In a recent CNBC Squawk Box appearance, Drew and Jonathan Scott, the dynamic duo behind the popular show “Property Brothers,” shared their insights on the current real estate landscape.
While giving a lot of advice to homeowners and people wanting to get into real estate, the brothers delved into the challenges and opportunities within the industry.
According to the Scott brothers, the current market isn’t ideal for house flipping. While there’s still money to be made and active buyers, the housing crisis has left people apprehensive about making significant property investments. In response, the brothers have shifted their focus to their rental portfolio, emphasizing the importance of longevity in homeownership.
However, the commenters on YouTube are unconvinced, with one saying: “This is how you know the real estate market is about to crash.” Ouch.
Discussing the unique situation in California, the brothers highlighted the government’s push for garage conversions as a solution to the housing crisis.
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Renovating garages for rental purposes provides a quick income stream for homeowners. Instead of having an empty space as a part of their house that serves no purpose, people can actually invest and get something out of it.
In the comments, people are not convinced by this: “Turn your garage into an extra home, and all our housing problems will be solved,” one person said sarcastically.
The conversation shifted to the changing dynamics of homeownership. Traditionally, people lived in the same house for generations, but now the average homeowner sells every 3 to 5 years, incurring taxes and real estate fees with each transaction. The brothers encouraged homeowners to explore strategies for longer-term residency.
Short-term rentals emerged as a trend, particularly on platforms like Airbnb, as showcased in a bunch of trendy TikTok videos. Basically, people rent homes, fix them, and then re-rent them to others to make a profit.
While the brothers acknowledged the potential for profit, they also cautioned about potential challenges, including restrictions in some buildings prohibiting Airbnb rentals.
On this same clip on TikTok, one commenter is skeptical of the brothers and their advice, saying: “Landlord celebrities. We’ve reached peak fulfillment as a society. Well done everyone.”
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Drew and Jonathan stressed the importance of understanding local markets before jumping in, asserting that quick profits are unlikely without knowledge and connections in the area. They identified hotspots like Houston, Dallas, Miami, and Nashville, with the latter being the location of their corporate headquarters.
The brothers advised investors to consider growth cycles in these cities and plan ahead for market cooldowns, a phenomenon exacerbated by the ongoing crisis.
Another thing they also highlighted is the significance of tax benefits in choosing a state for real estate operations. This important detail could make or break your real estate business.
Shifting gears to home renovations, the Scott brothers pointed out a contemporary trend – carbonizing homes. They offer a lot of products for renovation, but in this case, they wanted to focus on the living quality. With increased indoor air quality awareness, homeowners opt for induction ranges and improved ventilation systems.
They stressed the importance of functionality over mere aesthetics, aiming to make sustainable and healthy home choices more affordable for everyone.
The real estate market is characterized by challenges, and Drew and Jonathan Scott offer valuable insights. They are urging investors and homeowners alike to approach real estate with careful consideration, strategic planning, and a focus on the evolving needs of modern homeowners.
