A conversation with Zach Lemaster, founder and CEO of Rent to Retirement

Most investors decided turnkey rentals were dead the morning mortgage rates crossed 7%. Cash flow evaporated, the math stopped penciling, and the smart money went to the sidelines to wait for a cut that keeps not coming. 

That’s the consensus, but it’s looking at the wrong number.

Zach Lemaster runs Rent to Retirement, a turnkey company that sells and finances new-construction rentals for investors across the country, which means he sees what’s actually closing right now rather than what the internet says is closing. I sent him six questions about the deals he’s writing today, the mistakes that wreck first-time out-of-state buyers, and what he’d do with $50K if he had to start over from zero. 

His answers are below, unedited. My job is to tell you what to do with them.

Most people think turnkey rentals stopped cash flowing the day rates hit 7%. What’s actually happening in the deals you’re closing right now?

With rates remaining at current levels and the market slowing, sellers are willing to negotiate significantly more, creating a scenario where investors can acquire some of the best deals I’ve seen in decades. 

For example, some builders are willing to offer up to 15% of the home price as cash back at closing or a price reduction. If you put 20% down on a new-construction SFR (single-family rental) and received 15% back at closing, you would only be into the home for 5% down! This exponentially increases ROI. You could also use this 15% to buy down rates into the 3s, which would dramatically increase cash flow.

The best time to buy at REI is during a buyer’s market. Buyers currently have much more negotiating power and a unique opportunity to structure a deal with positive cash flow by controlling the terms.

This is the whole interview in one answer, so let me do the math he’s pointing at.

Take a new-construction SFR at $300K, and 20% down is $60K. A 15% builder credit is $45K. Apply that credit to your down payment, and you’re in for $15K of real cash, which is 5% of the purchase price. It’s the same house but a quarter of the money in the deal.

Or you don’t pocket it. You spend the 15% to buy down the interest rate. A rate in the 3s on a house that still appraised at full price moves the cash flow line from “barely” to “comfortably,” and you locked it in instead of waiting for the Federal Reserve to do it for you. 

The catch, and Zach would say this himself, is that incentives this size show up when builders are sitting on standing inventory. That’s a buyer’s-market signal, not a forever feature. The window is the point.

Your move 

Next time you talk to a builder or turnkey provider, don’t lead with the price. Ask what they’ll do at closing on standing inventory: cash back, rate buy-down, or price cut. Then run the deal both ways—15% toward the down payment versus 15% toward the rate—and see which one your market actually rewards.

What’s the most common mistake new investors make their first time buying out of state, and what’s the one thing that would have saved them?

Not going through proper due diligence and buying in low-income areas. Regardless of whether you are buying locally or at a distance, always complete all appropriate due diligence steps. This includes hiring a third-party home inspector, having full title work completed, and having an independent appraisal of the home. Make sure your contract includes contingencies for each of these items to protect you throughout the buying process. 

Lastly, there are some investors that are very successful investing in low-income areas, but it’s generally not the best approach for newer investors just getting into the game.

He names two mistakes and treats them as one, because they are. Skipping due diligence and chasing the cheap door in a rough ZIP code stem from the same impulse: trying to win on price rather than on process. 

The third-party inspector, independent appraisal, full title work, contingencies written into the contract—none of it is exciting, and all of it is the difference between an asset and a lesson. I’ve bought sight-unseen, and I’ve bought after flying out, and the only deals I regret are the ones where I let the excitement outrun the checklist.

Your move

Put your three nonnegotiable contingencies into your offer template right now—inspection, appraisal, and title—so you’re never deciding whether to “save time” by skipping one when you’re emotional about a deal. And shelve the low-income-area question until you’ve got a few boring deals behind you.

If you were starting over today with $50K and a W-2 job, what’s the exact first move you’d make?

I would do exactly the same thing I did when I got started. I would first invest in myself through education to ensure I have a clear understanding of and clear expectations for my goals. Since I built wealth through real estate, I would follow the same path. Buy newer homes in good areas with quality teams. 

I would not wait forever to find the perfect deal. So many people waste years trying to find the unicorn deal or trying to time the market. I would outline a clear buy box and make an offer as soon as I find a home that meets my criteria.

Assuming I already have adequate reserves, I would use the $50K as a down payment on a newer home and negotiate a deal that meets my buying criteria. Having a W-2 provides access to conventional financing, but I would also get quotes on non-conventional loan products like DSCR loans, as those loans are very competitive in today’s lending environment. Then I would simply rinse and repeat and ultimately try to diversify across multiple markets so I don’t have all my investments in one area.

Remember, cash flow creates freedom, but appreciation builds wealth!

Two things to pull out. First, the buy box. He’d “outline a clear buy box and make an offer as soon as I find a home that meets my criteria,” which is the unglamorous opposite of the unicorn hunt. 

A buy box is just your written rules: price range, market, rent target, condition, and return threshold. Deals that fit get an offer, while deals that don’t get ignored. That discipline is the whole reason he isn’t one of the people wasting years trying to time the bottom.

Second, he’d get quotes on DSCR loans (debt service coverage ratio loans, which qualify based on the property’s rent rather than your personal W-2 income) even with a salary in hand, because right now they price competitively and don’t burn through your limited number of conventional mortgages. Most W-2 investors don’t think to shop them until they hit the conventional wall years in.

Your move

Write your buy box this week: five lines, no more. Then get one DSCR quote alongside your conventional preapproval so you already know both numbers before a deal forces the question.

What’s a turnkey red flag that should make an investor run, even if the numbers look great?

That’s precisely it: If you are only looking at the numbers, you are not doing enough diligence. Don’t chase unicorn deals. Wealth is built one boring house at a time with modest returns, investing in good locations. If the numbers look too good to be true, they probably are.

This is the contrarian one, and it’s the line that’ll get screenshotted. Everyone teaches you to chase the fattest cap rate (the property’s annual return if you paid all cash). Zach is telling you the pro forma that looks best is often the one hiding the most. Modest returns in a good location will quietly beat gaudy returns in a place where the tenant pool, appreciation, and eventual exit all work against you.

Your move

When a deal looks too good, go find out why before you go find the money. Pull the neighborhood’s rent trend, vacancy, and five-year price history. If you can’t explain the great number, the number is explaining you.

What’s one market you were wrong about, and what changed your mind?

Texas (San Antonio and Dallas suburbs). I originally wrote off Texas because of high property taxes, thinking I could not cash flow. What I’ve found is that there are suburbs of metropolitan areas that have seen double-digit growth in both appreciation and rents that still provide significant cash flow, even with higher property taxes. 

Supply and demand drive home sales, so go where supply is low and demand is high. Keep it simple and consistent to be successful long term.

The honest answer is more useful than it looks. He wrote off an entire state on a single line item, property taxes, and missed years of double-digit rent and price growth in the suburbs because one scary number got there first.

The takeaway isn’t “buy Texas.” It’s that a market is never one number. Supply and demand at the suburb level beat the state-level talking point every time, and for the long-term-rental core, that means taxes are a line item to underwrite, not a verdict to act on.

Your move

Take the one market you’ve dismissed on a single stat, taxes, regulation, or being “too expensive,” and actually pull supply and rent growth at the submarket level. You might be wrong the exact way he was.

If you could text one piece of advice to someone who hasn’t bought their first rental yet, what would it be?

There is no such thing as the perfect deal. In today’s market, you have a large opportunity to negotiate and create a deal that makes sense. The old formula of putting 20% down on any investment property with a conventional loan may not work in today’s environment. 

That does not mean there are not good deals out there. The most successful investors are the most creative ones. Understand exactly what you need to acquire to meet your goals, and then be creative with all the different levers you can pull to make the deal work. Don’t pass on a deal if it doesn’t pencil out with the typical 20% down conventional mortgage. There are many other options to explore right now that can make or break a deal!

If you haven’t bought your first rental yet, you are not late. The terms just swung back toward the buyer for the first time in years, which means someone starting today has more levers to pull than the person who bought at the top of 2021 ever did. 

The old “20% down, conventional loan, hope it cash flows” formula is only one option now, not the only one. Creative isn’t a personality type you either have or don’t. It’s a list of financing tools you simply haven’t priced yet.

Your move

Don’t kill a deal because it doesn’t pencil at 20% down conventionally. Before you pass on it, run it three ways: conventional, DSCR, and a seller or builder concession aimed at the rate. The deal that dies one way often lives another.