This month, we caught up with John Brunstad, a real estate professional in Atlanta who has been working with GROUNDFLOOR on several projects. We chatted with John about his journey into real estate and what he is looking forward to in the future.
How did you get into home renovation/house flipping? How long have you been flipping houses?
I started out as a realtor in 2015, and after becoming fairly successful in my practice, I became interested in finding ways to generate enough income to be able to retire early. My first strategy was to acquire properties and convert them to Airbnbs. I bought my first property in 2017 and my second in 2018, but soon discovered that managing Airbnbs was a little more hands-on than what I was hoping for. So, I decided to sell those properties and try out creating rental properties. With rentals, I can truly earn passive income; I have a property manager that takes care of the day-to-day tasks, while I can sit back and collect the rental income from the tenants.
I started with 20 rental properties that I purchased and fixed up; but I quickly realized that if I wanted to keep doing this, I’d run out of cash -- I needed to start building equity. So I started using the BRRR (“buy, rehab, rent, refinance”) method to complete my projects, and for the most part that’s what I’m still doing. I currently have about 60 rental properties in my portfolio as well as a few full flips.
Real estate has become very much a family affair for me. My father is a commercial real estate attorney, so he helps out on company management and taxes while I take the lead on renovations. My wife is also involved; since she comes from a design background, she’s a great resource when it comes to picking out finishes and other home design elements. I love that I get to share this work with the two of them.
How many projects have you completed? How many are you currently working on?
Currently, I have about 60 rental properties I’ve renovated. I’ve done about 12 projects with GROUNDFLOOR thus far, of which I’d say 80% are rentals using the BRRR method. I love that I don’t always need to have a ton of money laying around to get started. I can acquire a property, renovate it as I see fit, then rent it out and later on refinance it to get my original capital back -- all while enjoying a steady cash flow from tenants.
A recently completed flip at 313 Summit Ridge Dr. in Lawrenceville, GA.
What do you take into consideration when you are completing a real estate project?
I think the first thing I look at is the location -- since I do not manage the properties myself, I want to make sure any new properties I obtain are within my property manager’s area of service. For my rentals, I tend to look for well-built houses with no foundation issues, a flat lot, and three or four bedrooms and two bathrooms. For flips, I look for properties that would make good long-term family homes. And of course, I always make sure the numbers work out so I can get a good return on my investment.
How have you seen the real estate industry change since you first began flipping? Any trends you’ve noticed?
As I’m sure everyone is aware, the real estate market is incredibly hot right now -- prices are insanely high and I only foresee them continuing to rise as we keep experiencing inflation. As a result, not many people are going to be able to afford to buy a house in the near future. That’s why I'm planning to continue focusing on long-term rental properties. People will always need housing even if they can’t afford to buy, so I feel confident that the rental market will remain strong. To be honest, I think condos and townhomes are going to suffer more than anything else, since the pandemic caused a lot of people to turn sour on apartment living/living in close proximity to others.
Also, because our rental properties are priced more towards the lower end of the spectrum, I’m not worried about not being able to find tenants. In fact, during COVID, we decided to participate in the Housing Choice Voucher Program (formerly known as Section 8), which connects low-income individuals and families with safe and affordable housing units in the private rental market and provides subsidies directly to the landlord on behalf of program participants. The HCV program was very appealing to me because not only does it connect our properties with long-term tenants (thus ensuring consistent rent coming in), it also provides us with some protection since tenants have to adhere to specific rules and regulations in order to participate in the program. Most of the projects I’ve completed with GROUNDFLOOR have been later enrolled in the HCV program.
How did you find GROUNDFLOOR?
To be honest, I just researched hard money lenders in the Atlanta area. I was initially working with a different lender, but after having a poor experience with them I decided to continue looking, which led me to GROUNDFLOOR.
I love how seamless the lending process is with GROUNDFLOOR. I can do everything online, including requesting draws for the project and contacting the GROUNDFLOOR team, which makes things so much easier. With the other lender I worked with, I experienced far too many delays in getting what I needed because there were so many different people that requests had to go through. I’m thankful to have found GROUNDFLOOR instead -- they are definitely one of the easiest hard money lenders out there to work with.
What has been your experience working with GROUNDFLOOR?
It’s been great! Working with GROUNDFLOOR is easy and efficient. The team is always quick to respond to any requests or issues I have -- shoutout to Ayo [Adeola, Manager of Primary Servicing], who’s been awesome! -- and the online system is really convenient.
What are some of your goals for your business in the next few years?
My long-term goal is to eventually own 1,000 rental units! I have around 60 right now, and I’m hoping to do two a month until I get up to 1,000. The ultimate goal is to generate enough passive income so I can retire early and travel with my family. My wife and I have also discussed buying some small bed and breakfasts to renovate in the future as a fun project to work on together.
I also want to continue doing some full flips here and there, but probably no more than six per year. While flipping is great, it is an ongoing business, and your stream of income is dependent on you constantly working -- I much prefer the more passive strategy of managing rentals.
If you could give a newer flipper one piece of advice, what would it be?
If you’re interested in this industry, just go for it! Don’t worry about taking all the courses or mastering everything first. You’ll learn a ton through trial and error. Just start small and build from there.
Thank you so much, John! It’s a pleasure to work with you!