Millennial Owns 200 Houses, But He Gets Others To Pay For Them: How To Invest In Real Estate While Mortgage Rates Are Sky High

Thirty-year fixed mortgage rates have climbed to the highest levels in more than 20 years, but that's not stopping one savvy real estate investor from doing what he does best: buying houses without burning through his own money. 

What To Know: The housing market has essentially reached a stalemate as anyone who has already locked in a lower mortgage rate is unwilling to sell and anyone looking to buy has to use the highest mortgage rates in more than two decades — it's not a buyers or sellers market. 

That's not a problem for real estate investor Sam Primm. According to a Business Insider report, Primm says there's never a perfect time to buy a house.

Even if interest rates were to drop significantly, housing prices would go back up, Primm said. 

The 35-year-old investor has bought approximately 200 houses over the last 10 years using the BRRRR strategy, which stands for buy, rehab, rent, refinance and repeat. 

Primm buys a property and increases its value through renovations. Then he refinances the house under a traditional mortgage and rents it out, charging the tenant the cost of the mortgage. Primm then owns the house while someone else is paying for it. 

As the housing market evolves, he evolves with it by adjusting margins to stay cash flow positive. For anyone looking to implement a similar strategy, here's what Primm recommends.

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First, you have to be willing to accept tighter margins while mortgage rates are high. 

"You're not going to be able to buy rental properties, especially with the method that I use, the BRRRR method, with none of your own money, and have $500 a month cash flow," Primm said. 

He normally shoots for cash flow of $300 to $500 per month, but he's willing to accept $100 or $200 in the current environment. Focus on the long-term upside, he said.

Next, real estate investors need to do a couple of things to remain cash flow positive on tighter margins. Investors should always charge market rent. As rental rates rise, you have to make sure you're keeping up, he said. 

You can also opt for longer-term mortgages, which cost you more in the long run, but can allow you to decrease your monthly payments, which can help you stay in the green. You can always pay more when you have extra cash, he said. 

Another tip is to check out what smaller banks are willing to offer. Sometimes you can find better rates from smaller banks, which can make a big difference long term.

Lastly, if you aren't making enough by filling your properties with long-term tenants, look for medium-term options or even short-term rental opportunities by using Airbnb Inc (NASDAQ: ABNB). Short-term rentals work much better in popular tourist areas. They also require more work, so make sure to assess the pros and cons, he said. 

Read Next: She Turned Her Neighbor's Barn Into An Airbnb, Now She Generates Nearly $3M A Year From Rentals She Doesn't Own

This story is part of a new series of features on the subject of success, Benzinga Inspire.

Photo: Sephelonor from Pixabay.