How to Identify the Hottest Housing Markets in 2023 with Zach Lemaster

Be in a bad position, you know, just being in those areas. And then, you know, we talk about all the tax benefits and accelerated. Which. Right. Which we do on these things. Those are all just icing on the cake.

Welcome to the Next Level Income show, where it's our goal to take your income, your investments, and your life to the next level. I'm your host, Chris Larsen. If you haven't yet, get a copy of our book for free at our website, nextlevelincome.com. that's www.nextlevelincome.com. just click on the book link and I'll even send you a copy if you put your address in. On today's show, we have Zach lemaster. Zach is founder and CEO of Rent to Retirement, the largest turnkey real estate provider in the world. You can find out more about it at www.renttoretirement.com. zach is a seasoned real estate investor who's accumulated a large portfolio of rental properties across multiple markets, including single family, multifamily, commercial, and new construction. Zach's also a licensed optometrist who practices now on a volunteer basis. He started investing while working as an optometrist and captain for the US Air Force and eventually allowed him to retire early from his career in medicine to be a professional investor by strategically investing in markets that maximize cash flow, appreciation and equity. We're going to talk more about Zach's story and exactly how he did it in the podcast today. Zach, welcome to the show.

Hey, thanks so much for having me. Excited to be here.

Ah, likewise. I'm excited as well. I think you have, you have a fantastic story. You have a fantastic company. We're going to dive into both of those here shortly. I'd love, love for you to tell the audience a little bit about your background as a physician before you started your company, Rent to Retirement.

Yeah, it's, it's been a long journey, you know, but my name is Zach Lee Master. I'm the founder and owner of, of our turnkey company called Rent to Retirement. And so we operate, you know, throughout the country, finding the best markets to invest in and offering turnkey investments to investors. But that's what we do now. Before that, I've always had a strong interest in real estate, Chris, and started Investing probably about 15 years ago at that point. And I never look back, I never stop. One thing I tell people that's allowed me to be successful is I've simply just continued to buy more and more real estate and then scale up, scale the larger houses and so on, but we've just stayed the course. But I have a background in healthcare, as you know. My wife and I are both optometrists. We met in school in Port, Oregon and she's Canadian. And then she, I convinced her to move to the U.S. we, I was on an Air Force scholarship. HBSP scholarship. So I joined the air practice for about seven years to fulfill my commitment. And then we moved out to Denver, Colorado where we, we opened up private practices but have since retired. It's been about five years since we were actively working. And that's just because through investing in real estate and creating, you know, financial independence through doing what we do with our, our active business. But bought my house when I was a young captain in the Air Force. Used a VA loan. It was a duplex. Lived in half, rented out the other half and really enjoyed that. And, you know, how the numbers played out and then just, you know, never looked back. And so that kind of. Eventually we got to the point where we were able to replace our income. Friends and family started to say, we see what you're doing in real estate. We want to invest with you. We don't have the knowledge of time, whatever the case is. And so that was really the foundation of our business. Rental retirement is just helping other people what we've accomplished following our process and systems that we've built over many years. So here we are.

I love it. Lots of overlap. And actually my wife's Canadian as well, so I didn't have to convince her, though she was already in the United States going back, which was a little bit easier. But yeah, I think there's, there's a, there's a couple great points you mentioned in there, Zach. One, I was just having this conversation with a friend yesterday who's getting started on his investment journey. And I said, look, his name is Brian. I said, brian, real estate is really a get rich slow game. I said, you know, start out, buy that property. I said, it's not going to seem that exciting at first, but just keep going. I said, and before you know it, I said, you'll have, you have wealth that's just beyond your dreams. So I think, like you said, I started out very similarly. Bought a townhouse, rented out a few rooms, bought the place next door kind of, you know, which is basically turned that into a duplex and had my first six units at 22 years old. And then, yeah, just kept, kept the pedal down. And I think what you mentioned, you know, a lot of people listen to the show. We try to Provide options. You know, whether. Whether you're professional like you were Zach, you know, looking to invest passively, or whether you're just getting started and want to do that. So we're going to talk a little bit about Zach and how his company, Rent to Retirement, has put this into a turnkey way. But something, um, you know, I want to. I want to really delve into something first, which is. It's something that I experienced here as I was leaving my profession.

You were.

You. So you were an optometrist for how many years total? And I know you still volunteer, so I don't want to say you. You were and you're not now, but you. You practiced, including the military, for how many years total?

Oh, it was about a decade. I would say about 10 years actively. And we slowly scaled back. Right. It was like five days a week, then four, then three, and then eventually. But yeah, about. About 10 years.

That's. Yeah. So I think, you know, one of the things, and I think, you know, specifically in America, you know, we really is. Is Americans, as male Americans as well, we have identity that really revolves around our profession. And, you know, one of the things that. That I faced is I was leaving the medical device profession, and I spent a total of 18 years in. There was. Was kind of a crisis of identity. It was, you know, I really spent a lot of time kind of thinking about it, working with my coach and saying, okay, like what? What's the meaning? Like what? Like, what am I going to focus on to really drive myself and Zach? I think a lot of people, they think, hey, once I. Once I have enough money to be financially independent or once I retire. And by the way, you look great for 65 retire. But, you know, once I retire at 65, you know, everything's fine. But what I know people, you know, people like yourself, people like me that are productive, they don't want to just stop doing what they're doing, and they also need another why. So do you mind walking through kind of like your thought process and your experience in going from, you know, one profession, one identity to what you're doing now?

Yeah, I mean, that's. That's kind of a deep concept because to your point, Chris, so many people have this idea of, hey, I want to get out of the rat race. And this isn't necessarily because they dislike their profession. I mean, same thing with us. It's interesting. So many people looking back now or like colleagues that we'll see in the future, that we are. That we haven't seen for A while they'll look back and say, oh well, you know, optometry wasn't right for you or you really enjoy it. And I'm like, no, that's, that's not the case. So it's just that we still practice. I still keep my active license. You know, I just spent all weekend going through ce. But, and we, but we volunteer. But the pun, like yeah, I know, right. But our, our why is in my driving force was to be able to still, you know, help people see, which I enjoy, but also just create a better path where I can have some independence to spend more time with my family. You know, we, we have young children, another one on the way here soon. And so it's really, it's really about them and focusing on being the time. Right. That's, that's a goal. But yeah, as we transitioned, you know, I didn't have a real hard time focusing or just personally identifying I with a real estate professional, but it was a hard thing to let go of for that profession. Right. I spent half a million dollars in loans going to school for a, a professional degree that took eight years to accomplish. So a lot of people I found in the beginning though is more about their opinion of what I was doing, which I tried to just shut the door on. Oh, and ignore. I mean all of us have friends and family that are happy to give us their opinion on stuff whether we want it or not. Most times not. Right. Especially what we're doing. Like if we're, if we're stepping outside of the box to do something different, which as many of us as entrepreneurs do, like you, you have to do that. But I remember there's many people that are like, oh, what are you doing? Even my, my mother in law was like that. It's too risky when we kind of went full, full on real estate. But I just had to like that gave me motivation to prove them wrong too.

Right.

You know, and, and so now, now can look back and see how successful we've been because we stayed that course. But I think, yeah, to your initial point about kind of retirement, right. It's not sit on the beach and you know, drink cocktails. It's dedicate your time to stuff that you're passionate about. And I found myself just as I've come into this, you know, having just more control of what we do. I've, I've had more passion in things like family and health and other activities and business in general. Running this business rental retirement has also allowed me to put my passion in helping other People accomplish what we've had. So I don't know if I just rambled on for five minutes, answered your question, but it's been a journey, right?

I mean, yeah, no, I think that's. I think that's really important because, you know, we were. We were talking before the show here, and there's. There's a real heaviness that I. I carry today because I learned just here in the last 24 hours that my good friend Caleb Welborn passed away. And some of you know him from being on the podcast, being my partner here. As we got started, he. He faced a. A quiet but tough battle with cancer, and ultimately, everything caught up to him. But I really owe a lot to Caleb. And one of the. Even though he was 15 years younger than me, one of the big things is he. He pushed me. Whereas you said. And I think he said, you know, we have people that want to give us their opinions. I had one friend, you, and I was leaving the medical device space. He said, what do you hate money? Like, why. Why are you going to stop doing that? So. Well, no, it's about. It's about really leaning in fully and doing this. And Caleb encouraged me to start this podcast. He encouraged me to write the book, which is as an engineer and somebody that's, you know, very analytical, it's. It's hard sometimes to see the. The qualitative reasons for doing something when you're so focused on the quantitative. And as we started the podcast, I didn't. Or before I started the podcast, I thought, that's not really something that interests me. But then as I fielded questions, as I had convers, as I mentioned the conversation I had with my friend Brian yesterday, I realized that there was a need out there for information, the same need that you fulfill, Zach, with your podcast. And when you talk to people and you help people and you give them not only the. The idea, but also the pathway to do things. And it helped me discover my why. Caleb helped me discover my why, which is to help educate, you know, the next generation and to really help people, you know, see that, you know, with financial independence, they can achieve bigger things in life, whether that's continuing to practice, you know, in a volunteer fashion. I have friends that are very successful surgeons and physicians, and they've gone down to halftime so they can spend more time with their family, you know, and then I have others that have. Have stopped, you know, doing one profession and now. Now fulfill a bigger purpose doing other things. I just want to take a moment and recognize Caleb, the impact that he had in my life. And if you're listening, realize that, you know, no matter where you are in life, you can have an impact on other people's lives, you know, whether you. Whether you realize it or not.

And I gotta commend you, Chris, and of course, very sorry to hear about Kayla, but I mean, just to show you how uncertain life can be and more of, you know, more motivation to go out and make. Try and affect others. And that's. That's a huge why right there. I got to commend you for taking the time to still be dedicated to your audience and share on that. It's. It's a tough thing.

Thank you. I appreciate that. And, yeah, and look, I mean, we. We get on here and we talk about, you know, we talk about positive things, we talk about money, and we talk about, you know, it can be very polished, but the. The fact of the matter is that money is a pathway. Right. To achieve those things that are really important, you know, in our lives. And, you know, for me, a big portion is, you know, getting to spend more time with my kids. My boys are 11 and actually 13 next week and in six days here. So it's something that I didn't. When I was on call. I got pulled in too many directions. Even though I love that life and I love being or doing that, I love my children even more than doing that. So the audience knows a lot about what we do. Zach, the reason I wanted to have you on and talk about rental retirement is that you've taken a concept which is familiar to a lot of people, but you've turned it into something that's turnkey. So I'd love to transition now a little bit and talk about the how that we can achieve some of these whys in our life. And you share a little bit about. More about your company.

Yeah, absolutely. And thank you for allowing me the time to go into that. Chris, I think that when we look at the. The audience that. That you've built, it parallels very. With people in our community.

Yeah.

Generally these are. I mean, real people that want to invest in real estate through one. One means or another or often multiple strategies at once. But. But they're often busy professionals. Right. Or potentially newer investors, and they're. They're looking for a way to strategically invest in real estate to have a. Some sort of outcome financially. Right. Kind of this. This idea of financial independence or early retirement. Yeah. Mental income, whatever the case is, to your point, in the very beginning, this is a. This is a time game. Right. It's not about timing the market, it's about time in the market. One of the things I love most about real estate is just a compounding effect over time. I always explain to people that real estate investing and in my opinion it's a lifelong journey. It's not something that we're me I'm ever going to stop doing because it's just exciting and you're always learning and then you get to teach others how to do it, whether that's your, your family, your children, whatever the case is. Right. I'm certainly going to teach everything that I know. But I view it as a, not a linear graph of progression. Right. It's an exponential graph where you're slow starting out but just owning over time through appreciation, debt reduction, rental increases, you know, and adding in the depreciation, tax benefits. Like it's cool to get to a point where your properties are buying more properties or you go through a 1031 and you trade up, you know, and you just get this exponential effect. But it takes, it takes time. So anyways, yeah. Rental retirement. We assist people in buying turnkey rentals in markets that we've identified to be very successful markets is mainly Midwest and Southeast. We have a whole criteria of things. We look at things like landlord friendly legislation, high rental rates relative to home prices, diversity of industries, economy and so on. And so we, we build teams in these areas once we buy a market. This is everything from builders, you know, contractors, property insurance people, property managers, where someone, an investor comes us, we help them build out an investment plan and strategy. We identify markets that they should invest in based on their criteria and then we sell them turnkey properties. These are properties renovated and newly built, leased and professionally managed, allowing them to have all the financial benefits of property ownership but no not have to do all the heavy lifting. So that is somewhat passive and they can easily diversify and scale. And then we also want to take a comprehensive approach to help them to include all the ancillary things to be successful long term. You are building a business here when you're investing in real estate. So you got to have the best financing place, right. Legal team accountant. You know, all these things are important to be really successful term. But we focus on single family, small, large, multifamily. We have some commercial assets and new build, new construction models across 12 different markets in the US a little bit about what rent retirement does.

Yeah, that's fantastic. I've, I've seen like in our space, one of the hottest areas has been build to rent which Is, you know, essentially, you know, for those that aren't familiar with the concept, it can be duplexes or standalone homes and we'll buy them. Oftentimes we'll buy them as part of an apartment community that we're buying. We've combined some as well. So renters have an option to move from an apartment to say, a townhome, for instance. But we do have a couple standalone communities as well. And one of the reasons that it's become, a couple of reasons it's become so popular, and I know you know these reasons as well. Home prices are at record highs, interest rates are very high right now. And the gap that we see between the cost to own and the cost to rent is as big as it's ever been. So I think, you know, for me, I'd love to hear your perspective. I think, you know, I think it's, it's a challenging time to buy residential real estate. It's actually a challenging time to buy commercial real estate as well because of the interest rates and the cap rates where they are. But I think the demographics, the fundamentals, I continue, I wrote about it in my book five years ago. I continue to, to update and write about it today. We just haven't caught up, Zach, with supply to meet the demand for renters, millennials, you know, retiring baby boomers, so on and so forth. How do you find the best markets? You mentioned the Midwest, the Southeast, how you find the best market? So the numbers make sense for you guys.

And you brought up a very relevant point because we are in a transition cycle right now and this causes a lot of concern for people. But where there's trans and uncertainty, there's also opportunity. Right? And the fundamentals, as you mentioned, do not change. So we look at this as a long game. We have our fundamental cash flow. Like we want to have like a 10 cash on cash return based on.

I'm sorry, you said 10%.

10%, that's minimum. You know, in, in being in an area. And we do a lot of build to rent as well. And often you can come into build to rent, especially right now, where you also have immediate equity, where you can be a creative investor, do like a cash out refinance to reinvest your capital. That's ways you expedite your goals. But we look for areas that obviously have the positive cash flow to meet our numbers. But a lot of it is being also in areas that have that cash flow, but also in the path of progress. You mentioned supply and demand and that's how this market is different than what we saw like back in 2008. For some reason, people want to immediately go back there, like, oh, are we going to experience that type of crash? I don't think we ever will again. I mean, every market cycle is, is different because there's different circumstances. But the fact is we want to be in areas where there's a huge undersupply and there's a huge demand and growing. A perfect example of this would be like Texas or Florida. Florida is our top market that we invest in, especially in the builder rent space. And construction is so slow right now just because of supply chain and all sorts of things. It's just construction cannot keep up with demand. And those are the areas where, yeah, the pro forma may be not super crazy attractive. We still want to be at that 10% cash, cash. But you know, they may not be super attractive year one. But, you know, you're in an area that's having strong demand both for increases in market value. Is those rents like in southwest Florida, we saw a 22% rent increase just over the past year.

That's crazy, right?

Yeah, I don't think it's going to be that, that high this year. But the point is we're in these areas where we're seeing consistent demand. And I don't think you'll ever be in a bad position, you know, just being in those areas. And then, you know, we talk about all the tax benefits and accelerate depreciation, which. Right. Which we do on these things. Those are all just icing on the cake.

Yeah, no, I think, I think you've made some terrific points there. And you know, one of the. Going back a little bit here in our conversation, I'll never forget the Money magazine I read when I was 18 years old. It talked about, you know, investing and compound interest and that, you know, that exponential curve that you mentioned. A lot of people get into real estate and they're thinking, well, I'm not making that much money right now. But I talk about kind of the, the 20 year overnight success, which was my first property that I put 3,000 down and then I sold it, did a 1031. That next property that I bought makes over 3,000amonth now. And the equity in that property was worth four times what that original property was worth. And it took 20 years, though. So I think, you know, if you have a plan, if you have a strategy that's based on, you know, strong numbers, demographic information that you mentioned, Zach, and you're able to work with a partner like yourself or I would, I would also say us that can give you good opportunities in these solid markets and you stick to it, you know, over 10, 20 years. And even as I talk about in my book, think about creating generational wealth. This is how the wealthiest families do. They plan, you know, not for, you know, their own retirement in 10 or 20 years, but they plan for how are my children, you know, going to manage this wealth in an effective way? And that's why I love real estate insurance. It helps create these multi generational wealth cycles.

Yeah, I couldn't agree more. I love to look back and because I was in the military, I contributed to tsp. I had a pension available. Even though the military is changing that now. They don't have a full on pension anymore for people.

Oh really?

Yeah, it's a blended retirement system where you get partial. But I mean, and that's just a trend we're seeing, right? The pensions, sure, yeah. Just don't make sense financially for the government or anyone else. But yeah, you know, I just look back about what my idea of retirement was. If I were to work say in the military or in the health care sector, just.

Yeah.

Until I'm, I'm 65. Right. Assuming I make it there and I'm healthy. A big motivating factor for me is just watching my father who did where his electrician works his whole life to get to retirement. Uh, but he became ill before he ever got there. Right. So that was a big motivating thing for us too is just like, like how do we be more strategic and intentional. And real estate is a great way to do that. It doesn't happen overnight. But looking back, Chris, like compared to a pension that I would have worked, you know, most of my adult life for, I was able to, to replace and then exceed within just probably three to four years of dedicated intentional investing. And this, this was just buying properties and holding on to them. Right. And then running that and doing it again. It's not, we weren't, you know, making huge profits through flipping. It was just buying real estate. Rinse and repeat. Having a plan and sticking to it.

Yeah, no, I love it. And we have, we got a spreadsheet that we put together for investors. And as I go through that spreadsheet, what I found is if you're living within your means and you're making a good income, most people can be financially independent within seven years. And I know you said less than 10 years, you said three to four. It's very achiev. We were talking before the show you have, you have a tool where people can learn about, you know, some of the hot markets here this year, some of the markets where numbers make sense. What's the best way for listeners to get a hold of that to learn more about what you do? Also tell us a little bit about your podcast as well. Zach.

Yeah, absolutely. So while our active business is helping people turnkey portfolios in some of the best markets throughout the US we like to talk about all things real estate because I truly believe that, you know, most successful investors are multiple things. We have many people that are investing in syndications, doing their own investing, investing in turnkey, maybe doing creative finance, you know, along alongside with other things. And it's just to to learn about different strategies. So we try to talk about just the whole spectrum of kind of financial savviness and literacy in general, but also how that applies in all things real estate related on our podcast. So I think the best place to start is just our website. That's rent to retirement.com rent to retirement.com and that has links to all our social media. We put a lot of stuff out on YouTube and podcasts for information. We just published our top 20 in markets for 2023 based on very specific criteria where we are actively investing and also going to be opening up shop over this year. And that's a publication where we're available to your community first before it goes public. So all they have to do is check out the website, mention your name and we'd be happy to provide that resource to them.

Beautiful. And we'll have a link to your website here. Renttoretirement.com in the show notes. If you're watching on YouTube, you can, you can check it out down below as well. Zach, it's been a pleasure talking to you today. Thank you for sharing a little bit more about your story and what you guys do at rental retirement.

Chris, it's been a pleasure. Thank you so much.

Hey Chris, here again. I hope you found this episode valuable. Now I have one more thing to gift you. We have a page for my coaching clients where you can get a free copy of my book as well as much more from previous guests on the show. Just check out nextlevelincome.com coaching to get a free copy of my book, audiobook and much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also, please like share and take just 90 seconds to give us a rating on Apple Podcasts.