How “Turnkey” Rentals Can Help You Build Real Estate Riches Faster - Transcripts

This is the bigger podcast podcast show 6 26.

I mean there's not a lot of difference whether you have a $200,000 single family in the Midwest, a two

million dollar deal

in a more expensive neighborhood.

You know, you still

evaluate the numbers the same. So don't limit yourself looking at you know the larger deals and getting scared at participating in

those, even if it

requires bringing in some private money,

what's going on? Everyone. I'm David Greene, your host of the bigger pockets real estate podcast here today with my fantastic co host rob solo, where we get into an interview with the ceo of rent retirement. Zach, was it lee master. How did he say it exactly Master. You know what's funny is when Brandon did these shows, he always messed up the last name and now I as the host find myself doing the exact same thing. It's funny because when I was a co host, I always knew what it was and as the host, I don't well Zach gives us a great interview from several different dynamic perspectives of real estate investing. So Zach owns uh investment property himself all across the country. Some of the small multi family, we get in to talk about a luxury property that he actually bought In Colorado in a ski area that he is going to be renting for $5,000 a night at peak season. He also owns a turnkey company, you may have heard their name rent to retirement. They are familiar in the bigger pocket space. You probably heard his ads on our show and we get into how he runs a company, how he hires, why he believes turnkey could be better for some people, really good stuff rob.

You know, I think it was really nice to hear his insight into turnkey properties, you know he really kind of spoke a lot on stacking your strategy and staying hyper focused because he's had a very cool trajectory in his real estate journey. He went from being an optometrist, going into wholesaling them to residential to commercial and like you said, incredibly successful business owner as well, so just really fun to always dig into those stories a little bit deeper.

Absolutely. Before we bring in zack, let's get to today's quick tip. Today's show, we talk about the W two mindset and how it doesn't always fit into the world that we work in which is an entrepreneurial space, what I call the 10 99 environment where you don't have clear paths drawn out for you, for an employer to walk in, you've got this huge immersive three D. Environment, you can take any path you want and it can be very scary and unsettling when you bring a W two mindset into this world. So ask yourself in what ways are you operating in a W two mindset ways that you may be and not know it is an unseen expectation that other people should be telling you what to do, The the thought that when something goes wrong, somebody else should be having to fix it and not you the belief that you shouldn't have to do work after five o'clock P. M. Or that during the hours of 9 to 5 you need to be working all the time. None of these are rules that are hard and fast set in stone, their habits that we've created because we've worked in a W. Two world for so long and if that's you, that's okay. But if you're trying to get into the world that rob and I And Zach operated on a daily basis that could be holding you back. So finds out somebody sit down and talk about what ways you might be experiencing a W2 mindset, it's holding you back, rob. You have anything you want to add on that topic.

No. You know, I think it's always very helpful to talk to someone who's actually made the leap and sort of has struggled with just going full on in the self employed, you know, I think one funny enough, I always used to say that I was unemployed and then Tony Robinson, rookie rookie host was like, no man, you're self employed, be proud of it and I was like that's right, I am. So you know, find someone pick their brain and learn that's all you can really do. All

right, well that sounds great rob. Okay, next up, let's hear from today's show sponsors. Does 15-20%. Are OI investing in turnkey rental sound attractive. Do you know you can use the birth strategy with new construction that has immediate equity rental retirement offers fully turnkey properties that are newly built or renovated, leased and managed, allowing you to invest with confidence out of state. They have single family, multi family new build and syndication opportunities across multiple markets that maximize cash flow appreciation and equity rental retirement, assist investors in learning how to build a comprehensive business plan with the best investment and tax strategies to achieve financial freedom through real estate investing. There's no excuse not to get started in real estate investing when you have the right team and systems already in place to learn more, visit rent to retirement dot com, that's rent T. O. Retirement dot com Or call 803 116781. That's 803 116781. To learn more about how you can get started investing in some of the best cash flow markets today.

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I'd say without any more ado we should get into our interview with Zach. Exactly master, Welcome to the bigger podcast podcast.

David rob. Thanks for so much for having me. I'm excited to be here.

Yeah, we're glad to have you too. So let's get started by asking you what does your portfolio look like right now with real estate and business.

Absolutely. This is kind of an ever evolving, you know, scenario. But today, what we're looking at, we mainly have transitioned to owning a lot of commercial retail space. That's the majority of our our personal holdings. So we have uh 30 commercial spaces or doors I guess that's um spread out across seven doors. We have 29 residential units. Two of those are single family in Canada that we own my wife's, Canadian majority are here in, in multiple states. We have a couple of duplexes, 14 plex in that. We have one very unique large short term rental and we have 18 build two rents. Those are all single family,

awesome. And then what about from the business side

on the business side? So what we're doing is our core business rent, retirement were a turnkey provider. And so we work in multiple markets throughout the US, mainly in midwest and Southeast. Yeah, we probably do about 50 houses a month. Um, these are mainly single family or small, multi where they are rehab leased and managed for our investor clients. And so that's really our, our core business

suite. So you've got your wealth and real estate, you make your money in business in real estate. You are like us a real estate nerd. So how did you get started in this whole space?

Yeah, I think real quick to your point, David, it's interesting as we, um, you know, we interview a lot of people who are really successful in real estate and other businesses. There's, there's so many people that make money outside of real estate and other avenues and put it into real estate and there's so many people that, you know, flip houses, but don't hold houses. I always thought that was a very interesting thing, but going back to our story. So I'll try to keep this somewhat short for you. Um We have a background in health care, I guess my wife and I are optometrist by education. We met in school in Oregon I think I initially got interested in real estate investing. As many people did reading just robert Kiyosaki, you know, rich dad, poor dad that really stuck with me just in the mindset, I continue to always educate myself about, you know, different, different aspects of real estate, although it took many years to actually take our our first step into investing. So we we went to school in Oregon. I was on scholarship with the Air Force after a professional school. So I went in as an Air Force captain for five years practicing optometry there, that's where we started investing in real estate. My first house was a house hack duplex, used a v a loan to purchase that excellent loan. We kept that house as a rental for many years, continue to move out of that and scale up over time.

So I kinda wanna like jump back just a hair here. And I wanted to ask, you know, I mean, you kind of, you spent $25,000 on a course and you split it with a partner. A lot of people do this. Um my question to you is when you're getting started do you feel like the success that you had kind of the boost that you had from this course? Did it come from the fact that you just spent money on it and you said I am financially committed to this thing now, so I'm gonna do it, Or did the success come from the knowledge that you got from it? Like I'm always kind of curious to hear, because it's always, I think it's like 50 50 for a lot of people

Robbie, you hit the nail on the head that it was 100% the financial commitment. It's like, oh crap, I better do something because I just dropped this amount of money that I don't actually have sure the course had some educational stuff, He had a little bit of coaching that reviewed some contracts with us. The reality is all that stuff was available online for free or just, you know, networking with the right people, but it's definitely the financial motivation behind it, I don't think that's necessary, you know, but but definitely it's, you know, going to light a fire under you to make sure that you do something in that scenario, that's what happened to us

for sure. And so when you were first kind of getting started, just so I understand the timeline, I know you said you you were into the optometry industry, was that what really sort of fueled your I don't know, like the initial capital to get into this or you know, how did how did that work out when you're first getting started or were you using the money from? Wholesaling to really fund the purchase of all your residential properties?

It was a combination. I mean we were also in debt. We had, you know, six figure student student debt. So that was a little bit of a burden of course. Having the V. A. Loan allowed us to purchase that first property with no money down. That's an excellent loan structure. But actually wholesaling rather quickly became the main method to fund a lot of the rentals that we were holding. Wholesaling was key for us because it allowed us to evaluate deals, learn how to find and evaluate deals and that I guess was crucial in allowing us to evaluate how to take on deals that we're going to buy and hold. But that was a great side hustle I guess that allowed us to build capital much quicker than we would just a typical, you know, profession. Are

you still in that, you know, I guess it's it's a little bit more of a of a front hustle at this point. But are you still in that world or did you sort of move on once you kind of built your your backlog of capital and everything like that you

mean in the health care setting?

No, no, in the whole selling setting. Like do you still execute that side of it at all or are you just now fully into like the other niches that you discussed earlier? Yeah.

Wholesaling is always uh an exit strategy that's a potential, if there's a deal that we're not gonna take on, we're gonna sell it to another rehabber. Um So I mean that is something we, we've definitely done, but it's not the core business uh really now we buy a lot from wholesalers um to actually, you know, take on that we're going to add to our own portfolio. So it's, it's something that's not a main focus, but definitely I think it's it's just an exit strategy that to be aware of of

totally, yeah, and I guess it's very rare that we have someone in your position here where you do have a really great business and you also have an amazing real estate empire. So just from a philosophical standpoint, I wanted to dig in a little bit, you know, on your, on the kind of how you handle your investments and sort of personal philosophy on how you're funneling money from, you know, one side of the business to the other. And so what I was kind of curious is do you ever, you know, do you take all the profits from your real estate side and just keep reinvesting that, because it sounds like you're always just, you know, growing your portfolio and buying more and more or is there a little bit of, you know, reward that you actually take from your real estate portfolio or do you live solely based off of business income? I

mean, we live, we don't live huge lavish lifestyles by any means. It doesn't take much to, you know, replace the the income that we have today. But I mean when we started to earn significant income through our business, the tax burden was painfully real. And so a lot of our strategy now is to reinvest that money and and that's following our, our philosophy of how you should, um, you know, reinvest your proceeds. And so a lot of our active business we take and we put it into at this point now these commercial retail centers run cost segregation studies on those to reduce our taxable income and just try to keep scaling scaling that way. So I guess the answer, I was just reinvesting it. Absolutely,

yeah. This is something that I really find a lot of entrepreneurs and real estate investors, you know, struggling with, especially when they do have a business that you're talking about and real estate and they just don't know like how do I pay myself? When do when do I pay myself? You know, when is that appropriate? Because for me, in my personal investment career, I've never actually spent any of the money that I've ever made in real estate. Not not really, anyway. I mean, not anything significant. I've always taken the profits that I've had and I've just dumped it back into the portfolio to just keep it growing and it's really hard because obviously, you know, I feel like you do have to reward yourself every so often, but you know, I'm sort of in a different or in a similar scenario where I have another business outside of that and that's kind of where I'm, you know, you know, my, my income is mostly coming for that so that I can just protect the real estate nest egg that I'm slowly building over time.

Absolutely. I love that

when it comes to what you really love about real estate, why you left your former profession to dive into this? What can you tell us? Like, was there a moment where you saw something that you hadn't seen before? Was there an element of it you fell in love with? Was it a pure business decision? Like what got you into leaving your old job and going full steam into this one?

I think probably the moment that we were just like, hey, we got to go full bore into this. This makes complete sense is a simple fact. That real estate, it's not time associated, you know, with working in the health care setting, your time, you're, you're compensated based for your time in the chair, right? You can only see so many patients, you can only, you know, be compensated, even even owning businesses to you're wearing multiple hats. Um and a lot of, a lot of health care professionals are not great business owners. Um, but just the ability to create income streams where you are growing your net worth and providing consistent passive income whether you're actually working or not. I mean once we kind of saw the writing on the wall with that, David was very much like, hey, we got to go all in. We've, we've seen a successful business model. We have a proven track record. It was an emotional change though too. There was a lot of people like, hey, you spent eight years of college going to school for this profession. What, what are you doing?

So this is probably a good point to ask you. Like we've talked about what we love about real estate. What are some of the challenges that you've encountered that you were not expecting when you first got into it or some of the things that stop you from growing at the pace that you wish you could, it's

an ever evolving world. You really need to stay up on legislation on financing. I mean, financing is, is a huge thing. Um, that's been a big obstacle for us as we've grown our portfolio over time. One thing we always do is interview multiple different lenders to try to find the best financing options. We hit a little bit of an obstacle with some of our commercial properties we purchased where they required, they gave us the best loan terms, but then they stuck us with all these loan covenants and requirements. They wanted a 10% liquidity requirement just sitting in the bank just letting inflation eat that away. Um and they checked that quarterly, so it's just a little bit of a hindrance to be able to use that money to grow and scale. I mean there's all sorts of obstacles in, in real estate from all different capacities. One thing that's allowed us to be successful I think is just being creative when and I also like that, that's a challenge obviously with the obstacle, but being creative to find a solution to those problems to be able to scale your portfolio, whether that's a tenant, a financing issue, whatever the case is. Um we've had some bad partnerships in real estate. I mean that could be applied to business in general, We, we've lost a lot of money um in partnerships that we jumped in too quickly and scaled too quickly with that unwound.

rob as you hear this. What are you thinking about when you're like thinking about what your experience has been and now we hear like Zach's doing this at a pretty big scale kind of thoughts are going through your head, as far as the challenges that you've had as they compared to Zac's

Well, you know, Zach is obviously you've scaled up and there's a really big difference between running a 20 unit portfolio and a 100 or 200 or 300 unit portfolio and I kind of, it's a very interesting challenge, you know, I think that the scaling is something that a lot of people are, you know, they have a lot of trouble, you know, because you know, everybody has a very different idea of what scaling looks like and how to successfully execute it. And so now that I've been doing this in scaling and growing my team and, and kind of making this work for me, I'm starting to understand that like it feels, and I don't say this in a negative way, but it feels like I'm leaving the golden days of like, you know, when I was learning everything and cutting my teeth and I could still make mistakes and I could still fail really big and now I'm really, you know, having to hold myself accountable and be like, okay, you know, playtime's over, we experimented, it was the Wild West for the first five years of my career, but now there are a lot of things that I have to take in consideration and they're like jobs on the line and I pay people, I pay employees and so for me, I'm kind of just in the throes of scaling, but I still, it's like, I know that even five years from now, I'm going to say that right now is the golden days because I feel like this is gonna be the most important day or the important period of my life is figuring out how to scale my business and so Yeah, I don't know, I mean I have a lot of respect for people that that can grow a portfolio past 20 units, you know, 20 doors just because the team, that's that's that it takes to do that is very difficult to build. It's very difficult to find people who are on your page on the same page as you, I guess. Yes

Zach, what's your thoughts on that, that element of what you're trying to build?

Yeah, systems, I mean systems and, and uh you know, that's scalability is the hardest thing. I think it's rather easy for a lot of people to scale their real estate business and portfolio to a few million, you know, with a handful of employees, but to really take it to that next level of growing your portfolio um where you have, you know, maybe 20 plus employees or you you're really making this a legitimate business and really any business, I think for that matter, scalability is tough, you know, and dealing with real real big issues with with employees and I mean that's, that's a hard thing. I think we we all are consistently facing and uh I haven't figured that out yet, but you know, everything, every step we take on scalability. You just, you know, you try something out if it doesn't work, you try to implement a better system to do that and you know, continue to add the right people to your team. That's what it's all about. I mean, we've heard the, um, you know, the term of or the saying of, you know, higher slowly and fire quickly. You know, sometimes we, we've done the opposite, but the right people are really what it's about creating those systems.

So another challenge that investors faces where they live can have a geographical hindrance on their investing. So if you live in a great market, you don't really think about this. If there's opportunities to buy properties, if you've got cash flowing properties that are where you are. But if you're in a market that's not so great. You're painfully aware that this whole investing thing kind of sucks. So you've had to learn how to buy properties in different parts of the country out of state investing? I mean, you're actually in other countries with some of the stuff, what are some of the challenges that you encountered when it came to long distance investing and how did you overcome those?

Yeah, I think the challenges of real estate really, there's some challenges that don't matter geographically because you're going to have the same issues and then there's some that are obviously, you know, there's, there's this comfort this mindset associated with, hey, if a property is close by, I can solve this problem, which could be true to some extent, but it can also, you know, maybe take up too much of your time. Um The reality is if you have the right people and teams and systems in place, it should follow the same process regardless of where you're at. Um, but investing out of state, I mean finding finding good contractors, how do you build that team, whether it's locally or in different areas? Obviously there's different state legislation you need to be aware of and in tax structures, it's like, what are the tenant laws and how do we know that we're abiding by those? Can we vet tenants the same way that we do in this area. How does the eviction process work? Um, you know, there's, there's a lot of things to look at is as far as managing the properties long term internationally. I mean, you know constantly and and we have family that owns property in Australia and many other countries as well. I always love to compare the U. S. To those countries as far as like a lending and tax structure because there's nothing else that comes close. I mean there's no such thing as a 30-year fixed loan in Canada or any other country.

Yeah. So I wanted to kind of dive a little bit into because I know you know you're a big turnkey guy, right? And so I wanted to ask like what does that look like? What what do you consider a turnkey property? Do you truly consider that when you're investing in something that is in that category. 100% done lockdown ready to go or do you still kind of go into you know, a potential turnkey property with any kind of renovation budget, whether it's three or four or $5000 just to get it up to you know, up to your standard. Yeah.

Turn keys. I mean we could go down many different rabbit holes with this. Right? I think there's there's a lot of people that have different opinions about turnkey versus you know, doing syndications or something like this. I think in general turnkey and obviously this is our business, right. But I think turnkey is an excellent option. If you're working with the right people to allow you to scale To allow you to have a little bit of hand holding starting out and allow you to diversify into different areas, but it doesn't make you immune to the same sort of challenges that you would have with real estate in general when we look at turnkey, I mean what our definition is as a house that's newly built because we actually participate in a lot of new construction that's about 50% of what we do at this point in time is built to rent. Um But we want to see a house that has you know, at least 8 to 10 years of life expectancy. So if you're if you're h vac, your water heater, the you know roof needs replacing, then then you know definitely those are your Capex items, those are the biggest items to do that. And then of course lease and manage the property. But we also, even though we we sell turnkey products, we also buy turnkey, you know, a lot of the commercial assets we buy, I would consider those even more so turnkey, those are triple net leases, management pays our taxes, pays our insurance, pays our mortgage for us, you know, they, those are triple net leases off often corporately guaranteed. So I mean there's there's a lot of different philosophies about what turnkey really is.

David, are you still doing any, are you buying any turnkey these days? Because I know obviously you're the value add guy right here. Surber and I know that obviously that has been a very big component of your career but obviously I know that you're a very busy and a very successful real estate entrepreneur. So as you kind of, you know grow in your business, I know that your time is more limited. Does that mean that you're typically looking for more turnkey stuff at this point. Are you still kind of in the value add space?

Um, I think that that's a really good question here. Um, my heart is in the value add space, but depending on what I have going on at any given time, I've had to be humble enough to admit if I take on this project, like it wouldn't pop into mind right now property having a contract in savannah Georgia that is um, in the historic district, it's coming with short term rental permits. There's a lot I really liked about it, but in the inspection it's got some significant issues like needs to be torn down to the studs at some point needs a complete new roof. And I was thinking, you know, if I'm honest with myself, if I buy this thing right now, I am never going to manage that rehab. I'm not going to know what's going on. I don't have a person in place that I trust that could manage the rehab. That's the wrong move for me. Even though it's got a ton of value add potential, I won't be able to execute on that. Um, and I'm probably more geared towards when we say turnkey in the short term rental space is what I'm looking at, I need something that is coming furnished doesn't need a whole lot of work out the box is good to go and I recognize I'm not getting the built in equity. I used to have, but I'm not gonna be bleeding. Trying to find how am I going to get furniture brought into this place and it, when we are having the supply chain shortages and How am I going to get a contractor in one of these really hot markets where it's very difficult to find them. It's gonna be 90 220 days before someone even starts the project.

David. I think that's a crucial point just being realistic with what, what your capacity is right at this point in time. And if you're, if you're looking for, if your time is limited based on other things that you're doing in your business or building your portfolio. Um, I think a lot of people are looking for, you know, they may get distracted with, you know, if you don't have the time to dedicate to a deal, then you're not going to perform on it the, to the best of your ability. And so it's just being realistic with, you know, what you bring to the table and what your time capacity is and what fits your goals at this point in time.

Yeah, and that's that's an important thing to acknowledge in real estate in general because there is a temptation I need to come up with a name for it. This is where I miss Brandon Turner because he was so good at coming up with clever names for things. But it's this idea that there's a part of human nature that wants to ask the question of what am I supposed to do? Just give me the blueprint and I'll just go do it as if life works that way, as if there's just a path that everybody can walk and that isn't the way that this goes. There are many paths and depending on your skill set, your time, your goals, they're all going to be different. And part of I believe at least part of being good at real estate is knowing yourself well enough to know what type of properties that you should be getting into and where your time is better spent. Like I think that's one of the reasons that I went out and I built businesses and built teams instead of just focusing on buying a whole bunch of smaller properties as I had a skill set where I like leading people and I'm sort of a a visionary, whereas somebody else like that's not what they're good at, They're really good at bookkeeping and so they just need to be running syndications and buying multi family properties. And it's, it's both frustrating when your new trying to figure it out, but it's beautiful when your experience, because all of a sudden the tree like explodes into branches and you have all of these different ways that you can walk in that makes your job more fun. And I know Zach, one of the things that you believe in is this concept of strategy stacking, it's, hey, you're good at this asset class. What's the next asset class that you can bring in that will sort of compliment what you already got going on. Can you, can you share um what that strategy is and how you've worked into your business?

Yeah, absolutely. I think so many people, especially starting out, David, have they get the shiny object syndrome right? And it's like, oh, I want to do this, I want to do this. And that's a beautiful thing about real estate. And there's so many different ways that you can make money investing in real estate and be successful. But you can't start with all of them at once. And so you need to stay hyper focused on what makes sense for you and then just understand that as you continue your journey. Real estate investing is a lifelong journey that there's going to be multiple different ways that you can learn about and participate in. That's exactly how our business and our personal investing has grown over time. We bought our first duplex and you know, the next year decided by two more duplexes and continued to scale over time. We tried wholesaling, that was a lot more work than we initially anticipated. But that allowed us to learn how to evaluate deals, guess what we wanted to decide to keep some of those deals because we really like the idea of long term holding when then we started to build this this business and be successful with that, investing in different areas started to make more money.

Yeah. So when you're entering a new strategy I guess because it seems like you like looking at your portfolio did wholesaling residential now, a little bit of commercial, you've succeeded at it. Is it a matter of, oh, I feel like I've succeeded at this time to try something new or do you think of it as more like I need to master this strategy before I move on. What's your mindset there? Yeah,

I wish I could tell you that I have this this clear action plan rob, but it's it's more or less, you know, learning about a new strategy, being intrigued by it because if if you're interested, you're passionate about it and you're interested in a strategy, then you're obviously going to migrate towards that more and and want to learn about that and take it on. I've I've always been attracted to the idea of commercial in general just because it's, you know, longer term leases now, there's a lot of risk and volatility with that as well. Um Make no mistake about that aspect of it. Single family and residential I think is just your bread and butter solid way to build wealth at least initially. But um that's been something I've always been interested in Just to be really passive and have these long term leases in place. So we we decided we wanted to invest in commercial, well probably 5-6 years before we even bought our first one. Um but it was just, you know, talking to the right people learning about that, but the next, when we hear about different strategies and this applies to the tax side too. When we learned about cost segregation and investing in opportunity zones and things like this. My mind was blowing because I was like there's really ways to completely, you know, reduce your taxable liability if you're in and invest in real estate, doing the same things we are already doing, we love real estate for all these reasons, you know, So it's learning about it and you know just continuing down that path until the next thing comes up.

So what are some practical examples that you can think of where the average listener because sort of let's let's say somebody starts on the multi small multi family path. I think that's probably the most common way everyone gets started rob. You were part of the Pokemon generation. So it was like was pikachu the first Pokemon everybody gets to

know. You usually usually choose between bulbous or char mander or um Squirtle.

Okay so that real estate just like that is the same thing. It's you've got the small multi family road, maybe that's bulbous or then you've got the single family like house hacking wrote that's Squirtle and I don't remember what the other one you said was, but there's like another route that char mander, right? Maybe that's gonna be like just buying single family homes and casually areas like like Kansas city like lower price point area. So there's typically those three passive people start in your own house act, you get into small single family or small, multi family, small multi families, probably the most common way that people get started. You learn the fundamentals of real estate, the best that you mentioned, you have a lot of duplexes, triplex is across the country. That's not a coincidence. So Somebody gets seven, of these things and they start to experience what I call that hurting cats feeling. It's like in the cartoons where there's a leak in the submarine and they stick their finger in it and then another leak pops out and then they stick their finger, another one, they stick their toe and then they gotta let go of one finger to go plug in another one in the water's coming out from there. And for me it was like every single day another little leak was popping up and none of them were gonna sink the boat, but they were freaking annoying and it just, it wasn't fun to be investing in real estate because I'm dealing with these very small problems of elite going on a sewage line, breaking an air conditioner going out a tenant complaining about something. And I just thought, you know, I could sell 25 of these houses, replace it with one house 25 times as big or as good or you know an apartment or something and get the same benefits, but not the 25 different holes that I'm having to plug. So for me, that was my moment where I realized that I need to get into a different asset class. Can you, I guess what I'm getting at here is can you share some practical examples of what a listener who's got seven or eight small multi family properties that's ready to get another stack added on to what they're doing, some possible scenarios that would work for them.

Yeah, absolutely. I think that's really what a lot of people think about when they're trying to achieve financial independence or, or significant passive income is, is how do I scale up into some of these larger type of deals? Um, and, and there's multiple things you need to do to position yourself to really be the most attractive investor. Biggest thing is on the financing side. I, I think that's why starting out with single family, small, multi family puts you not only does it give you the experience investing in real estate, but it also positions yourself in the best financing position. When a commercial type of lender, whether we're talking commercial, retail, office, industrial, multi family when they're evaluating you as a borrower, they're going to look at your track record in your performance. Most people are not jumping right into real estate buying a 50 unit apartment complex. I think it's a great way to scale up over time and and also show the bank that, hey, I can be a successful investor buying and holding these properties and running them successfully and that's going to dramatically change the type of lending that you can accomplish. Um you know, being having that experience gives you the confidence as well to look at larger scale deals and just changing your mindset about that. But I think financing is the biggest thing to really look at, make sure you're having a successful portfolio other than that, I mean there's not a lot of difference whether you have a $200,000 single family in the midwest, a $2 million deal in a more expensive neighborhood. You know, you still evaluate the numbers the same. So don't limit yourself looking at, you know, the larger deals and getting scared at participating in those even if it requires bringing in some private money, practical examples though, I mean running running a business successfully with those smaller rentals.

Yeah. Even with the managers that were in place, they still had come to me and they're like, what do you wanna do with this, what do you want to do with that? And it was, well the bid that you got like I remember one of them, there was a sewage line that broke underneath one of the properties and they came back with a bid for $46,000 to fix. It I remember thinking like I mean I wouldn't let the house go to foreclosure but that would make more sense than what they were gonna wanted me to spend on this. So I said alright well who did you talk to? They gave me the name of the company and I said did you send anyone else out? No. Would you like us to like I've told this here's a side note property management companies go through staff so fast that you can tell someone this is what I want and they probably hired three people since the last time you spoke to them and that person has no idea what you had said to the first one. So you're always reiterating these instructions And we sent somebody else out and he said Oh I can fix this for $2700. They ran a scope through line and figured out where the problem was. Whereas the initial bid was they were just gonna rip out the entire like floor of the home to to try to find where the Leak wasn't. I just remember thinking I could have easily just replied yes fix it and threw $46,000 out of $2700 problem.

So practical examples from that and I agree with you 100 is yes knowing how to manage your managers if you need to hire an asset manager at some point in time it's it's worth doing that because they will also allow you to be more successful and more passive. But I mean even in that scenario right with with your property managers, even if they took care of the issue which clearly in your case they didn't because they just gave you the first most expensive quote um and left it at that. But even if they take care of everything and you're just hearing about it, that's just so much noise, you know, and it distracts your mindset from what's actually that could be a super successful property that you you know sell and have huge appreciation in the future. But there's so many of those issues that are distracting you from being able to focus on your business. So yeah, focusing on how to manage manager, how to find and vet good managers and how do you solve individual problems when they come up? Sometimes it takes getting on the phone and calling those contractors and being creative and finding the right people to actually solve those problems, it's the same type of issues, single family house large. It's just maybe a larger scale issue. But solving those problems is probably one of the best skill sets you can have and learning how to follow through with that.

I'm curious, David, what was that like? What was that job title? Was it property manager? Property manager or was it property manager comma property manager.

So that is another issue. I ran into a business where like your staff is always asking for a title or a job description. There's this like I need to know what's my title, What's my job description? I was like, well, I'm hiring you to do all this stuff that I don't want to do and there's a lot of different things. So I don't know that I could possibly come up with every possible thing that could come up. But Can I just trust that if you have to send an email out through mail chimp, you could do that. Like do I need to include that in your job description. So I think that I don't even think I called him an asset manager because every time I put something out for that, I got people that wanted, you know, $200,000 a year. But basically what they had to do was sit in front of the email that all of the property managers would send the statements and their repair requests to And handle the emails that came in with some degree of common sense. And if you ran into a big problem. No, I need to go bring this in front of David and kind of learn from what he did and fix it. So I learned quickly that giving the title asset manager was not a good idea because it was like, Oh, well, I'm an asset manager for this huge corporation and they paid me 250,000 a year, so I'll come work for you.

Yeah, I just sent out a very, I sent out an email yesterday that was like eight rolls and I put in the email that, you know, each role would require, like 1-2 hours a month. You know, it wasn't anything, it was like, it was to help like the people in my program, I'm trying to expand the capabilities of it. But I had a lot of people that reached out and they were like, oh, I want X amount and X amount. I was like, oh no, no, no. As per my email this, it's like two hours a week maybe. You know, it's not, it's not a lot. So I think that's probably pretty common. Well,

no one's gonna care as much as you care, you know about your properties. And so how do you make that higher, you know, um how do you make someone, how do you find someone that can make those executive decisions for your portfolio, it's tough. but if you find a good property manager, which that's a tough, that's a tough job, right? I mean, that's a tough business. It's really like you have mad owners and you have mad tenants and you're just in the middle of it, um you know, but there are good ones out there that can usually, if you give them good direction, handle the majority of the issues.

Yeah, I would say to the people listening, if they're trying to figure out how do I kind of get into the next step? I really believe in zack. I'm curious if you would support this and you as well rob a big hindrance to people being successful in our world, which I'm going to call the 10 99 world because it's just, you're responsible for your own success here Is they bring a W2 mindset into it, they're expecting structure and rigid rules and a 9-5 schedule and all these things that we've been conditioned to expect from grade school into the workplace to where it just like we almost have a moral system set up around, you shouldn't have to work past five or like weekends, you should have off. And if you're asked to do something outside of that, it feels like you're being taken advantage of, even if you sit in the office and do nothing for seven out of the eight hours you're getting paid for, right? So, when somebody comes into our world with those expectations, it's very difficult to adapt to something like you could have a problem in a short term mental, like let's say that there's a mouse running around inside there at nine o'clock at night and the tenant isn't looking at it like, oh, I'm bothering the person, I want this mouse out of this house and you don't want a bad review. So the right thing to do is to jump in and fix it. Um, if people could have that flexibility with understanding that you're getting paid to solve problems and they can pop up at any given time, but there's benefits this as well. I personally think we would have more people in our space that we're able to get more involved in what the three of us are doing and therefore they would learn. Is that, Zach, do you take a similar opinion to that?

Well, that's the hardest thing David is, is finding staff that that has that mindset. I mean, the entrepreneurial mindset, um, you know, it, there is no 9 to 5, there is no on off and, and you know, that's a hard thing to, I think that we can probably all attest with this. I mean sometimes you need to turn turn off your own mind right? And and focus with your family when you're at home, that's a hard thing to do. And I've, I've struggled with that. It's like my wife constantly reminds me, but to find someone that has that same sort of mindset,

I don't

know how to do it. I mean it's it's a, it's the biggest challenge is finding good people. And if you have someone that has an entre entrepreneurial mindset and to keep them, I don't know, they would likely want to be some sort of partner to some degree at some point. How are they, you know, how are you going to compensate them? Keep them happy to stay? It's a tough thing. What do you think rob?

Yeah, this is hard with with the W2 and the 1099 thing is we want all the good things of the W two world when we're 10 99 but none of the bad things, you know, and so it's like we want our kicking one, we want to eat it too. And this is something I deal with a lot, you know, I um podcaster, content creator, real estate investor, there is no moment in which I'm not thinking about really those three things other than if I, you know, try to turn off at like five or six and my wife and I have an incredibly, you know, flexible life and so do the kids, but you know, it is not fun when I come home at 6 30 because she's like, well you can come home at four, right? And I'm like, well, yeah, but I still, if I, if I don't work, we don't, you know, we don't pay the bills kind of thing. And it's really similar even with hiring employees and everything because you know, I'm the entrepreneur, they're not. And so the meeting of the minds there can be very difficult because you know, I have to really make them understand, especially like my assistant who she's like my property manager and everything and I have a lot of sympathy for her because you know, she'll be messaging Airbnb guests at, you know seven in the morning, seven at night, midnight to three. But she might have downtime from 1 to 6 p.m. Because there wasn't a single peep on it so it ebbs and flows and I think you're right. I mean, I think you just have to prep people that's like, look it's not it's it's cush when it's kush and it's not when it's not like when it rains, it pours and you know, you have to really understand that with the real estate space because it's just, it's never a 9 to 5 thing, it's a nine To, you know, nine,

but that's what you're building. You know, that's what you're growing over time. You got to put in that work now you gotta be willing to do it, No one else will right now, you know, to to build that that type of lifestyle and portfolio long term. So you know, it's it's just part of the game,

although I will say that, you know, when I was living in an apartment and stuff broke all the time and I would put in my maintenance requests, They wouldn't come fix it for like two or 3 weeks. I kind of wish I could do that where things go wrong and I'm like yeah, I'll give it a couple weeks and then I'll fix it. I do. I am envious of that.

Alright, before we move on to the next portion of our show, let's take a quick break to hear from today's show sponsors,

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Alright. The next segment of our show is the deal deep dive. In this segment of the show, we are going to dive deep into one of our guests specific deals to see how it turned out, how they found it in a bunch of other juicy details remember that you can do more deals yourself with the help of bigger pockets tools and resources so be sure to check those out. So question number one is what kind of deal is this?

So the one we're gonna be talking about today is right up rob's alley, this is a luxury short term rental out in the mountains in keystone colorado. We actually found it basically just through broker relationships. It was listed and poorly marketed and then just became a stagnant listing.

Okay. And how much was the deal?

So it was, it was listed at 4.8 million and that was far over list price. Far over market value. Of course Zillow has it at like 55. Um, you know, and I think that they were, they were going off of that is kind of their, their pricing structure, but no one there had been zero activity on it, no bids anything. Um, and it was listed by a broker that wasn't really, I think checked in and you know, was maybe on the ski mountain more than they were answering their phone. So, um, that's what it was listed

at. Okay. And then how did you end up negotiating it to get any contract?

So we looked at it and we don't have a lot of short term, I mean we have limited short term space and so this is really a big learning lesson for us is evaluating it, looking at areas for value add. So, um, this is something we looked at as hey, obviously we need this, the numbers to make sense, be positive cash flow. We evaluate all these deals even if they don't make sense on the surface. Um, just to see what kind of opportunity there is there. So what we did is we basically gave them an offer. We saw that this is a stagnant listing, um no activity. And so we just put an offer in our initial offer was three million. And so that was significantly less than, than what they, especially in today's market. You know, they told us we didn't even respond right, that's just insulting. And so um, that's, that's what we did. We threw it out at three million. We heard back from later.

sounds very, very familiar to a deal that me and David just did, how did you fund it?

So we actually used a second home loan for this property and this will be a good, I mean, good learning lesson just on the financing side to look at what different financing options are out there because of the price point on it. Um We were told by probably 20 different lenders that no way can you do a second home loan with 90% loan to value? This is jumbo. Um You know, they, you're going to have, uh, you know, this is above our underwriting criteria that we would allow for. And so most lenders were quoting, I think it was like a 60 to 70% loan to value on it. They also didn't know how to value the property. They're like why are you buying it below market value and you know what's wrong with it? Um So we actually end up finding a credit union locally that had had done some financing for us commercially. In the past we got a second home loan with 10% down. They actually waived the mortgage insurance because there was no company that would provide mortgage insurance at that price point. Um And uh yeah so and the the interest rates as well. Um We almost used an armed product on that just because interest rates are a little bit more volatile at this point in time.

When was this again? Just so that I know

yeah, so we we just acquired this earlier this year.

Okay. Yeah because we just closed our our $3.25 million 6.25. So just a little bit over years.

Yeah. And that's a tough thing. We were getting a lot of quotes at. Uh So this was obviously, you know, a couple of months ago. Interest rates were definitely different than than right now. Um but still we were still, I mean we're still seeing some quotes on again armed products below that for 4%. Um you know, and and it's just I think finding the right credit unions and banks to explore with.

So what did you end up doing with this deal?

So this is a short term rental. I mean it was, there's not a huge value add as far as renovation. It was built in 2001. So it is, it is dated and we'll we'll put some renovation into it over time. But really the opportunity with this one is the property manager which was also the listing broker on it. So you know, you can kind of imagine how that property was run. Um It's large enough where it's a wedding venue in the summer as well as like corporate space. Um So they actually had quite a bit of activity in the summer, but they, They kept the rental out, I think it's $1700 a night throughout the entire year. Um I mean I think that's probably rule 101 with short term rentals as having dynamic rents, especially in peak season ski, you know, ski season, that that property is projected to run out between 4 to $5000 a night in, uh, in peak season. And she was still running it out at $1700 a night now. She kept it rented for 340 nights last year. Um, but obviously, you know, there's, there's much more upside potential.

Well, what I guess we sort of talked about the outcome, Is there any any other specific outcome that that came out of that or we're still kind of figuring out exactly where you're going to net out. Right. Yeah.

This is a new deal for us. So we'll look at it and see how it performs over time. We're excited about it. If there's a huge equity position, maybe we'll do something with that or look at 10:31 in the future. But you know, I don't know. I mean, we'll plan to use it of course, maybe a couple times a year when, when it's not rented out. But we're excited to see how the path goes And just on initial projections. I mean, they did Just in using dynamic rents and not changing anything else about the property. We were able to increase the income by over 30% on it and that's huge. And so that, that took it from being a, you know, a property that didn't cash flow at all at 90% loan to value. We would have been losing quite a bit of money on that to actually being positive cash flow, which is been hard to do. We've been looking in this area for short term rentals for probably three or four years now and it's always a scenario where it's like, okay, we'll buy it if we're, if we're not putting, You know, 30-40% down on it to make it cash flow.

So what lessons would you say you learned from the deal? I

would say, well, we didn't really talk about too much of the negotiation. I went straight to the point of what we actually ended up acquiring the property at there. There was a lot of tactical, um, conversations throughout the process of, oh, we have this person. You know, we have some people because they knew we were interested in it. We were the only people that viewed the house, even though we gave them a lowball offer, it was, hey, we're interested, you know, we have some other people that are interested. They're putting in these offers. Um, you know, and countering us and we just stuck to our guns the whole time that we knew the number. This wasn't an emotional by, that's the biggest thing. Um, I think in this one, David, this was not an emotional buy that you can easily get yourself into. I think especially in the Airbnb space if you plan to use it. Um, but we knew where our numbers were to make it make sense. And we stuck to that the entire time and that allowed us to actually acquire it at, at the price that we needed it to.

hey,

I want to use a lender that I've been using because I feel, you know, loyal to them and I feel comfortable and it's easy, I don't have to turn in all my docs. Well lenders are not created equal and they're quite dynamic as well. So if you have a good relationship with someone absolutely explore that. But every deal is different and definitely be willing to look at different loan options out there. We had so many people that tell us that You cannot finance that 90% loan to value. You know, we don't have mortgage insurance on it. And uh you know, a lot of people said that that's just not possible. So those are the biggest takeaways also just looking for value. Um and sometimes that takes some time, especially in today's market

awesome. And lastly, who was the hero on your team for this deal?

Is this is this a new question? I don't know if I've heard this one before.

It is we're throwing you a little curveball zack.

Alright, well my my wife's a hero. I have to give her the shout out because even though we I I got emotionally attached to, I was willing to pay more than we should have. Um but she was the one that really rained us back in and said no, just we'll find something else. You know, you don't you don't need this. Um You don't don't stretch this to make it work just because you've been looking for three years for something like this, if it makes sense? It does and if it doesn't, we'll find something else, it's not a big deal. And so I think really that is the biggest aspect of just keeping us focused knowing the numbers and going through um you know, our criteria and so definitely um wife is a hero on this.

They always are.

Yeah,

she made me say that by the way that she's

standing on the other side of the camera, like you better say it.

Yeah,

alright, well that brings us up to the last segment of our show. It is the world famous famous for in this segment of the show, Robin. I will ask you the same four questions we ask every guest and we're excited to hear what your answers would be. Question number one, what is your favorite real estate book?

And I don't have anything that hasn't already been said. Um you know, there's been so many good books, a huge Kiyosaki fan, but probably for right now, the millionaire real estate investor Gary Keller. Um that was, that was just huge for me. And I try to read that once a year section to talking about the different stages of think by own and receive a million. That's huge implementing systems. I mean, that's that's just an outstanding book and encourage everyone to read it if they haven't.

Great, great question. Number two,

favorite business

book

business for us. I mean, this kind of goes to what we were talking earlier about the entrepreneurial mindset. So, so the e myth Absolutely, or a myth revisited on this one um, with Michael Gerber, this is definitely something that I I try to read consistently as well to remind myself to focus on the business, not so much in the business. I think this is a crucial book for anyone running a business in any capacity. Um, and definitely something that is just, you know, how to build a team, focus on systems. It's, it's central book

awesome. And when you're not building a turnkey empire and commercial empire, what are some of your hobbies? So,

as I mentioned to you before the show, we have a one year old, Uh, that, that's our hobby right now. Um, you know, we're, we're loving that. We used to travel quite a bit. Um, we, right after we got married, we did seven month honeymoon and visit like 30 countries scuba, died a lot. We love to travel. We're excited to get back into that once the kiddos old enough to do that. Um, and then other than that, just enjoying nature out here in beautiful colorado,

in your opinion, what sets apart successful investors from those who give up fail or never get started?

I think I'm gonna say I'm gonna use three terms because I believe that all of these are violate essential for, for people to be successful in real estate. First of all, they need focused, you gotta stay focused on what you, what path of investing you want to participate in. If you're a new investor, don't get the shiny object syndrome, choose a path and take action and follow it. But the biggest thing over time, I think is just staying the course tenacity and creativity or the two other key words. Um, real estate has a lot of obstacles and it's it's not easy, right? Like this takes a lot of time. This takes work. This isn't a get rich quick type of scenario and it's challenging and frustrating, but you, as long as you can stay consistent to investing, this is a lifelong journey, generational journey as you teach your Children how to be a successful investor as well. But you've got to stay the course and be creative about solving problems. There's always a solution multiple solutions often and you know, put in the due diligence to find out what those are

very wise words to live by Zach. Lastly, can you tell us where people can find out more about you?

Absolutely, our Youtube page were, although it's a newer page, we're trying to put out as much educational information about all things real estate. So our pages just rent to retirement, rent, t. O. Retirement, they can go to our website as well, that's rent to retirement dot com to learn more about, you know, our team, different things that we have going on. If they're interested to learn about turnkey investing in the any of the areas that we operate in. Um that's and that's got links to all our social media accounts as well. So that's a great place to start

rob. How about you? Well,

you can find me on Youtube as well, on rob built. That's R O B U I L. T. And you can also find me on instagram at rob bill and Tiktok at rob bill toe.

All right. And if you like the interview that you heard today with Zach, go check out bigger pockets. Youtube page, we have a ton of stuff. I guess it's called a channel. Not a page, tons of stuff on there, different interviews. I'm interviewing people, rob's got some stuff that's on there. Lots of different, bigger pockets personalities that if you want to get deeper into this world, there's plenty of content and then be sure to check out bigger pockets dot com slash podcasts where you can see the other podcast that we've got for you to listen to on specific topics you want to follow me specifically. I am David Green 24 on instagram and everywhere else. Zach, this has been fantastic. We really appreciate you being here with us and sharing your information. Is there any last words that you'd like to leave with our audience before we let you go

go and take action. It's a crazy world right now. You know, high inflation, more interest rates are crazy competitive markets. There's still deals to be had and people are still being very successful in real estate. Don't let that stop you educate yourself and take action. It's been fun guys, Thank you so much,

awesome. We'll let you get out of here. This is David Greene for rob power solo signing off