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Dave Dubeau [00:00:09] Hey everyone. Dave Dubeau here property Profits real estate podcast. And let me ask you this. If you’re a Canadian, have you ever thought about investing in the States? I mean, most of us have. We’ve all seen what the house prices are like there compared to Canada. And if you’re not Canadian, if you’re in the States, have you ever thought about investing outside of your own backyard and ideally having kind of a turnkey opportunity? Well, today’s guest. Exactly. Master is going to be telling us all about that because he knows a thing or two about this. Zach has been investing for a long time. He got started when he was in the military. He was you got a really interesting background there. So he’s in the military is an optometrist. So a doctor is doing really well in that whole career, got into real estate investing and walked away from that was able to retire from the military and from being a doctor and focus on real estate investing full time, you name it, he’s done it. Single family homes, multifamily property, turnkey properties, wholesale deals, development deals. Zach’s been very, very involved in all of this in these days. He helps a lot of other people get going with turnkey properties. So Zach, welcome to the show.
Zach Lemaster [00:01:15] Dave, thanks so much for having me. Excited to be here and what a nice introduction. Thank you.
Dave Dubeau [00:01:19] Well, we do our best, so Zach, let’s just dove right into this. And for folks who aren’t familiar with what turnkey properties are, can you give us your definition?
Zach Lemaster [00:01:30] I’d love to. And I’m glad that you started with that, because turnkey is one of these buzzwords we hear, and it’s got a huge variety of definitions depending on who’s using it. Yeah. So when we talk about turnkey with our business rental retirement, we talk really in the full scope of turnkey meaning we’re assisting the investor, we’re doing everything. This is meant to be a passive type of investment where the investor has a team set up to walk them through investing in the best locations that we’ve identified throughout the United States. But there, you know, they’re not having to actively find managers or manage the property remotely or, you know, choose where to invest. We’ve already done all that heavy lifting for them. So they have the benefit of home ownership and all the benefits that come through real estate investing without having to, you know, do all the heavy lifting themselves. And that’s really the goal. When we talk about turnkey day, we mean a property that’s either been fully renovated or newly built. About half of what we do is new construction. That’s single family multifamily. We have some commercial assets as well. Then we lease and manage the property for the client long term. In addition to that, we assist them with building a comprehensive business plan long term. You know, it’s not just we’re not just selling a turnkey asset to the client, managing it for them. We’re actually helping them put the pieces together to help them obtain their financial goals long term, because there’s a lot of ancillary things that come alongside building a business. That’s what you’re doing when you’re investing in real estate is building a business. And that includes, you know, things from the tax, the legal, especially Canadians potentially looking to invest in the U.S. There’s a little bit more complication with that. But I mean, not significantly, but we’re walking them through that entire process with a team set up in place to assist them with, you know, the tax, legal, accounting, financing, etc., to really be a successful investor long term and coaching them through that. So that’s what we mean when we say turnkey.
Dave Dubeau [00:03:07] Yeah. Okay, very cool. So playing devil’s advocate here, if you’re going to all the time trouble, effort and expense of finding these properties, either renovating them or building them from the ground up, why the heck are you selling them to other investors instead of just holding on to them yourselves long term?
Zach Lemaster [00:03:23] I love that question because it comes up quite often. You know, the first answer to Dave is we do, right? I mean, we keep a large portfolio of what we do, but that doesn’t mean we need to own and it’s not in our business plan, nor do we have the financing capability to keep every single house we come across. We did $1,000 last year. My goal is not to have a thousand single family, small multifamily. You know, we do have a large portfolio in that capacity to this degree because we go into these areas that we’ve identified to invest, you know, from a landlord friendly legislation, tax, legal structure where the rents, you know, have high rental demand, diversity of economy, these are all things we identify location. Then we build our own portfolio there to build our own, you know, to meet our needs first. And that also allows us to develop the teams and systems in place. We’ve already got the system, but once we kind of hit our portfolio needs there, then we can open it up to our other investors. So we just like with every investor, we have a specific investment plan and strategy based on how many assets we want to own, but we already built those teams and systems to just keep that wheel turning to offer those products to our clients.
Dave Dubeau [00:04:24] So but that sounds very efficient, right? So you’ve gone in, you’ve done the heavy lifting, you’ve kind of taken the punches, so to speak. You’ve built the teams in those areas. You’ve built up your portfolio. Now, instead of just letting that kind of go to, you know, not go to waste, but just kind of sit there, you’ve got the systems in place to actually keep rolling with other people. Okay. Now, one of the questions I got for you, Zach, is what are you seeing these days as we’re filming this? We’re the end of the summer, 2022. Where are you looking at as markets for these kind of development deals? Are these kind of turnkey properties? What are what are the some of the markets that that are your favorites?
Zach Lemaster [00:05:02] Yeah, absolutely. And I just want to make one more point on your last discussion, Dave.
Dave Dubeau [00:05:05] That’s a fascinating idea. Hold that thought for a second. Hi there. This is Dave Dubeau. And real estate investors hire me to raise capital the right way. Why? Because most of them are stuck with too small of a portfolio and they don’t know how to attract investors and raise money for their deals. So I help them to connect, capture and close their ideal money partners. Bottom line, when you’ve got a deal, you’re going to have the capital to do it. So go ahead and book a no cost capital clarity session with me at Book A chat with Dave dot COM. Again, that’s book a chat with Dave dot COM.
Zach Lemaster [00:05:40] As you mentioned and so nicely introduced in the very beginning, we were able to retire from our professional career fields early on in life through rental real estate investing. That didn’t happen overnight. You know, that happened over many years of consistently buying more and more rentals every single year. My wife’s Canadian, you know, just and I know you know that, but we own property in Canada, but we’ve strategically chosen the different locations to invest in and been able to retire from our true past life by doing that, you know, doing exactly what our business model is today and we have the foundation is that we had a lot of people that friends, family and colleagues that came to us and said, hey, we want to do what you’re doing and we see the success that you’ve had. We have no idea where to start. We don’t want to be an active investor like you. And so that’s like, Oh, well, we can easily scale up what we’re already doing for ourselves, for, you know, additional clients and create additional revenue and meet everyone’s goals. And that’s really the idea behind it in the foundation. But as far as the markets go today, because we’re constantly looking for the best investment opportunities from, you know, multifactorial type of view, there is that we want to be focused on or in the path of progress. There’s a large population shift going on right now, largely to the Sun Belt in a lot of different areas. And COVID expedited that I think to a large degree, as people can work remotely, they want to live in areas where they have a good lifestyle, affordable cost of living, good weather, good legislation, you know, an attractive tax structure. So you think of those type of locations, also coupling it with, you know, what type of rents and appreciation we’re seeing Florida as are as our top market right now, especially in the new construction space. We have our average client, Dave, that does participates in a new construction build with us, has $150,000 of equity when they’re done. Those are real numbers of people that have completed their builds. That that’s one sector that we do is pre-construction. It takes 18 months to build. We have stuff that we’ve already built and ready today and still has maybe 20 to 30 K of equity that allows the investor to be a strategic investor to cash out, refinance and pull their money back out or just sell the property for a gain. So Florida is probably the best market for appreciation and as well as cash flow right now because there’s so many people moving, there’s a huge rental demand. We also invest heavily in Alabama, some Midwestern states where you can have a little bit lower price point, maybe not as much appreciation, but potentially better cash flow would be areas like Kansas City, Missouri, and different areas in Ohio and Indian Indianapolis. I mean, those are areas we’ve just consistently invested in for the past ten years and have done quite well in that kind of B class, working class, 150, $200,000 house.
Dave Dubeau [00:08:00] Excellent. Well, so okay. So speaking of that, that was the next question I had for is obviously each market’s going to be different, but what is kind of the price range of the houses that people are looking at for these turnkey type properties? And what kind of cash flow can they realistically be expecting from those kind of properties?
Zach Lemaster [00:08:17] Sure, we have criteria in terms of what meets our return numbers, the areas we want to focus on. So I would say your average house price single family is anywhere from that one, 52 to 50 range and that’s your middle to upper B or lower class. And the type of neighborhood that’s the sweet spot because that’s where you still get a quality tenant. But the house is affordable enough to still be able to cash flow a few hundred dollars a month in net. And so when we look at something, we want to meet really about an eight cap range or if you’re using financing, say a typical 30 year loan that’s offered in the US, you know, basically you’re looking at a 12 to 15% cash on cash return. So $200,000 house may be cash flowing, you know, four or $500 a month net. At the end of the day, if you’re using a conventional loan, we have some properties that are, you know, multifamily and things like this that are a little bit more expensive and maybe cash flow more as well. But I would say that’s kind of the vast majority of what we’re looking at.
Dave Dubeau [00:09:08] Well, I love the fact that you’ve got a lot of experience working with Canadians, because this is a this is something that’s interesting for a lot of Canadians. However, there’s that big hurdle of getting across the border and there’s the big hurdle of the concerns of double taxation. And then there’s the other hurdle of how do you cover our budgets? Because everybody’s so, so happy in the United States and all these different things that Canadians aren’t as accustomed to up north investing up here. However, there’s the appeal of, relatively speaking, a much more affordable product and much better cash flow in the States. So I know we can’t get into the super in-depth, but can you give us kind of like the big picture, 30,000 foot perspective on how Canadians are able to make this work investing across the borders?
Zach Lemaster [00:09:51] Yeah, and it’s really not overly complicated. I think a lot of people just look at it and don’t know where to start, you know, and understand all the components. That’s why it’s important to be working with a team like us who works with Canadians on a regular basis. Also, you know, it’s international investors. We have investors all across the world that invest here. And it’s really. Not overly complicated. There’s a few key things you need to do. The biggest thing that’s going to vary is the financing aspect of it, the lending. So you just set up an LLC in the States that allows you to purchase the property and be able to have income. As a reminder, these type of properties really, even though you have positive cash flow, Dave, you’re probably reporting a loss on your tax returns simply because of all the expenses of the property and the write offs. The tax structure is extremely attractive to own real estate in the U.S. and it’s beneficial for investors to invest here because of that. So there really isn’t a lot of reportable income and they can operate through things, different tax structures to set themselves up for success. So when they have capital gains and they want to do something on the exit of the property. But essentially, yeah, you work with our team to get an LLC set up. You invest, you set up a bank account with that LLC, you invest in the States through that, that structure, and that gives you the asset liability protection as well as being able to use financing. As far as that goes, I mean, we have all sorts of different lenders, one in particular that caters specifically to Canadians to allow attractive investment products. So you can use financing and have a pretty attractive portfolio built in a short amount of time. By doing that, you can also we’ve had investors go through conventional loans. When we say conventional, that’s your 30 year fixed loan. Many people don’t know that that exists for Canadians. But RBC does it for a lot of our clients that are Canadian. So it’s just about building a plan and strategy with you based on what your goals are and then mapping it out.
Dave Dubeau [00:11:33] Fantastic. Zach, this is fascinating. If people want to find out more and learn more about you and what you guys are up to, what should they do?
Zach Lemaster [00:11:40] Check out our website. It’s a rental retirement dot COM rent t0 retirement. Com We have all sorts of sorts of content on there that has our YouTube channels, social media, podcasts. We’re putting out content on a daily basis. Dave Really about all things real estate because we’re professional investors ourselves. We’re passionate about real estate, we’re passionate about helping people accomplish their goals because that’s what’s rewarding at the end of the day for us. But ultimately, you know, real estate has allowed us to build the lifestyle that we we’ve desired over time. And we love helping people do the exact same thing. So check us out. Rent to Retirement dot COM. The best thing to do is schedule an investment consultation. We don’t charge anything for time with us. You know, there’s no coaching program. It’s not charged. I mean, if you want to invest with us, then we’ll look at properties specifically. But the best thing to do is set up a strategy, call with our team and go through your specific scenario and answer all the questions that you have.
Dave Dubeau [00:12:29] Fantastic. Zach, thanks so much. It’s been a lot of fun.
Zach Lemaster [00:12:32] Davis Manipulator, thanks so much for having me.
Dave Dubeau [00:12:34] All right. Take care. We’ll see you on the next episode. Well, hey there. Thanks for tuning into the Property Profits podcast. If you like this episode, that’s great. Please go ahead and subscribe on iTunes. Give us a good review. That’d be awesome. I appreciate that. And if you’re looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book right back there. There it is the money partner formula. You get a PDF version and investor attraction book dot com again investor attraction book. Dot com. Take care.