multiple different areas where we can achieve better returns. And that's what allowed us to catapult our investing career to really invest in these different areas, diversify, scale quicker, obtain better returns, and just really be more successful. And that was the foundation of of our business, rent to retirement. We're a turnkey provider. And so we offer investment opportunities that are either newly built, renovated, leased, and managed for our investors in multiple different states that we've identified as having, you know, meeting our investor metrics. And that was very much just the foundation of us being successful investors in these different areas, and our friends and family and colleagues saying, hey, we wanna do the same thing you're doing, but we don't have the time, we don't have the knowledge, you know, we need some assistance with that. And so that's really where we built our business. And so fast forward where we're at today, you know, we have a team of close to 20 people that work with us, and we have, you know, we're probably doing between 50 to 60 houses a month on the turnkey side, a lot of those are on the marketing side for those, but they meet our our investment standards. And we take a lot of that money and put it into our own investment properties.

Zach Lemaster: [5:50] We buy a lot of commercial assets and run cost segregations on those. So that's kind of a fast forward where we're at.

Mike DeHaan: [5:56] Nice. I just wanna point out how gangster it is that you, like, were able to replace two optometry salaries with your investment portfolio. Yeah. I feel like most people, like, their goal is, you know, I wanna, like, $5,000 a month, and that's how I started. But you're replacing, like, big money with your rentals. Like, that's awesome. Yeah.

Zach Lemaster: [6:14] Well, optometry gets we know we're not we're, like, lower tier of the health care professionals. You know? There wasn't much.

Mike DeHaan: [6:20] But It's still That's good. That's good. It's a really good career. Right? So good for you. That's that's awesome. And then, I mean, kinda like you said, set the foundation as well for, I guess, getting into those turnkeys. Like you said, your colleagues and things like that are are looking for those different investment opportunities without having to put in all the dirty work of people that wanna be buying fixer uppers and that sort of stuff, which Right. In my mind, you know, correct me if I'm wrong, that's kinda like the target demographic. Most people that you work with is probably a lot of people that are looking to get started and aren't quite ready to get their hands dirty, or there's somebody who has surplus cash, they have a high paying job, and their time is probably better spent buying, you know, these turnkey properties, something that requires less work, but they're still able to get a good return because you're basically doing a lot of that upfront for them.

Dan Austin: [7:05] Mhmm. Is that correct?

Zach Lemaster: [7:06] 100%. That's our typical demographic is the people, yeah, busy professionals, they wanna own real estate, they don't wanna be active investors. People that live in expensive markets where they they can't really invest low, there's a high barrier to entry, people that wanna diversify and scale. And we also have people that are really active investors too, that that also just want to tap into a new market. Yeah. Or do you know, add that alongside what else they're currently doing.

Mike DeHaan: [7:29] So yeah, for sure. And I mean, in in working with someone like you that sort of overcome that fear of getting out of your home market, I think, is so valuable. And that was the big thing for me back when I bought properties with you was, you know, I was trying to find opportunities locally. At that point, I was doing 10:31 exchange, and I couldn't find anything local that really made sense for the cash flow that I needed. So working with you to be able to find these properties, you know, I live in Washington State, being able to find it in Minnesota, it was sort of got me over that hump of, like, having to learn to delegate. And, like, I really don't have to walk through the kitchen of every property that I look at. You know? And as we've grown our business, been very easy to carry those same principles even in properties that we do here locally in in the Spokane market is we don't need to go and walk through all of them. We're happy to buy and do our due diligence off of photos or trusting other people just like we do in all of our virtual markets now as well.

Zach Lemaster: [8:21] Yeah. 100.

Mike DeHaan: [8:22] That's great, though. So I guess, how did you initially get started with that? Because that's a very different model providing turnkey properties than a lot of people who are, you know, wholesaling like we are, know, or they're working with realtors in these different markets. Guess, how did you go from I'm trying to buy properties to now I'm gonna be like a turnkey provider?

Zach Lemaster: [8:42] We bought turnkey. The first two properties that we bought were Southside Chicago. I think you guys are active in Chicago, so you know that market. If I remember, like, 4th Avenue, then I don't know how to say what that deep south. K? They were, like, deep class assets, high end renovation, you know, not very good property management. Actually, the the guy we bought him from who, like, managed properties, he he died Mhmm. A year after we bought him. It that was unfortunate. And he was a young guy with kids really sad. But Oh, jeez. We were in a a position where just like, man, we just got dumped on these things, and we gotta figure it out. And through that process, we figured out how to build our team. We have built our team on the management. We had to find contractors. I mean, that's really what what this is all about at the end of the day is building the right team no matter what location you're in. And so we we built our team and and, you know, turn those properties around. And to be successful, Had to figure out the, you know, CHA, the section eight.

Mike DeHaan: [9:32] Mhmm.

Zach Lemaster: [9:33] And that that wasn't a fun thing to do. And basically, that was that was a baseline that we built that same model in different locations. We had standards we wanted property management to adhere to. We had standards for on the rehab on the properties that we wanted done appropriately, and we just replicated that based on a market that we identified that we wanted to invest in. And that was very small scale. I mean, we'd be doing a few properties a year in maybe one or two locations. But as as people as we joined these networks and we started to see some success, people just naturally migrated to us and said, hey, we wanna do the same thing with you. All we have to do at that point in time is partner with the right people and then scale up what we were already doing because the foundation was was laid. And so I think that's that was really just a natural progression of what we were already doing, Mike.

Dan Austin: [10:16] Yeah. Was there anything when you first started out, like, and that you do now when you're looking at a remote market, like a virtual market that how do you pick that?

Zach Lemaster: [10:25] There's a lot of criteria. We have fundamental criteria that we look at. You know, we wanna be in areas that are really in the path of progress. I think at the end of the day, that's that's really what it's about. But there's different things. I mean, you know, a lot of the builder rent stuff we do in Southwest Florida is specifically because that market is exploding.

Mike DeHaan: [10:39] Mhmm.

Zach Lemaster: [10:39] And we've never seen this type of discrepancy between supply and demand that we have in have in this area. So, I mean, those are areas where you likely will have strong rental demand. We try to build below the median house price point so you don't have as much potential market fluctuation. But generally, Dan, we wanna be an area that you have large rental demand, you have relatively affordable house prices so you can still cash flow where you can obtain, some cases, landlord friendly legislation, you know, sometimes it'll vary from that a little bit, Minnesota Mike, but it's all about it really comes down to the team, having the right team. So there's a market as a whole, but then on a microeconomic scale, what areas within that location do we wanna focus on, areas where there's you're in the path of progress. We have people that attend city planning meetings and so look, okay, where where is transportation and jobs being created over the next ten years? We wanna be in areas that have a diversity of of industries. And often what we found is if we really like an area that is it's too expensive to really cash flow in, we look at secondary and tertiary markets adjacent to there, and those would have more affordable price points, but you kinda have that bleed off effect where you can still have, you know, viable rentals. So there's a lot that goes into that. But at at the end of the day is, you know, choosing location and building the actual team there.

Zach Lemaster: [11:51] There's there's some areas that we wanna tap into. We just haven't also found the right people there. So

Mike DeHaan: [11:55] Yeah. I think that tertiary market comment's huge. That's been a lot of places that we've gone as well is, you know, basically find out, you know, where is everyone in bigger pockets talking about and find, like, the nearest city that's the closest one to that. Yeah. That's also, like, a good size and having growth. You know?

Zach Lemaster: [12:11] A 100%. And even, like well, so I was stationed in North Dakota out of the gates, and I remember I some of our yeah. So I I should say deployed. I typically say deployed to North Dakota. But some of the first wholesales and, you know, rental properties we did, they're I mean, they were farms, legit farm. We wholesaled some farms. It's just like nowhere. But, know, there's still demand, and no one else was in there doing it. So Wow. But there's opportunity if, you know, in in a lot of locations if you look.

Mike DeHaan: [12:36] Yeah. That's interesting. So you said you find, like, partners in all these different markets for, you know, your your turnkey provider, you're helping fix them up. You're not taking title all these places. Right? Like, you're not actually buying them and fixing them up yourself and then selling them. Like, I don't assume so. Like, what does that look like?

Zach Lemaster: [12:53] Probably about 5%, you know, the vast majority. And when we first started out, yeah, we were the ones in there, you know, taking the financing out, doing the crews, and at one point, even property management as well, which I realized very quickly that I was not meant to be in the property management business. But really it was it was having standards and a system that we then implement in these different locations with the right people that we're practicing with. So yes, at this point in time, vast majority of stuff that we have, it's it's a marketplace rent to retirement has turnkey properties that is being sold for our partners in these locations that meet our standards for building, for rehab, as well as management. And we have a very strict vetting process that they have to go through, and often these are people that we've actually personally worked with to a degree as well. And so that's kind of the the model now.

Mike DeHaan: [13:40] Gotcha. Yeah. That you you already touched my question. I was gonna ask how do you, like, vet these people and ensure quality? Because, you know, turnkey providers get a bad rap. I mean, just just like wholesalers do. Right? Like, you can sell whatever people wanna hear because you kind of have all the knowledge. You know, like, people will say wholesalers will conceal information from people, which I mean, some of them will. And then, you know, same with, a turnkey provider. It would be very easy for someone to go and just, like, put lipstick on a pig and, like, sell it as a, oh, yeah. It's a fully renovated property when they know fully well that behind the walls is just a disaster. So you know? And that's made even more complex by the fact that you're having partners that are doing all those renovations. So I guess how do you, like, more specifically maintain that quality? I'm just curious, because I'm sure a lot of people that would be interested in, you know, buying turnkey property, that's one of the first things they would ask.

Zach Lemaster: [14:26] That's a tough thing. That's, you know, that's a really good point, Mike, because and we could probably talk an hour just just on this aspect. But there's been a lot of our our partners that we've fired. Okay. You know, on the management side, fired on on the rehab side. Mhmm. And sometimes they do a good job, and then they, you know, you lose a few good people and and don't do a good job. But I mean, it's we we have a clear process and line item by line item and expectations and large things like your mechanicals and HVAC and roof. And not everyone's perfect. I mean, especially on the management side, like, management is a hard business because you, I mean, you're constantly going through people, you got mad owners, you got mad tenants, you know. I mean, communication and accounting is the biggest on the management side, I think is where 95% of the problems occur. But really, when you have a dialed in partnership with someone, and we got some people right now that's just like, is full trust and full accountability, because we've been through that process with them so much and we just know that they produce. Maybe we had to go through in the first few properties, we like maybe personally bought with them or rehabbed, because we actually fund a lot of them too, And so we're actually tied to the private lending side, and so we have a financial interest to ensure that the house is doing well. But we have standards that they need to meet on the front end, and then we hold them to that. And if they fall short on something, we also hold them accountable, right?

Zach Lemaster: [15:44] It's a post closing issue like, hey, if this is something that you truly missed, you need to go back in and fix it and make it right for the client, because really that's how we create. And we have a very good reputation in the turnkey space, which is hard to do. You mentioned that earlier because there are so many bad operators in the turnkey space. But reputation is everything for me. And if we gotta bite the bullet and pay for stuff post closing, we will do that. But the providers, mainly, they know that if they wanna continue to maintain business with us, they also have to do right by the client. But then there's also things that are outside of that, too. You have some crazy, crazy people that are on the buyer side that have unrealistic expectations, you know, they own a property for three years and, you know, they gotta replace HVAC. It's like that stuff happens, you know? So it's setting clear expectations. And also on the front end, from the buyer perspective, you need to take responsibility whether you're buying from turnkey or otherwise, you gotta go through the same due diligence, have your inspections and you know, meticulously go through that. You cannot ever think in real estate that you're just buying a property and everything's just gonna be okay. You gotta go into it having reserves, go through the same due diligence, and sometimes that's a learning process. Mhmm. But you get the same same steps.

Mike DeHaan: [16:49] Yeah. And I think that's super valid. And it is funny. I think that people that aren't initiated in real estate, they tend to forget that, like I said, things happen, like, regardless of how new a property is. You know? Like, I I live in a new build house, and we had water leak that, like, flooded our our master closet. Right? I've this house was built less than a year ago. But that just happens. Right? Like, there's nothing you can do about it. It's just, you know, there was a faulty part, something ruptured, and we had to have a plumber come in and

Zach Lemaster: [17:15] fix it. That's part of the game. Exactly. 100%.

Mike DeHaan: [17:17] Yeah. So cool. So I guess was with your business, with how it's sort of structured, I'm curious, like, do you have a lot of, like, repeat clients? Like, what is your typical your business look like in terms of, like, your customers? Is it, like, like, what what is the main person that's that's looking from, a The the avatar. Yeah, what is your ideal avatar for your business?

Zach Lemaster: [17:42] I guess general client that we we see the most, and we have quite a variety. Actually, it's interesting to see some people come through that are, you know, really successful investors in real estate, and they just want to diversify or they have this, you know, multimillion dollar portfolio they wanna, you know, maybe transition into different locations in 10/31. But I would say the vast majority are people that are, like we talked about earlier, wanting to get started, or high paid professionals that wanna own real estate, but be more of a passive investor than really like having to go out and find and analyze and acquire and manage the property itself. That would be the typical person, and most people are repeat clients. Think in this business, I mean, we have over a 70% recurrence rate with investors. Sometimes that means they're coming back three to four, six months and buying another property or a few properties. Sometimes that takes one to two years. That really just depends on the individual, and where they're at at that point in time with their financial and investing goals. But I think the big picture is that most people are trying to, when you're thinking about financial independence in real estate, you're, you know, this is a long game, and it takes building a portfolio. No one is in this game, or least they shouldn't be, to buy one or two rentals and call it good.

Zach Lemaster: [18:51] You know, you gotta stay the course of consistently building your portfolio. We have some people that, know, bought some turnkey properties with us and then went out and built an exceptional business, you know? And so that's super cool to see. And I love that aspect because I think sometimes turnkey, you look at it as, I mean and some people try to classify it as like, oh, if you're doing turnkey, it's, you know, it's this or this, like syndication or turnkey. Right? And it's like you gotta choose and choose sides. Well, real estate doesn't work like that. I mean, real estate is really, my opinion, in our experience, there's multiple different strategies that you can be successful in at once. And and typically, the successful people are doing multiple things. We do have some people that are investing in in turnkey just because they, you they're at capacity with their time, with their active projects. I mean, a lot the stuff that we buy right now, I would consider like high level turnkey stuff, and this is a lot of commercial triple net leases. These are the things that, I mean, we don't really acquire too many value adds anymore at this point just because I don't have the time and capacity, and we're looking to just make it simple, put a lot of money in one place at one time, get some tax benefits, and leave it at that. But hopefully I answered your question about the typical investor.

Dan Austin: [19:59] No. Yeah. Yeah. That's good.

Mike DeHaan: [20:00] Yeah. That's that's super good. One of

Dan Austin: [20:02] the things that I'm I'm thinking about, when you talk about the typical avatar and people buying, like, you know, Mike, in your situation, you already owned your own rental properties and were managing them, and you still went turnkey. You know, it's like this diversification thing, and there's different I I think there's different seasons in your investing life too when, like you said, Zach, when you might not have time. Right? But then you're Mike and you buy those and then you go on and build this giant, you know, real estate business that him and I are running. But what I was gonna say is, for a lot of your clients, you mentioned earlier too, on the commercial side of things with cost seg, if somebody like myself or Mike come in and we're going to buy, say 10 turnkey properties, we got a $10.31 some money, or we got to do something, park some money. Do you have the ability to help walk a client through cost seg on the single family portfolio? Or is that not worth it? And you got, you're just focused more on the commercial side of things when it comes to that because taxes are obviously a huge part of real estate as a benefit.

Zach Lemaster: [20:57] Yeah, good question, Dan. I want to hit on a few different points that I think you just brought up is that the short answer is yes, we're going to walk them through it. But we're also going to incorporate the right professionals to do that. We have relationships with guys that will do cost seg studies and a lot of them on single family. Typically on single family with a cost seg, you're not you're not gonna go out and have a full engineered report. Right. They'll generally look at the, you know, they'll be able to give you a re an estimation on that you'll be able to use for taxes just based on like some data about the house. Right. And maybe it's like 7 to $900 per house to to do that. And if you're a real estate professional then and you plan to hold those properties, then all day long, the the numbers make sense to do cost seg. Whereas Mhmm. Like on a commercial property, it could be 10 to $20 for a report where you're getting a legitimate engineer and it's a detailed report. But we try to help people build a comprehensive kind of plan and network with the right people, same thing with real estate specific attorneys and CPAs that we personally work with, and basically we've just added to our network over the years. Same thing on 10/31. Most people don't know, most 1031s actually fail, and people don't complete their ten thirty one successfully simply because they, especially in a scenario where you're selling one property trying to buy multiple, and if you're working with multiple different sellers in multiple different locations, you know, it could take one seller to really screw up your ten thirty one, and there's a lot of working parts with that.

Zach Lemaster: [22:18] So, mean, I yeah, we have ten thirty one qualified intermediaries as well as like, okay, let's let's focus on a business plan to effectively accomplish your your goals with this ten thirty one and walk you through it.

Mike DeHaan: [22:27] Yeah. Wow. Yeah, I like that.

Dan Austin: [22:29] I mean, I just like the idea. And like you're talking about doing some build to rent stuff as just layering that cost seg on top of your already, your, say 15% return or whatever the return is that you're buying on, on like a new build. And then you're just layering that maybe it's a couple, $23,000 for the additional cost seg instead of doing a straight line depreciation, but that's going to help you, you know, reduce your taxes so much more. And then when you're looking at $10.31, I mean, there's just layers and layers that you can do of why you might choose, a turnkey rental provider in this situation where you can just gain access to so many things that would be a pain in the butt to do it yourself. Mike and I own several, several properties in the single family, small multifamily, and we've just never done cost seg on them. We know it's not always worth it, and we've researched a little bit, but you know what, we just do 27.5 straight line depreciation. We're not maximizing it on a portfolio level, but you know, if you had the help and you had the opportunity to do it, seems like it would make sense.

Zach Lemaster: [23:26] Yeah, I think it's just setting people up for success and and at least providing some education. At the end of the day, that's it's really what it's about. I mean, we we have the professionals in place to assist them if they need it, but sometimes you just don't know what you don't know.

Mike DeHaan: [23:37] Right.

Zach Lemaster: [23:37] I mean, when we first learned about cost seg, you know, and and all the other things that the 2017 Tax Act really allowed for us with opportunity zones and some other things, it's like, man, that's just opened the door. Because that's the biggest, I mean, we talked about this a little bit previously, Mike, when we had you on our podcast, but the biggest way to, the easiest way to give yourself a huge raise is just pay less taxes, you know? And real estate is, there's nothing else that comes close to that. So there's so many, even from a passive investor, even without doing accelerated depreciation, I mean, the normal benefits from real estate, well, that's why there's more millionaires made in real estate than any other asset class, and why people build generational wealth. You know? It's just building that, doing the tax advantages of what is available to them, and passing those on for generational wealth.

Mike DeHaan: [24:20] Yeah. I think that's so right too. Just and that is one of the great things about real estate is, you know, it's not necessarily a get rich quick scheme, but it is a get rich guaranteed scheme if you do it over a long period of time.

Dan Austin: [24:31] I love that. Consistency. I do wanna ask, like, maybe go back to the genesis of your business because Mike and I are, you know, we're trying to build our empire and a lot of our listeners are also like starting their own business or like right in that kind of early real estate investor stage, like any. Just like maybe transform back to that time. Cause it hadn't been crazy for you because you were leaving the air force. I'm assuming you were already, into real estate and then you're buying and then eventually become this turnkey provider, you know, this Genesis of this business, any tips or tricks or comments, considerations for people in that early phase when you're just in that grind and it's just you are a solopreneur or your business is so small, you're doing everything and you're just kind of

Mike DeHaan: [25:15] pulling your hair out. And for context, quick too, I'm just curious, when exactly did you start? I feel I failed to ask that before, like, how long ago?

Zach Lemaster: [25:22] Yeah. I think our first so I mean, starting in, like, our first property, starting in the turnkey or

Mike DeHaan: [25:27] Starting like, when did you buy your first property? How long ago was that?

Zach Lemaster: [25:30] Yeah. I think that was around 2009. It was when we bought that that first duplex. Yeah. Close to that. And we we held that one for many years. Sure. You know, and then actually ten thirty one out of that one into into multiple. On the turnkey side, we've probably been in the business for about over ten years at this point. But but in the first few years, I mean, it was very much like we're we're building our own portfolio. Maybe we brought someone, you know, a couple friends and colleagues that we were either lending money or, you know, I I would say, like, core business, you know, multiple different markets, probably six or seven years. But going back to your question, Dan, about, like, first of all, I mean, we're all in this this hustle. If you're if you're an entrepreneur, especially in the real estate game, like, it just takes more work. And it's just it's like sometimes the chaos never goes away, and sometimes you also get to the point, I think you go through these ebbs and flows, and sometimes hopefully, you know, you see some success and some benefit, and you're like, man, this is this is cool, and you can, you live this lifestyle. I mean, my wife and I, we took, after we got married, we took seven months and went to like 30 different countries and you know, did that, and now we have kiddos, so we can't do that anymore.

Zach Lemaster: [26:35] But at least at that point in time, that was fully, and that was right when we left optometry. We were able to do that simply because real estate you can't. I mean, if you build a system, you can go and do that from any location. But yeah, there's some times where it's, you know, it's a 20 fourseven type of scenario. But I think of what a lot of people find themselves, I think there's different points that you get to. The first is the brand new investor that's never bought a house, like how do get over that hump? Well, just buy your first house. I mean that first one in the grand scheme of things, it doesn't matter financially, but it does mentally and emotionally. So that's the first thing is just stop reading books, stop listening to podcasts, just buy your first damn house, and go out and do it. And then from there, buy your next one, right? And just continually buy, and that's really what it boils down to, and then managing those challenges along the way. At some point, as you're making this a legitimate business, you'll get to the point where it's like, you're still wearing multiple hats and doing everything in the business, but you eventually will create systems and then you can replicate that and eventually try to remove yourself. And that's being done, I think, by adding the right people. Sometimes you gotta go through some wrong people to find the right person. But when you find the right people that are really, you know, they understand the business and they're vested, then it allows you to take a step away.

Zach Lemaster: [27:43] So I think it's a constant transition and, you know, you always have a ton of obstacles and issues and we've lost a lot of money with different partnerships and bringing in the bad people, you know, the not the most appropriate people. But I feel like I'm rambling now, so

Dan Austin: [27:57] No, I love love what you say about just buying your first house, it's so true. And then it happens before you know it, you know, just this last weekend, Mike and I were sitting down and we're not looking at our portfolio as a house and oh man, the oven went out or the refrigerator, the furnace. We're looking at a P and L for performance.

Mike DeHaan: [28:15] And

Dan Austin: [28:15] that I think, you know, now you've maybe transitioned from just being an individual investor to maybe an entrepreneur or, you know, owning a portfolio, so to speak, when you start looking at it that way. And it's hard though. And the reason why I asked that question is when you're growing a business and you have shiny object syndrome, there's, you know, Mike and I in our business alone, we have a few different channels in which we gain revenue. It takes a lot of time. And now where we're at is like, do we, how do we escalate into having people do that? Where's our middle management. It's hard to let go of things. And as Mike and I are finding out in our business, it's hard to let go of certain things and delegate it to others because we've been doing it. It's all in our head right here.

Mike DeHaan: [28:54] Yeah. And it's happened so quickly as well. Like, if you if you start to systematize and you start to scale even like, the snowball effect with real estate is so real. So I like Dan over the weekend sent me a photo of a house that we walked that was two years ago from over the weekend. And I wanna say that was probably in the first 10 houses that we ever walked. Yeah.

Dan Austin: [29:14] Right. Right. We didn't get to buy it, though.

Mike DeHaan: [29:16] We didn't buy it. Yeah. We didn't buy it. And that was only two years ago. And now we're, you know, we've we've had months where we've done 15 to 16 transactions on the walk in 10 houses.

Zach Lemaster: [29:26] Well, and that's that's a huge point, Mike. And and yet, at some point, you guys really shouldn't be, like, walking the houses and and really making any of those decisions. Know, there's better utilization of your time. And that's one thing I'm still struggling with and have for many years is like, I'm a perfectionist as many entrepreneurs are, and you want to make sure, especially this is your baby, right? Your business, you want to make sure everything's done appropriately and but nothing will ever be 100%. But you gotta have a little confidence of like, almost like turning it off, I think, and not watching that stuff, understanding that it's not gonna be done perfectly, and that there may be some some challenges with that. But it really frees up your time to focus on the bigger the bigger picture, right, and the bigger things, which ultimately is going to light your business to go to that next level. But it's like this internal battle too. I mean, at least for me.

Mike DeHaan: [30:14] Yeah. I know Dan especially struggles with that. He wants everything done perfect his way. But I I've always been kind of a a delegator. And my my sort of belief is you have to be willing to accept 80% of the results or 80% of your time back. And if you can do that, like and you can capitalize on that time that you get back, then it's worth the reduced results that you're getting. Just because, you know, hiring employees is is great, and it's important, but they're not gonna care about your business as much as you are. No matter how much they feel you feel like you want them to or you try to sell them on it, like, they got their own lives. You know, they are gonna have limited upside compared to you are in your business, and they're gonna wanna do other stuff after a while. Mhmm. You know? And and that's something that, you know, you just sort of have to deal with. But

Zach Lemaster: [30:53] I'm gonna start taking notes and and quoting you in our future episodes, Mike. Got you got some good key points you're throwing out.

Mike DeHaan: [30:58] Yeah. So cool. Well, I appreciate it, Zach. We start to wind down here. There's just some questions that we like to ask people to sort of to, I guess, sort of get inside, you know, sort of what makes you so successful, and then also just hear about some of the the real things that go on in the real estate business. That's kind of one of our MOs as we wanna hear not only the good, but also the crazy stories. You know? So we're very open about those in our in our business. But I guess first off to start, what do you think is, like, your secret sauce that's allowed you to be so competitive in this business? Because it is a super competitive business. Right? So how have you been able to to do so well with so many other people trying to do the same?

Zach Lemaster: [31:39] Man, I don't know. I feel like and probably I would share the same, you know, some of the same attributes that that you guys would and anyone else that's successful. And I think this is probably less about about me personally, just about just people that are successful in general. And it's just man, I grind, like, you know, there's some points and now I have a family and stuff. And it's like, my wife gets on my case, but then we also, you know, take time out to do just family stuff. But sometimes you just gotta put in the the damn work and late at night, and so many girls don't wanna do that. Right? They they want the easy way. And that's kind of where society is headed, I think, unfortunately, is this where's the easy Mhmm. Easy success. Right? Yep. And there there is no such thing. And so you really gotta just do the grind and and accept the challenges and the obstacles as as they come up and just stay the course. There's been so many times where I've just wanted to throw my hands in the air and say, Screw it. And we've lost a lot of money. I mean, we could probably talk about this, but we've lost millions of dollars in lending other people money and gotten screwed on it. And that's very challenging emotionally, really. We recovered from it and really actually ended up forming better partnerships through the people we met with that, but it's just staying the course. And it's kind of like, I think for any military people that have heard the saying like, ready, fire, aim.

Zach Lemaster: [32:57] I mean, don't wait for the perfect deal. It's just get out and buy a deal, then buy the next one, and buy the next one. And some of them are gonna be crap, and then some of them are gonna turn out way better than you expected.

Mike DeHaan: [33:08] So Yep.

Zach Lemaster: [33:08] It it all balances out. But I think that would to summarize that, I I would say just, you know, actually just taking action and consistency over time.

Mike DeHaan: [33:17] I like that. Yeah. Dan Dan and I are big believers in I mean, we do like to hate on all the know, you a lot of realtors and investors and stuff that man, they love the post that I'm working from my boat shot. It's like Rise and grind. Rise and grind.

Dan Austin: [33:31] Yeah. Look who we're on the boat, but we're still working with our laptop.

Mike DeHaan: [33:34] Mean, it's like, I love

Dan Austin: [33:35] it though. The problem that what, what you're saying, I think Mike and I relate to this totally is like, gotta put in the time. Mhmm. And it's not always fun, but at least you're doing it for yourself and you're growing your business. And so many people wanna get to the point to where they get to be the, they get to enjoy the fruits of their labor, but they haven't done the labor yet. So they're traveling and they're giving up their jobs and they're doing whatever they do that's cool on Instagram, but they actually haven't put in the work yet. And so that's so short lived because they want that immediate gratification.

Zach Lemaster: [34:05] And you see other people that that's what Instagram is, I think is the highlight reel of all the good, right? When the reality is you peel back the layers, it's like, you know, you're sitting in an office, you know, for eight hours or longer than that. And just, you know, dealing with the shit, but you gotta do it and eventually pay off. I love that you just mentioned that, Dan, that you're doing it for yourself, right? Because that's what's remotivating and it's really, I think all of us would attest to it, it's really about us, about our future and our families. And that's the why. You gotta have your why. Yep. You know, we didn't leave our profession because we hated optometry. We love optometry and helping people see, but we also help people be successful in real estate too. So

Mike DeHaan: [34:46] Yeah. Yeah. And and like you mentioned there, Chidan, you know, that can be outside your box as well. I'm sure you've you've done stuff way outside the scope of what you intended to, Zach. I mean, I know Dan and I, we've had Saturdays. Dude, I I always remember down in that basement at 6th Avenue, this mouse infested basement. We're down there because we're we need to get this thing rented out, and we're literally just total, like, rape dungeon, like, creepy basement where we, like, have, like, like, laying all this moisture barrier. We're crawling through the muck, and it's just, like, we couldn't find a contract for one to do it. So I was, cool. I guess we're gonna do it ourselves. Gonna do it.

Zach Lemaster: [35:20] Yeah. Someone's gotta do it. No. Like,

Mike DeHaan: [35:22] having to call sellers, you know, and deliver the bad news that we're not gonna be able to close on their deal. You know, showing up early on Saturday to help people move or, like, loading up trucks because the seller couldn't get it themselves, and it needs to be empty by Monday for the buyer to be able to to buy it. Right? Like, all those things are so far outside the scope of what us as business owners should be doing. But, I mean, that's then stuff has to get done. You have to be willing to put in that work.

Dan Austin: [35:47] Someone's gotta do it.

Mike DeHaan: [35:48] Exactly. So awesome. I I love it, Zach. Right right on the same page there. Alright. So all these these transactions you've done, what is your craziest real estate story that you've had? You know, this can be something related to, like, a a tenant, a transaction, a buyer, whatever you got, something that, you know, we all have these unique situations. What's your craziest one?

Zach Lemaster: [36:09] You want crazy? We have no shortage of crazy. Well, I don't want to be too morbid, because there's been like a terrible murder scenario. So I actually don't want to go there. Let's keep it a little bit lighter than that. We'll do as you're talking about mice infested. So this was actually early on. This is a wholesale deal that we did that was in Detroit Lakes in Minnesota. So this is actually somewhat kind of close to your properties. I mean, not not super, but I mean, scheme of things, Detroit Lakes, it's like a huge vacation destination for people in Minnesota. In the summertime, we found a a property from a lady that had inherited this property from her husband. No one was living there. She had no no leverage on it, so she owned it free and clear, but also no one had, like, taken care of it, and the city has condemned it basically. And they've given her, I I don't know what it was, like, ninety days or something to go in and do something with. And so she called one of our band I think we had our bandit sign out there. And so went out and evaluated well, I think it was if I remember the numbers correctly, I think we valued it on the assessor's site at, like, $1.20 or something like this, or maybe it was higher. We never gave her an initial offer at 50,000. We went to go tour the property, which was just the door was open, and just walked in. And there was probably 300 squirrels living in the house, and it was like, so I empathize with you on this where it's like, we didn't actually even go in because they got like territorial and like screeching, you know, from looking through holes in the attic and stuff. And there's just shit everywhere.

Zach Lemaster: [37:39] And it was just, you know, definitely a rabies infested environment. So we actually came back with like hazmat type of stuff and pest control with us to kinda like and they wouldn't even touch it either. They're like, basically gotta get it demolished. We had to bring in some people from Minneapolis to actually evaluate it. But ultimately, this was a wholesale deal, I mean, we were thinking about potentially taking on but it's like, oh, man, this is just way above our head right now. Right. We went back and renegotiated to actually buy the house at $10,000 or at least contracted at $10,000 because and and we had legit quotes to show you know, like what kind of work needed to be done just for the animal control and then the rest of the rehab. But this house was in the perfect location. It was right on like the Main Street drive, you could look down, step out the front door, look down and see the lake. You know, it's just an excellent location for that aspect. And she had to do something with it. Otherwise, she would have had to pay, you know, money to have the house the house was going to be condemned. Right. So we had to a time, a clicking time clock too. So anyways, got under contract, $10,000, ended up wholesaling it within, I think, one week to a local rehabber at $60,000.

Zach Lemaster: [38:47] Nice. Nice. So we made 50 k on on just a wholesale deal within a few weeks, and he ended up rehabbing it and and doing exceptionally well. I think he uses it as an Airbnb now, and it's it's worth probably over, I don't know, over 500,000 at this point.

Dan Austin: [39:02] That's a great deal.

Zach Lemaster: [39:03] Every everybody won in that scenario. But, yeah, squirrels, you know, had nightmares after that.

Mike DeHaan: [39:08] So Yeah. Yeah. Right. That's a huge fee on that price point too. And I think that's one of the benefits of, you know, wholesalers as well is, like, realistically, that's a deal that no realtor would have touched. You know, even if you could have listed on the MLS for, say, like, 50 or $60, and a realtor has to go and, like, take people through the squirrel house. It's all infested. Oh,

Zach Lemaster: [39:26] that's not that's liability.

Mike DeHaan: [39:27] Yeah. Yeah.

Dan Austin: [39:27] That's not happening.

Mike DeHaan: [39:28] They're not gonna do that for 3% for $1,800, then I'm gonna touch it. Right? But that's wholesalers. We had one that was kinda similar. Now it was squirrels with raccoons. And I walked up in this place, and there was, like, a dozen raccoons. And I I literally came around the corner, and they all stopped and, like, just stared at me. I thought I was gonna lose my face for a second, but then they all went sprinting out the window that was open in the room.

Dan Austin: [39:51] Yeah. Roads scary,

Mike DeHaan: [39:53] man. No. That that's that's a good one, though.

Dan Austin: [39:54] That's crazy. I love that. It's like a day in the life of a real estate investor right there.

Zach Lemaster: [39:59] Yeah. See, we're I wish we were filming this stuff too, you know, so you could carry a little cam with us because Yeah. Right. Of that stuff is just hard to even fathom. You know? Yeah.

Mike DeHaan: [40:07] Yeah. It really is. Yeah. Awesome. So I guess one one last question for you here before we we sign you off. Looking back, know, 2009, you've come tremendously well. You've done ex extremely well. Right? When did you know that you made it? Right? So I guess, like, when did you sort of have that internal feeling of going from, you know, I'm trying to figure out to, like, I'm doing it. Like, this is this is awesome.

Zach Lemaster: [40:34] Mike, that's a good question. Because a lot of days, we still feel like we haven't made it. Right? We're still we're still working.

Dan Austin: [40:40] For sure.

Zach Lemaster: [40:41] And and I think that, you know, that's that's okay, though, because that's also that, like, fire, that's that motivation that's always driving you. You know, I think I probably experienced that at different stages. You know, when our first house that we bought and was a duplex, and we rented out half, and I was like, oh, this pays for the mortgage? Like, wow, that's a win, you know, that that works. The next stage was probably where we got to the point where we were able to replace just our living expenses through rental properties, which could have been, you know, dollars 3,000 a month or or whatever it was. And that was a huge feeling of accomplishment. And then the next stage was like, okay, replace our active income through passive income and also really scale the next business. But man, I don't know, we're at the point right now where we're just, we have a lot of trajectory and we're buying a lot of, you know, large retail centers. We're just really dialed in, I think, and with our systems in place and with our partnerships in these different areas, with some different like excellent investment opportunities, we didn't get a chance to talk about the build to rent stuff, but, you know, some build to rent opportunities where people are just making like 6 figure equity positions like immediately. I mean, we're doing a lot of those ourselves as well.

Zach Lemaster: [41:50] So I think we feel like right now is a really good time where we're just dialed in. Now we got all sorts of chaos going on with interest rates and people are concerned about the market. I'm not at all, because we know there's still a lot of opportunities. So right now is good, but I think we're always looking for the next thing, you know, and I think that's part of that entrepreneurial spirit is, you know, you're never fully satisfied. So I don't know.

Mike DeHaan: [42:13] Yeah. Yeah. That's a tricky one. Yep. I I like that answer because, you know, I think a true entrepreneur always kinda feels that way. Mhmm. You know, even, you know, Dan and I literally last week, we were going over our p and l's. Like, there's some ups and downs, especially over the last couple months. But then, you know, the next day, he sends me the picture of that photo I mentioned before of the house that we walked out two years ago. I was like, damn, we've have come a really long way since that. You know, it's I

Dan Austin: [42:35] always feel. Yeah. Is.

Mike DeHaan: [42:35] And I like that too. It's like

Dan Austin: [42:36] a milestones. Right?

Zach Lemaster: [42:38] Mhmm. And Mike, you talked about when we had you on about your goals, like you found your old book, right? And you had your goals. Yeah. And sometimes it's important to just, know, pat yourself on the back a little bit and like, look at because you're in the grind all the time. It's like, am I really making progress? Like, you know, what are and it's frustrating sometimes. Sometimes you got you got to actually schedule out time to look back and say, hey, this is where I thought I was going to be. This is my goal. And this is where I am, you know, and that's that's some re motivation too.

Mike DeHaan: [43:06] Yeah. And there's no right or wrong answer because everyone's sort of why and, you know, their sort of endgame is is gonna be different, and that's fine. You know, some people wanna be Grant Cardone and be worth a billion dollars. Some people wanna have, you know, 10 paid off rental properties and, you know, make make cash off that they live off of. So Absolutely. Perfect. So right on, Zach. Well, I guess I do wanna touch on your build to rents here really quick, but let's see that as the last question. So where can people find you, and what's a good, I guess, value proposition you can offer to everybody else, whether that can be, you know, the things that you're the build the rents that you're doing, you know, your own education, your own podcasts. Where can they find you, and and what's something you can offer to our listeners?

Zach Lemaster: [43:47] Sure. Yeah, our business, Rent to Retirement, you go to our website, renttoretirement.com. That's the best place to just find out more about us to find out about our team, investment opportunities that has links to all of our podcasts and YouTube and social media. We've tried to put out a ton of education. And I think that's just I mean, we're just passionate about real estate. It's not just all about turnkey. We're all doing everyone on my team is a professional investor, And I've added them appropriately because of that. And we're just passionate about helping people along with whatever they're doing. If you're interested in buying turnkey with us, fantastic. If you need a good CPA, a real estate attorney, cost seg, ten thirty one guy, whatever the case is, you know, we have some great networks for you. And I think that's important. As far as value add, I've found, Mike, in my experience that the people you surround yourself with and the networking that you develop is far more important for your success than any individual property. And so just being, you know, surrounding yourself with the right people and and working with them. And so I think that's really the value that we offer, whether you end up buying property with us or not. We are a group of successful investors that are passionate about helping other people, but we also have some great investment opportunities in parts of like, you know, whether it's build to rent in areas like Texas and Florida, where there's ton of people moving, or that's just a good solid Midwestern cash flowing property, we probably have a lot of things that would fit whatever your investment criteria is.

Zach Lemaster: [45:15] Perfect. Love it. Love it. Did you wanna talk briefly about build to rent?

Mike DeHaan: [45:18] Yeah, sure.

Zach Lemaster: [45:19] Yes. So just real quick, as you're summarizing for anyone that's interested, one of the common things about Turnkey is like, or common objections or what people say like, hey, I'm not getting any value, immediate equity created, I'm buying at the you know, market value. Well, there is opportunities out there where you can come into immediate equity, the builder rent space is one place that we've been able to create that simply by creating partnerships with builders doing a volume price point with them where you're able to build below market value, where an investor can actually participate in ground up construction where you're buying well below the market value and have immediate equity to run through numbers specifically right now. We are building both duplexes and single family houses in Southwest Florida and other parts of Florida as well. A single family is right around that $300,000 price point. Those houses today are, if they were completed today, have a market valuation between $404,130,000, and they rent out at $2,500 a month. And so those, that's positive cash flow on a brand new build house in a good area that has immediate equity. Now you have to be patient and take some time to go through that process. I mean, it could take fourteen to eighteen months to build the house, but likely, you know, the market value for rents and price points will be higher than we are even seeing today. We've come full cycle with this, and we have some people that have, whether they've actually decided to cash out refinance and pull their money back out to reinvest, or to sell their property, every single person that's come full cycle has not had less than $150,000 of equity in their investments.

Zach Lemaster: [46:53] We have plenty of actual addresses and case studies to share, but I love that aspect because you can have a little bit of your cake and eat it too by having, being in the path progress in a great market with having positive cash flow. You just have to be patient for it to be built. And we all know right now there's a lot of delays in construction. Yes. So that's just one other interesting type of investment we offer to our clients.

Mike DeHaan: [47:14] Yeah. I like that. Doing, like, the BRRRR method on new construction properties. You can't beat that.

Zach Lemaster: [47:18] We call it the build, rent, refinance, redo. So yeah. There you go. I like it.

Dan Austin: [47:23] So you're saying you could build a house for 300,000. It rents for 2,500 currently based on current. Man, that's that's pretty amazing. Plus all the equity you're getting into. I'm I'm just looking at the numbers. Like, we can't build a house in our home market for that that rents for that. Mhmm. I mean, that is no. That's those are great numbers, be honest.

Zach Lemaster: [47:41] Yeah. And a year ago, because the people that have come full cycle, I mean, we are the our rent projections at that point in time was 18 to eighteen fifty on a four two. And on that same model, and I mean, that still would have been like a 12% cash on cash return or whatever with regular financing, but just because you're in the right market, and we had about a 30,000, we thought $30,000 of equity. Well, just being in the right market in the path of progress now, know, obviously, market's doing exceptionally well. Yeah, now they're running out because of population increases in rental demand of 2,500, and those are worth over 400,000. So Wow. Yeah. And, of course, this next year, I mean, people are concerned about, like, where the market's headed. I really look back at supply and demand. If you're in the right places, you know, that's not gonna change things dramatically. That's below the median house price point for that area. So your bread and butter rentals, think, will do just fine. We probably won't have crazy appreciation over this next year, but we'll we'll still have some. Sure.

Mike DeHaan: [48:35] Yeah. Definitely. Cool. I like it. Well, thanks for listening, everybody. If you have any interest in Turnkey Properties or hearing just more about what Zach has to say, go and check him out. Like I said, at renttoretirement.com. He also has an awesome podcast, which think is just the Rent to Retirement podcast. Right?

Zach Lemaster: [48:53] Yes. Yep. It is. Yep.

Mike DeHaan: [48:54] Perfect. So go check him out there as well. Besides that, if you enjoyed this show, go and subscribe and give us a five star review on wherever you listen to your podcast. And if you're interested in learning from Dan and myself, and being coached on kind of how we built our business, go and check out the instantinvestorprogram.com, and see if you would be a good fit for our mastermind group. Dan, you wanna send us off?

Dan Austin: [49:15] Nope. I'm good. Yeah. Let's see you guys all next week.

Mike DeHaan: [49:18] Alright. You need a better send off than that. You always have something. Dan's the whole thing is Dan has a bad send off. Come on.

Dan Austin: [49:23] I I know. I'm sorry. I've got a what what are we at now? Six week at hold? Seven week old baby at home? I just haven't been in the game lately, man.

Zach Lemaster: [49:32] Oh, man.

Dan Austin: [49:32] Yeah. I'm tired. I'm tired.

Mike DeHaan: [49:34] Not even

Zach Lemaster: [49:36] into the the, like, the sleeping through the whole night yet sort of So

Dan Austin: [49:40] know what's funny is, he slept through the night last night, which is actually the worst because you think your kid's dead, so you're up all night. You're like, why are they why are they not awake crying?

Zach Lemaster: [49:50] Yeah. Yeah. Alright. Well, congratulations, dude.

Dan Austin: [49:53] Yeah. Thank you.

Mike DeHaan: [49:54] Alright. Well, thanks so much, guys. Thanks for listening. Talk to you guys next week. Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.