KGCI: Real Estate on Air - How Tim Hunt Reached a $700,000 Net Worth working a 9-5 Job

Starting point is 00:00:00 Welcome to Uncommon Real Estate, where it's all about finding creative solutions for real estate agents and investors. In exclusive mastermind conversations with some of the brightest minds in real estate, you'll learn how to earn an extra six figures a year. Don't follow the herd. Be uncommon. Here are your hosts, multi-millionaire real estate agent and investor, Chris Craddock and Jeff Saferight. Hey, everybody. Welcome to another episode of the Uncommon Real Estate Podcast. I'm Chris Strattick, and I am super pumped to be here with my friend Tim Hunt. Tim has taken his 9 to 5 W-2 income job and has been learning and growing and leveling up in a way to build financial freedom for himself. Well, the problem is in the D.C. area, oftentimes when you buy rental

Starting point is 00:00:58 properties, they don't cash flow because, I mean, although the value of these properties go up, rents versus what you pay for them, it doesn't really quite work. And that often doesn't happen in any metro area. And so Tim has created a very creative custom way to be able to win in this market and be able to create cash flow in a place where there isn't cash flow. And that's one of the things I love about real estate is that you can find creative ways to win when you own a property. When you own a stock, it's like the stock is the stock is the stock. With real estate, you're able to create other ways to win, whether it's refinancing, whether it's creative financing, whether it's renting parts of the house or renting lots of different parts of the house.

Starting point is 00:01:45 So with that said, remember, we always talk wealth is when your money works harder than you work. And Tim has done a very good job of taking what he earns in his 9 to 5 where he's trading his time for dollars to build revenue that works when he's not working. So with that said, Tim, tell us a little bit about yourself. Yeah, hey, thanks, Chris, and thanks for having me on. I'm real excited to be here. Yeah, so I'm originally from the Boston area. So, you know, Boston sports teams, everybody hates them, but I love them. I grew up around there. So, you know, moved around a little bit, spent a few years in the New York City area and then married with three school-aged children right now. And we moved to Northern Virginia back in 2014 for my job. Like you talked about my 9-to-5 job, I work in the cybersecurity industry. And that's a little bit about me. And that's me and not shell right there. All right. So when we first met, remind me, how did we first connect? Was it a referral from a friend? Was that right? We connected through your uncle who lived on my street in Springfield. Oh, okay. Okay. Got it. Got it. All right. So that's awesome. So we connected. And it was interesting because

Starting point is 00:02:55 you told me what you were looking for. And, you know, because we have a big team and are usually have a lot of inventory. The funny thing was I knew of an off-market property that fit exactly what you were looking for. And I'm curious, do you remember what you paid for that property? I can, yeah, I actually have it right in front of me. I paid for, that was the townhouse in Centerville. And I paid for that. Let's see, purchased in 2020 for 362K. Okay. And if you were to just, if you Google it right now, What is the Zillow number for just here? $450.

Starting point is 00:03:38 $450. All right. So you've already got $100,000 in equity plus your monthly cash flow, plus your tax advantages, plus your principal paydown, plus plus, plus. That's why real estate is awesome. And so with that, tell me what your model is because I find this to be really interesting. And I've heard a lot of people do this, but you're the only person that I know is doing it in the D.C. area. So my model is to purchase a single family home or townhome and then divide it into basically a completely separate basement apartment, a one bedroom, and then the top upstairs and the top two floors be a separate rental.

Starting point is 00:04:19 And where I got this idea from was growing up in Boston. If you watch movies that are set in South East or South Boston or in the city, you'll see what we call triple deckers up here. So those are straight normal multifamily properties like. three families. But it's also very common for people in New York too, but in Boston for sure, to rent out their basement as a one-bedroom apartment. My sister actually did this when I was younger. She was having children to bring in some extra income. And I always thought, wow, that's a good idea. Again, you talked about like your money working for you, right? Of course, there's sacrifices, you know, with giving up some of your own house space or whatever. But she always talked about

Starting point is 00:04:57 how it helped her and her husband get through some tough times. That extra rental income was key. when their kids were little and things like that. And I was always like, oh, wow, that's not a bad idea. So when I moved to Northern Virginia, my wife was pregnant with our, we have three now, our first baby. And she was, we were both like, hey, I don't know when the baby comes, are you going to want to go back to work? Are you going to want to work part time?

Starting point is 00:05:19 We're just unsure. And so we said, let's buy a house just based upon my income. But then how do we pay the bills and try to keep building our nest egg? Well, I said, hey, if we can find a house that's set up in the right way where we could turn the basement into a separate rental. Like the kids are little. We don't need the whole house right now. We're just getting started. So that's a way where we can bring in some cash flow, save some money. You might not feel such pressure to go back to work and you go from there. So yeah, that was kind of where the idea blossomed. So tell me about the numbers on, let's just talk to that

Starting point is 00:05:52 Centerville property. Tell me the numbers on what your monthly payment is and what the two different rentals are. Yep. So my monthly payment in the townhouse in Centerville right now is about with the HOA and everything. So if I bundle everything in all the taxes together, I'm looking at about, you know, and I figured in some upkeep and things like that. So I kind of bundle all of my expenses together. Of course, unforeseen things come up. When I put in property taxes, what I normally spend and I'll stop. I'm looking at about 2,200-ish. Is it? my outflowers, my cost per month. And then my rentals are bringing in 31.50 total. All right. So you're cash flowing $1,000 a month after all expenses on a just a small little

Starting point is 00:06:46 townhouse because you did. Now, here was the thing that I thought was so interesting. So here, if anybody, if you're listening, picture this in your mind. So I really do not love this model for a townhouse. house for a buyer, right? You walk in and immediately you can either go back into the room. You don't go down like the lowest level. It's three levels. You walk straight back and you see like the kind of rec room, family room in the back. But then there's stairs right there in front of you that go directly up to the mid level. And then there's more stairs that go up further. And so for a family, I just don't like that because the stairs are right there. But when Tim was talking about, about his model. I was like, holy crap, this is perfect for your model. So tell us what you did to

Starting point is 00:07:36 to work that out. And also, I know there's some rules as far as what you're allowed to put in. Like I know in Fairfax County, you can't put in a range. And you can't do some of the things to split it up, but you can subdivide it in a way. But what did you do and how did you stay in compliance? Yeah. So when I first started doing this, even at my house in Springfield, I immediately looked into the Fairfax County rules and regulations, right? Because I want to do everything above board taxes and following codes and all the things like that. And of course, if you're in HOA, you've got to look into your HOA, bylaws on everything like that. So what you can do is you can have a kitchenette.

Starting point is 00:08:16 You can't put in a range, like you said. So in order to put in like a freestanding range, you need to have, think the rule is it has to be like an in-law apartment for a family member or something like that. So what I do is I do a kitchenette. So with a refrigerator, a hot plate, a microwave, a toaster oven is normally like the basic setup is what I do. So again, it's a kitchenette. It's not a kitchen with a sink and garbage disposal, whatever. You do a dishwasher if you want. I normally don't go that far in the basement or the first floor rental because I try to keep the cost down.

Starting point is 00:08:47 So what I did with the property there in Centerville was, yeah, when you showed it to me, I walked in and I was like, this is perfect. because it has a shared common entrance there right off the parking lot. And then you walk in and you have two doors, three doors, because to the left is a laundry room. So the laundry room became a shared space. And then straight ahead of you was a door that became the front door for the basement or the first level apartment, the one bedroom. And then to the right, like you said, was the door that led up the stairs, dumped you into the family room on the midlevel with the kitchen and a half bath. And then there were stairs from there that led up to where the bed. rooms are. So it was a perfect setup. So moving into the, oh, go ahead. But with that,

Starting point is 00:09:28 there wasn't a door originally, originally because it's just a single, like Roham, you just had the open space back or the open space the stairs. So you put that in, correct? Yeah, exactly. Yeah, I'm sorry, I walled off the stairs that were leading up to the side and put a door at the bottom of them. So that separates the two apartments, kind of. So you walk into that common area or foyer and you have the doors leading into it. And then when you go into the one bedroom right there, it's actually like a studio. It's not a one bedroom. It's that a property is a studio apartment. But I did, I put in that kitchenette off to one side, the bedroom area there, because it's a studio there. And it already had the full bath coming off of it. So I mean, it was perfect. It was, you know, didn't take a whole lot

Starting point is 00:10:12 of work, just kind of cleaning things up. And the property was in pretty good shape anyways. So really the kitchenette and then walling off that on that, the stairs for the other apartment, the two big things that I did. So here's what I love about real estate, right? This is what's so fun when you look at it is there's a number of ways that you can can be winning here. So you got a slight discount because it was an off market property. So you got it slightly under market, but it wasn't like 50 or 100 grand under market. It was like a slight discount. But the cool thing was you were able to create a value ad because of the layout of this property. And honestly, it's a layout that is probably slightly less attractive.

Starting point is 00:10:55 It's a little bit more unattractive for a normal family. But for your model, you were able to re-envision it and make it something that is super, super attractive to you. So I think that's super powerful. So tell us about one of your other properties. So we started renting out the basement in my house and my single family there in Springfield and kind of did the same thing. Put a kitchenette in the basement.

Starting point is 00:11:20 that one we had shared laundry in the basement. So I had to wall off. Basically, if you picture yourself on the main level, you know, kitchen has a door with stairs leading down to the basement. So what I, and as you walk down those stairs in down into the basement, the tenant's living room is off to your left.

Starting point is 00:11:38 And so what I did was I put a wall in there. So if I had to come down and do laundry, they didn't want to be, you know, encroaching on somebody else's privacy and wanted separation. So we put a wall in there with the door. And then you come down the stairs. and it leads to the laundry room. So we shared the laundry room in that situation.

Starting point is 00:11:54 And then I put another door in after the laundry room. And then that led into where the tenants full bath is and their bedroom and like their whole whole side. So again, it was kind of like I had to do a little bit of work to wall it off and to separate the two properties on the inside. But it was obviously important to me that they are truly separate, right? A shared laundry room is one thing, you know, for people in a multi-unit property. They're used to that.

Starting point is 00:12:17 If you live in like a small apartment building, right? sharing laundry is not the end of the world, but you don't want to share any other spaces, at least me personally. So we did that. We put in the kitchenette. One big thing for me that I look for in these properties is that shared entrance or a private like slider entrance. So for my house, it had a walk around to the basement with a slider. So I put in just a walkway around the side of the house. So then the tenant has their own entry and exit with their slider door in the back of the basement. And then that's theirs. So we didn't have to share an entrance. The only thing we shared there with laundry and put in a kitchenette. But it went great. We started renting that in

Starting point is 00:12:53 2016. And then by 2018, we had saved up enough and we bought a townhouse in Springfield. Same type of thing. Very similar to my house. It was an end unit townhouse. So I did a walk around side. Slider door was the entry and exit. And that was separated on the inside with interior doors and didn't have to wall anything off there because it was really already separated, had a full bath already, had a bedroom and just put in a kitchenette. So it really, you know, I'd estimate, I try to budget maybe, you know, depending on how much needs to be done, but like 20 to 30 grand, when I bought the properties, you know, maybe less for Centerville. I had to do more for the townhouse in Springfield and for the house in Springfield. But, you know, around 25 grand maybe to do the

Starting point is 00:13:40 improvements. But I'm making that back in cash flow, you know, shortly thereafter. So it's totally worth it. All right. So here's a couple other quick questions, rapid fire questions. How much equity do you think you have between all the different properties you own now? Okay. So I would say probably 700,000, something like that. I think that's probably the equity. That's a good estimate. Okay. Do you mind me asking after you pay your bills, we don't need to know how much you make or how much you spend on stuff, but after you pay your bills and what's left over outside of investments, right? I just want people to see what the difference is, because after you pay your bills on after tax dollars, you've already paid taxes and everything else, how long do you think it would

Starting point is 00:14:23 take you to save without any investments, $700,000? I mean, I can't even, you know, I can't even tell you, you know, I mean, I don't even know, you that. Yeah, it took me a long time. I mean, I think I can't, I can't even tell you. I don't know, you know, because then you, you know, that money that I try to save outside of that is, okay, vacation, you know, okay, this, okay, that, you know, type of thing. So, I mean, 15 years, you know, more probably, 20 years. I can't even tell you. And how long ago was it? It was, what, eight years ago that you said you started this? Eight years ago. So your net worth has been turbocharged. You literally were able to do in 50% of the time by creating something that compounds and grows on its own,

Starting point is 00:15:09 versus something where you're trading your time for dollars. Exactly. Yeah. So I just want everybody to realize that it's a doable, it's a doable thing. And it's really the only thing. And the last thing I'm going to share is this. I have a neighbor who makes about a million dollars a year. And he wasn't a millionaire, right?

Starting point is 00:15:30 That's the crazy thing. He wasn't a millionaire. And here's why about 50% of his money went away to taxes. Right. And then he, so then he keeps. 500 a year. You know, he spends about $35,000 a month, you know, judge him if you want, whatever, but like when you make a lot of money, you spend, spend that. So he had about 15,000 left over. And then after you put away for college kids college funds and everything else,

Starting point is 00:15:54 I mean, it takes forever. And then if you want to go on some big vacation or whatever, all of a sudden, the money goes away. And so he just started investing in real estate. And his net worth is going to be triple within two years. it was before. And that shows, no matter whether you make, you know, less than $100,000 or a million dollars, it's hard to earn enough money to make it into something really cool. You've got to have investments that are compounding on itself. So, Tim, we just got a couple of minutes left here. What questions should I be asking you that I haven't asked you already? Challenges. So challenges, I think, with this type of setup. So fast forward to you take the plunge,

Starting point is 00:16:38 you find a property that works. You have a good contractor who can do the improvements for you. So the first challenge right there is finding the right property. Because like we talked about, not every property is going to work. You're going to be looking at a lot of single family homes or townhomes or whatever. They're not set up the right way and you can get impatient. But if you want to do this, you've got to wait for the right one. And this leads into the second challenge is this living setup isn't for everyone.

Starting point is 00:17:04 So no matter how many times I write on my postings, this is a multi-unit property. In bold, I get inquiries, I get calls from people who didn't read the listing. They just saw the pictures and email me or Zillow me or whatever. They don't understand it. And I explain to them and they say, oh, I'm not interested in that, which I totally get, right? Because not everybody's going to want to say, hey, honey, there's going to be somebody else living in our basement. Right. Like we don't have a basement at this townhouse.

Starting point is 00:17:27 That might be a no, no deal for them. So it's not for everybody. And then pricing, especially for the upstairs, the rent appropriately because you can't, you know, if you're in this one townhome block, right, and townhouses are renting for 2,900, right, for a three bedroom, two bath. And you have a three bedroom, two bath. But you don't have a basement, right? Because it's a separate apartment. You have to figure out, okay, how much do I have to drop my rent from the 3, from the 2,900 that the townhouses are going for around here to attract people to say, okay, this one's only 2,500, but I don't have a basement, but it's $500 less

Starting point is 00:18:08 per month worth it to me for that tenant to then say, okay, so I can, you know, I can save 500 bucks a month so I don't have my basement, but whatever, I only, you know, I only get my kids every other weekend or I have one kid or I don't have any kids. It's just me and my partner, whatever. So it's not for everybody, but those are some of the challenges that you have to be prepared to deal with and think through. Definitely doable, but it's just, it takes a little more, but again, I'm not, I'm more than covering the mortgage and making cash flow and getting that, building that network like you said at the same time. Absolutely. That's awesome. Well, Tim, this is super, super helpful. I didn't ask you this out of time. So feel free to say no.

Starting point is 00:18:49 But would it be okay? Anybody that's listening that's thinking, man, I, I'd love to do this, but I also feel like I'm a little blind. Even though these are people that are professionals in this industry, sometimes moving from helping people buy and sell to being an owner themselves is a little bit scary. Would you be open if somebody wanted to email you and just ask you any questions? Would you be open to? Sure. Yeah. Yeah, that's fine. What would be the best email address? And here's the crazy thing, Tim. And I'm saying this, I'm challenging you as a listener to do this. Because a lot of times people are willing to show you their path and people don't take them up on it. And it's crazy to me. I'm like, man, if somebody's doing something that's really cool,

Starting point is 00:19:33 I would always want to talk to them and find out like how they're doing it. So what's the best email to reach out to you on? So my first name, Timothy, just T-I-M-O-T-H-M-H-M-H-M-N-H-M-N-T-H-Mill-N-T-Mil. Yeah, so that's me and if anybody's got any questions, I'm not a master or don't have the answer for everything, but always willing to help. Yeah. But what I love about it is the people that win in life, it's massive and perfect action, right? It's never perfect, but going when you're ready enough. That's when it gets really cool. So anyway, hey, Tim, thank you so much for spending some time. Thanks for sharing

Starting point is 00:20:08 your knowledge. I'm super pumped about what you're doing. And it was awesome opening my eyes to what I've always said is that you can always win in real estate if you're willing to be creative. And, you know, the way you saw something that most people don't see was just so cool. So thanks for sharing your knowledge with us. And yeah, brother, you have an awesome. awesome day. Awesome. Thanks. You too, Chris. Welcome to Uncommon Real Estate, where it's all about finding creative solutions for real estate agents and investors. In exclusive mastermind conversations with some of the brightest minds in real estate, you'll learn how to earn an extra six figures a year. Don't follow the herd. Be uncommon. Here are your hosts,

Starting point is 00:20:48 multi-millionaire real estate agent and investor, Chris Craddock and Jeff Saferight.

KGCI: Real Estate on Air - How Tim Hunt Reached a $700,000 Net Worth working a 9-5 Job

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