How a 33 year-old can own 167 rental units, without having to put any money down

• Sam Primm borrowed money from a private lender to purchase his first home, and then he transferred the loan to a mortgage. 
• He uses hard-money lenders now to purchase and flip properties, while rental income pays off the loans.
• He will share the essential steps and components needed to create these deals.

It is easy for one to assume that someone with large property portfolios started with a substantial amount of money or some kind of head start. 

However, this is not always true. Sam Primm claimed that he purchased his first home at the age 26 with money borrowed from a private lender. According to property records seen by Insider, Primm and his middle school friend now own 85 houses and an additional 82 apartments units, making them 167 income-generating rental properties. They mostly operate in the Greater St. Louis area.

Primm stated that he did not use any of his own money in order to build his portfolio and that he never used his own money for repayment. 

“I borrow money from people to buy real property, which is an asset. Primm stated that she takes the cash flow generated by the asset and then pays the people from whom I borrowed it.

Faster Freedom is his educational platform that offers a free service. He now focuses on helping other people achieve financial freedom. He shares content on YouTube, Instagram, TikTok and Twitter, where he has over 1,000,000 followers. He teaches the same methods that he used to build his portfolio.

Primm believes that anyone could do what Primm has done. Before he got started, he worked a 9-to-5 job as a construction-equipment sales manager. 

Insider spoke with him about how he got started, how he vets properties and how he secured loans. 

Secure the funds

Primm stated that his first property was a one-family home. Primm borrowed money from a private lender and planned to repay it after renovating the property. Insider obtained a contract agreement showing that he secured a $100,000 loan with a 8% interest for a 12-month period. 

However, he quickly realized that he didn’t have to sell his property to pay the lender. 

Primm stated, “I could keep the rental myself and not need to sell it if I go to the right bank and understand the system.” 

A cash-out refinance loan was obtained from a bank. This is a loan that is taken out on property that already exists. This let him pay off of existing liens — in his case, the private lender. This is known as the BRRRR process, which stands to buy, rehab rent, refinance, repeat.

Primm explained that banks are reluctant to lend money on high-risk properties. An investor must first get the property to a reasonable level before they can qualify for a loan. This will require capital. 

Primm can use two types of lenders to buy properties: a private lender and a hard-money lender. The first is someone you are able to borrow the amount from. This can be a friend, family member, or mutual connection who is willing to lend you the amount but isn’t keen on doing the work. 

Primm’s first purchase was made by a friend.

After acquiring the first property, he was able turn to hard-money lender, which is a company or fund that will lend the money. This requires credit checks. Underwriters are also required to assess the property’s market value.

They often have a higher interest rates. Primm does not hesitate to take this route as there are benefits to working together. 

It’s a company. They are experts in real estate. Primm explained that they know the market or they wouldn’t be lending.” Primm said that they will double-check any deal they make before lending on it. Private lenders won’t do this. They trust you.

These types of lenders will not lend long-term loans. Primm stated that the terms are typically shorter with an average of six months.

Traditional banks are still an integral part of this process. Once the property is rented and fixed, the cash flow it generates will qualify you to get a mortgage. Your monthly payments may drop up to half depending on the terms. 

Primm advises that you don’t wait until the property has been renovated before looking for a bank. Primm suggests that you build relationships with local banks during the renovation process. 

Primm stated, “Before a property or contractor is purchased, you need to go to the bank to talk to them about it and ensure that they are okay with doing an 80% cash out refinance and taking out a loan.” “So, you kind of get preapproved for the type of property that your are buying or selling.”

Primm stated that even if the bank declines to lend, it doesn’t mean the end of the universe. You can always sell the property for its current market value and move onto the next project. 

It is crucial to choose the right property 

A great deal is essential in the buying process. You want to make sure you have the right profit margins and that the lenders see the potential of the property. 

Primm is interested in bank-owned property: properties that were foreclosed, then sold below the market value, and particularly distressed properties that cannot be moved-in.

Then he determines the property’s worth after repairs are completed and purchases it for 75% of that amount, less any costs. Or, he buys the property at half of its value after repairs are completed. 

When looking for property, he has three main requirements. He first looks for a property in an area that he can comfortably rent out long-term.

“I see a rental home as a long-term investment. Primm stated that he intends to keep the property for the next 25-years. Primm said, “I do not want to rent a property in an unsafe area for my tenants.”

He considers buying distressed properties that need repairs his second priority. This allows him to get properties at reduced prices. 

He also ensures that the property has cash flow. He determines the rent that the property is eligible for and subtracts all monthly expenses such as mortgage payments and insurance.

He stated that one of the greatest risks with this type buy was underestimating how much work is required. 

Primm explained that his property now generates enough cash to cover his personal and business expenses.