Want to learn some valuable and exclusive real estate and passive income tactics? In this episode, Sam Primm shares his real estate journey and how he realized that there is no ceiling to the money he can make through flipping houses! Sam shares how to analyze the market and leverage on your assets to get the best deals. Sam explains how your mindset, attitude, and ethics also play a huge role in your journey.  He also touches on partnership, brand building, making connections, and more! Tune in and see what fits your needs as a growing entrepreneur and real estate investor!

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Flipping Houses And Making Money: Learn The Best Real Estate And Passive Income Tactics With Sam Primm

Before we jump into our interview, I want to make sure that you have every opportunity to check out what we are doing over at FlipTalk.com. We have some amazing things in the Flip Talk universe, from events to free stuff to coaching, mentoring, and our mastermind community. Go to FlipTalk.com, and look around there and see if there is anything that fits your needs as a growing entrepreneur and real estate investor. With that said, I have Sam with me. How are you doing?

I’m doing well. How are you doing?

I have no complaints at all whatsoever, which is part of being an entrepreneur. We don’t ever have complaints if we are doing it right.

If we do have complaints, it is usually our doing. We got to figure it out.

How are you doing?

I’m doing well. Everything is going well. I got a few people spooked but I seem to think it is going to be all right. We keep going. We are not slowing down. Good deals are good deals no matter what the market is.

Good deals are good deals no matter what the market is. Click To Tweet

When did you get started? Let’s hit that. We can stay on this topic for a minute.

I didn’t make it through anything crazy. We started in 2014 and 2015 timeframes.

I went through 2008. I love listening to the optimism of the guys who got in after because that was the optimism that I had. I don’t think there is going to be 2008. I want to stress that out. Whatever we see is going to be fundamentally different. There are a lot of different reasons but it is a whole different conversation.

There is an optimism you have when you haven’t gotten kicked in the nuts 100 times. There is this caution that almost walks the line. Scarcity will be the wrong word that you have when you have lost everything. We look at it from two different points of view a little bit. That is a different conversation. I don’t think anything bad is going to happen in the market coming up. There could be some things that affect our businesses that we are not aware of. It is something to hit on, beat up and have a dozen conversations about. Have a cigar, a whiskey and laugh.

No one knows for sure. We don’t need to dig too deep. I look at and talk to people. I don’t see anything that wasn’t around as drastic as ‘08. I’m sure there is going to be some type of softening correction. It can’t remain at the pace it has been. I understand that for sure looking at that. Things shift but as long as you are not over-leveraged and you have a good base of equity, you have 40% equity in your rentals so collect cash. I don’t think it is going to be all sunshine and rainbows. I was saying, “I’m not a doom and gloom guy like it used to be in sales.” It is negative sales now.

From the thumbnails, I see that the market has been crashing. It drives me bonkers. I’m more optimistic to be the guy on that side because many people utilize this to fearmonger people into watching their videos to get clicks. I’m obnoxiously overconfident or not confident but positive about it because I have to be on that side of it. A ton of people, negativity sells, the market is crashing, the world is ending and zombies are coming. That is going to get clicks rather than, “It is going to be okay.

You said something in your comment.s “Good deal is a good deal.” Make sure that you are running a sound business. You have some fundamentals and core sand lines in the sand for what you don’t buy and it is a good deal. You are buying properties that have equity in them. You are making sure that you are able to cashflow those properties. You are not over-leveraging. It is extremely important. If you are buying at retail, I’m betting it is going to go up and you are barely breaking even on that property. If one thing goes wrong, you are crashing and burning. Having good core business principles is important.

Not just being in business too long but also all the stuff we bought in St. Louis, we know the market and all cashflows positively. Some cashflow $120 a month and some cashflow $600 a month but they all cashflow positively. Our running portfolio is sitting at about 60% loan to value. I’m not thinking we are going to continue to have properties. No matter what happens, you are going to make money because of the tailwinds. I’m a little more optimistic than, “We are all screwed. The zombies are coming. Get your canned goods and go in your bunker.”

You got started in 2014. What did that look like? Why did you even get into real estate?

I got into it because of my business partner Lucas. He was an engineer at the time and he disliked his job. I liked my job. I was making good money. He wanted to have somebody do real estate with him, not on his own. He was having a partner and buddy do it more than anything. We started to experiment and do it on the side. We bought a couple of rentals. We did a couple of flips and wholesales. I started to love it and that made me realize that I wasn’t quite fulfilled in my job.

The amount of money I was maybe made me think I was fulfilled but I started to see that there was no ceiling to how much wealth I could create. There is no limit to how much money I could make passively and actively. I can be able to able to control my financial freedom and do what I want. I want that little taste of seeing, “We bought eight rentals on the side. We bought eighteen rentals on the side.” What would we do if we could spend 60 hours a week on this?

The amount of money you make can make you think or feel that you are fulfilled. But in flipping houses, there is no ceiling to how much wealth you could create. Click To Tweet

As we started slow, we built up a rental portfolio and got a pipeline of connections with people, deals and lending sources. It came at a time in 2018 when I went full-time. I took that leap. I have been going at it hard since then. 2014 to 2022 are the hottest eight years ever in real estate. I got lucky and timed it there. I’m working on stabilizing and getting things to a point where hopefully, we can withstand whatever storm or rain is coming.

What does your business look like now? You are buying rentals and building your portfolio. Do you do any flipping and wholesaling or any other strategies as a real estate investor, besides this buy and hold?

I will give you a quick breakdown of our company. We have a flipping company here in St. Louis. When I say flip, we mean wholesale and fix and flip. We are going to do about 300 houses in 2023. It is about 250 wholesale and 50 house fix-up flips and sells. I’m always adding rentals. I have a $40 million run portfolio that I bought. Lucas and I have single-family rentals, apartment complexes and self-storage facilities. I have a couple of property management companies that manage our properties and a few other people. I have a real estate education investment company and social media stuff. The wings are buy and hold, active real estate investing and the education side of it. All real estate, all day, every day.

I love high-volume guys. I have operated about 200 deals a year myself. I always want to know what your infrastructure looks like. That is where my head goes. What does your team look like? What does your infrastructure look like? Let’s do that first. What do the 300 deal-a-year operations look like?

There are about 22 to 23 employees. We have to start with the people-facing or the customer-facing. We have five full-time acquisition guys. Their job is to go out and buy houses through the marketing leads we give them and as well as their networking. We buy about 60% of our houses from $0 of marketing spent on networking. They are out there networking as well as buying our leads.

We have a full-time dispositions guy who sells all those wholesale houses. We have an agent who sells all the flips. We have a project manager that manages all the rehabs that we do. We have a couple of contracts to close people to help get everything to the finish line in marketing and branding. We have some office staff, support, VAs and sales managers.

I have mentioned Lucas a couple of times. He runs this flipping company. I run the education. I haven’t been to a meeting in that company in over a year but it is a good source of passive income for me. We also have a couple of other odds-and-ends roles in there. We have someone that does the last 5% of every rehab because contractors seem to suck at that. We hire somebody that is detail oriented to do that. All in all, it is about twenty employees give or take a little bit. It is a good machine that we got going, rocking and rolling over there.

All of it aligns for me except for the one dispo guy. How does one dispo guy wholesale 250 properties and not want to slam his head in the door twenty times a day?

We are working on that. Our team is all building run a portfolio. We have over 600 doors between our team. Lucas and I have 275 of them. Twenty-five percent go in-house. That is simple. He gets paid still but a little bit less to sell to somebody in here. That is easy.

Of the 250, you are selling some of them to yourself.

I would probably say 75 to 100 between Lucas, myself and all the other employees. We got a good buyer’s list. We are in the process of hiring an assistant for him to help because he is overworked. In 2022, we did 200. He was probably maxed out of 200 with people buying in-house. We took that jump in 2023 on the path through that. We are going to get him some help and support. He is a talented individual so that helps. If I were you, the first thing I would be like is, “That doesn’t quite add up.” That is what we are working on.

You got to take the time to negotiate with buyers and everything else. You have some great systems in place and your partner being an engineer, I’m assuming that you got some fantastic systems in place and some processes in place to take a lot of that. You can systemize a lot of your business. I don’t have to tell you. We are talking to the audience. A lot of that workload is in automation and not necessarily on the individual but still, the number of conversations you have to dispo how many deals can drive somebody insane. When you are doing rehabs, do you run contractors or subs?

We have all 1099 contractors do the workforce but nobody is in-house. It is all crews that we have been working with over the years. We have our A team, B team and C team. I always tell people that they have a core group of contractors they work with but they may get greedy and raise their prices. They may hire a bad crew, may go out of business or move.

We have a good core group that does most of our things that we sometimes bid out and sometimes don’t. We trust them and have worked with them for years. We have other contractors that we can sub we need as we grow but we are a decent-sized outfit as far as 50-ish rehabs a year, maybe even a little bit less than that. We have been starting to wholesale a little bit more with the unknowns of the market.

 

We maybe are only going to do 40 in 2023. That is a lot for a project manager. That is all they do, as well as that guy that helps unbutton things up at the end along with contractors that we know and trust that that is not too heavy of a lift there. We are managing 3 or 4 at times. It is not anything too bad for somebody to do their full-time job. It is a managed contractor that is working on the projects.

People hear 50 a year and that is roughly four a month. If your average turn time is 4 months, you are talking about anywhere from 12 to 16 properties in inventory at a time. It would not be a huge lift for project managers, especially if you got some good GCs in place. They take a lot of that load off. It goes down to systems and processes. BRRRR is your primary method. Let me step back. It takes a tremendous amount of leads to be able to buy that many properties in a year. What marketing are you doing or do you find is most successful for you to generate leads?

Our biggest spend is on TV. We did quite a bit of TV. It is a decent return on the actual ad spend and leads we get directly from that but it is more of a big-picture branding thing. You know that you have to buy these distressed properties and come across the right person at the right time. You can try to do that with list stacking and ads and try to figure out who went through bankruptcy or probate or whatever is going on in their lives or something is not good. We have those sources I can talk about but the TV is to get them across to the right people at the right time. Also, they see our ad enough and something does happen. Even if they do not see our ad, hopefully, they remember our name, look us up and search our website.

TV is our biggest spend. We make a decent amount of direct mail, some bigger lists and smaller stacked lists. We do some SEO. We are back and forth on AdWords and pay-per-click. We have done it and we don’t do it. We go back and forth on it. We buy the majority of our deals through networking with people talking to real estate agents and other wholesalers. We are going to buy 75 houses a year from other wholesalers that were their easy button and they bring it to us. We can either flip it, keep in-house as a rental or even market it up a little bit.

We spend about $40,000 a month in marketing, nothing crazy for how many houses we do. It is because of that 60% relational-based buying that is like a gravy train. You get a good real estate agent, wholesaler and insurance agent or whomever it is that knows a ton of people. They bring you 8 to 10 leads a year, 3 or 4 buys a year. That adds up if you got 5 or 6 of them coming to you

What is the infrastructure you have in place to handle the call volume? If you are running TV, you are getting a lot of looky-loos direct mail. It drives a lot of calls. What does your team look like on that?

We have an inside sales rep and a lead manager. The inside sales rep takes all the initial calls and qualifies them. The phone is not ringing off the hook but it rings a decent amount. She is taking in all the calls, qualifying and trying to set up appointments on the spot. We have a lead manager that is nurturing and helping the sales guys manage all those leads that come in. We are getting 125 to 150 leads a month, nothing too crazy.

We have five acquisition guys. We don’t want to give them too many leads because, like anybody else, they are going to take the low-hanging fruit. If they get three leads a day, they are going to pick the best one but if they are getting a lead-ish a day, hopefully, they will try to squeeze all the juice out of that. We are nurturing along with our sales guys as well as a little bit of inside support that helps keep a point of contact and keep us top of mind to the seller.

 

BRRRR is your strategy. I’m assuming that is what you teach.

BRRR with an S. You got to change it, Don. Come on. It is Buy, Rehab, Rent, Refinance and Scale, not Repeat. We changed it.

Let’s talk about BRRRS. BRRRS is something that can help you build a portfolio fairly quickly if you utilize a strategy properly. For anybody who doesn’t know what BRRRS is and has been living under a rock, not reading the blog or just finally looking into real estate investing, let’s describe what the strategy is and why you’d want to use it.

The BRRRS strategy is a way to use other people’s money to buy rental properties. Most people think you have to put your own money or at least 20% cash down on a rental property but it is a way to buy distressed properties and utilize leverage and cashflow from those properties to pay off whomever you borrow the money from. It stands for Buy, Rehab, Rent, Refinance and Scale.

 

It is a way to back end 20% down. Banks don’t care about the 20% down in cash. They want that equity. They want a safe position on their loan. If it is a $100,000 property and they lend you $80,000, you can put 20% down on that. If you were able to create that equity, they would also lend you $80,000 since you happen to have a property that you owe less than it is worth.

It is a way to back end that 20% down with equity. It is an extremely powerful way to grow quickly if you don’t have unlimited money, which few people do, especially people that are getting started. I did well for myself before I quit but I wouldn’t have been able to put 20% down on 18 rental properties like we did the 2nd year. That is a lot of money but we are able to do that easily because we are leveraging and using other people’s money.

Let’s talk about private money, leveraging and using other people’s money. How do you find private money? We do 100% private money. That is our whole thing. For everything we rehab, we don’t put any air money in it. The question always is, how do you find those people? I’m going to ask you that same question. How do you find those people? Where are they? How do you have those conversations?

Private lenders are not what everybody thinks. I’m sure you hear this all the time. I can’t tell you how many times I got comments on social media like, “I wish my dad was rich like yours.” I was like, “I wish my dad was rich too.” It is usually relationship-based. People think it is somebody that sent a millionaire. They are worth $100 million and they are going to give you money. It is not that. It is your neighbor or your neighbor’s friend. It is your network or your network’s network. It is somebody that has a little bit of extra money.

I was talking to somebody. I told him to go talk to real estate agents to get deals. They talked to several agents. They found one they connected with. This agent was like, “I always wanted to do this but I don’t understand and don’t have time. I’m taking my money out of the stock market because it is not looking good. I got an extra $100,000. Could you use that?”

It is people that have a decent amount of money saved up and are looking to diversify a little bit. It is usually an insurance agent, CPA, your parent’s neighbor or your mom’s boss. It is somebody that has a little bit of extra money that wants to diversify. They believe in real estate but they don’t have the time to do it. They don’t want to do it but they are willing to invest in you and real estate. They are amazing because of the flexibility and relational things you can do with them.

It is not just some pie in the sky, somebody driving up there or flying their private jet everywhere. It is normal people with a little bit extra money that you got to get in front of by talking about real estate and its power of it. It is a great investment for them. I used to be like, “Thank you so much for your money.” Now I’m like, “You are welcome. I’m giving you an extremely great return on a safe investment that I’m guaranteed to pay you back.” It is a powerful thing once you can start to make some connections.

It’s a very powerful thing to start making some connections. Click To Tweet

Let me ask you this, instead of how the conversations go, because the conversations are the wrong direction to go with this but what do you usually offer your lenders? You are buying these properties. You are going to renovate and refinance them. You are not going to be in them for a long period with private money. What does that typical loan look like with interest rate and points with that lender? How do you usually structure it?

It is a little bit different but with each one, we are trying to get it streamlined. In general, we offer them a minimum of 8% return on their money. If we turn it a little bit quicker, that can go up. The average private lender gets 8% to 12% annualized on their money. We offer that on the backend. We don’t pay monthly payments or anything. There are no points. It is just that return on the backend. We guarantee it. We are putting our skin in the game.

We are not putting our money in the game but we are putting our assets in the game. We guarantee the loan with every single one. We add them as additional insured. If the building burns down, the check goes to them and us. If they want to, they can be listed on the deed or have a lien on the property. They are protected in their investment. It is 8% to double-digit returns that can turn in 2 to 3 months quickly. That is how we do it. How do you do it?

We are strictly rehabbing. We are not necessarily BRRRRing the properties. Our buy and holds are typically subject to properties. Our structure is 10% in one point is how we will do the lender. Every lender is different. For some of them, we do make monthly payments and for some of them, we pay everything on the backend but it depends on their preference. It is similar to a certain degree.

The only caveat is that it has to be 100%. They have to loan us 100% of our purchase price, rehab costs and any holding cost because you can’t scale a rehab company by putting money into projects. You are going to be broke all the time and we don’t get into this business to be broke all the time. That is how we do it.

We talk to everybody we can talk to and tell everybody we can tell what we do. We are always looking for referrals for lenders and having conversations. The key for me is you have to be asking and looking for the money before you need it. A lot of people make the mistake of not trying to get the money lined up or at least the relationship lined up before they need the money. When you need the money and you are asking for the money, there is a whole different conversation that happens. That is a key takeaway for me.

I always get asked, “Should I find the deal first or the money first?” The answer is yes, both. Always be looking even if you don’t have a deal and always be looking for a deal. The worst case is you can wholesale if you don’t have the money or try to raise the money but whatever it is, always be looking for both and add extra funding sources, whether it be private, hard money or bank money. Always be looking to have way more money available than you think you are going to use so you never have to turn a deal down or do the best extra strategy because you don’t have money.

Let me take this in a different direction. I checked you out when we talked before, but I checked you out when we booked this show and you have blown up big on TikTok. Congratulations. My question is, how does having a social media presence help you in the real estate game? We know all the other ways that can help you, but is it worth doing for somebody that is trying to find deals or private money? Has it opened doors for that stuff for you?

It has. I haven’t walked through any of those doors yet. I get a decent amount of people sending me leads. A few people are offering money or asking if I’m looking for lenders. It can do that, especially if that’s your focus. If you talk about money a lot and deals and make that a point in a lot of your content, it can for sure help, especially if you want to go national and have a bigger, broader deal flow.

It wasn’t a ton for me. Mine is more about building the brand for educational purposes and eventually having people do the mentorship if they are interested. It is not necessarily to find deals. However, it does work for that if that is what you want to do. Everybody should try it. Ninety-nine percent of people on social media are consumers. Only 1% are creators.

It is a great opportunity for people to grow a brand. Who knows what it will turn into? It could turn into the deal flow, money, affiliate or marketing. It could turn into many things. Having millions of eyeballs watching you every single day is never a bad thing, in my opinion. You can figure out how to monetize it or not if you want. Having eyeballs that you can point in a direction is extremely powerful and has never been easier, honestly. I don’t think it’ll ever get easier. It is still the time for most people if they have any interest.

What would you recommend to somebody to do if they are getting started in this business? Somebody has this wild, crazy idea and they want to be a real estate investor. Where should they start?

They should start by connecting with their local community at 1,000% every single time. If you want to invest in your backyard, which is what most people do, I know some people do remote investing and virtual investing but a majority of newbies are investing where they live. You got to get connected with your local industry.

People that are not in the industry don’t understand this, but there is in almost every single city that is decent sized. There is a time every single month, maybe multiple times, when everybody meets at their local meetups. There are contractors, hard money lenders, private money lenders, real estate agents, wholesalers, insurance agents, title companies and banks. Everybody that you are ever going to need a meet meets at your local meetups that are active.

Facebook groups are great to join and get to know people and see active people, but the people that get in their car, drive and go to the monthly meetup are the people that are putting themselves out there and that are willing to meet people and get outside their comfort zone. They do that because they are active or getting ready to be active.

Join your local meetups, talk to people in your market and get to know everybody. The real estate investing market industry is not that big if you get active investors compared to most cities. It is a small group of people that are usually willing to help. There are a million different things you can do after that. The first thing you got to do is meet local investors and people that you are going to be doing deals with and fixing up deals and selling deals

Tell everybody how to get ahold of you if they want to find you.

Follow me on social media. That is the best thing to do. Whatever social media is your favorite, I’m on all of them. @SamFasterFreedom is my social media handle on everything. Follow me and message me on Instagram if you want to connect with me. That is where I’m active on Messenger. Follow the free stuff and put me what you want. Whatever you want to do, enjoy it, go out and take action.

If you are getting value from the show, make sure you are following Sam at Faster Freedom wherever you can find him on social media. Make sure you are going over and checking out FlipTalk.com for all the things we have going on Flip Talk universe. Sam, thank you for being here. I appreciate it.

Thanks for having me.

 

Important Links

• Sam Primm
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• @SamFasterFreedom – Instagram