How a 33-year-old man owns 167 rental units without putting any money aside

  • Sam Primm went to a private lender for his first property, then turned his loan into a mortgage.
  • He now uses hard money lenders to buy and flip property, while rental income pays off mortgages.
  • It shares the key steps and components needed to put these agreements in place.

It’s easy to assume that someone with a large portfolio of properties probably started out with a large sum of money or had a head start.

But it’s not always the case. Sam Primm said he bought his first property when he was 26, using money borrowed from a private lender. Seven years later, Primm and his college friend now own 85 homes and 82 apartments for a total of 167 income-producing rental properties, according to property records viewed by Insider. They mainly operate in the greater Saint-Louis area.

Primm said he used none of his own funds to build his wallet and none of his own funds to pay it back.

“To put it simply, I borrow money from other people to buy real estate, which is an asset. And then I take the cash flow produced by the asset and pay back the people to whom I borrowed the money,” Primm said.

He is now focused on helping others achieve financial freedom through his freemium educational platform called Faster Freedom. He also uses YouTube, Instagram and TikTok, where he has over a million subscribers, to share content. The methods he teaches are based on the processes he used to build his portfolio.

Primm thinks anyone can do what he did, he said. Before he started, he worked 9 to 5 as a construction equipment sales manager.

In an interview with Insider, he explained how he got started, how to review properties, and his process for getting loans.

Securing funds

Primm said his first property was a single family home. He borrowed money from a private moneylender with the intention of paying it back after he renovated and sold the property. He got a $100,000 loan with an 8% interest rate for 12 months, according to a contractual agreement seen by Insider.

But he soon realized he didn’t need to sell the property to repay the lender.

“I could keep this rental myself and not have to sell it if you go to the right banks and understand how the system works,” Primm said.

He got a cash refinance loan from a bank, which is a loan taken out on an already owned property. This allowed him to repay existing liens – in his case, the private lender. The process is popularly known as the BRRRR method, which stands for Buy, Rehabilitate, Lease, Refinance, and Repeat.

Most banks don’t want anything to do with a high-risk property that needs work, Primm said. So, to qualify for a bank loan, an investor will first need to bring the property up to standard of living, which requires capital.

For this, there are two types of lenders that Primm uses to purchase properties initially, a private lender or a premium lender. The first is simply someone you have a relationship with who is willing to lend you the required amount. It is usually a mutual connection, a family member or friend who wants to invest in real estate but is not interested in doing the work associated with it.

For Primm’s first purchase, he turned to a friend because it was easier than trying to get a loan with no experience.

After the first properties, he was able to turn to hard money lenders, which are companies or funds that will lend you money. This process requires credit checks and includes underwriters who also determine the value of the property.

The downside is that they often have a higher interest rate. But Primm isn’t shy about going that route because there are benefits to working with them.

“It’s a business. They know real estate. They know the market, otherwise they wouldn’t lend,” Primm said. “So they’re going to kind of double-check the deal to make sure it’s a good deal before they lend on it. Private lenders won’t. They just trust you.”

It is important to note that you will not get a long term loan from these types of lenders. Terms are generally much shorter, with the average being around six months, Primm said.

That’s why a traditional bank is always part of the process. Once the property is repaired and rented out, the cash flow it produces will qualify you for a mortgage. This is also when your monthly payments halve, depending on the terms.

Primm recommends not waiting until the property’s renovation is complete to find a bank. Instead, you should build relationships with smaller, local banks throughout the process, he said.

“Before you even get a property or a contractor, while you’re working on it, you go to the bank and talk to them and make sure they’re okay with doing an 80% refinance and getting a loan,” , said Primm. “So you’re sort of pre-approved on what type of property you’re going to buy or have bought.”

If the bank says no, it’s not the end of the world, Primm said. You can always sell the property at its new market value and move on to the next project.

Choosing the right property is essential

Getting a good deal is an essential part of the process, as you’ll want to make sure your profit margins are worth it and lenders see the property’s potential as well.

Primm looks for bank-owned properties: those that have been foreclosed and then sold below market value, especially distressed properties that are not ready to move into.

He then determines what the property will be worth once repaired and buys it at 75% of that price, less repair costs. Either he buys the property at 50% of what it will be worth once repaired.

It has three main requirements when looking for a property. First, he finds a house in a neighborhood where he feels comfortable owning a long-term rental.

“I view a rental property as a long-term asset. I’m going to hold it for the next 25 years,” Primm said. “I don’t want to buy a rental property in the neighborhood that I think is unsafe for my tenants.”

His second priority is to buy a distressed property that needs repairs. This helps him get properties at discounted prices.

Finally, he makes sure that the property will have cash. It does this by determining how much rent the property can get and subtracting all monthly expenses, such as mortgage and insurance.

He said one of the biggest risks associated with this type of purchase is underestimating the amount of work required for the property.

The cash flow his properties now produce covers both his personal expenses and his real estate expenses, Primm said.

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