HGTV’s Property Brothers reveal the largest mistakes real estate investors make

During a far-reaching CNBC interview On Wednesday, they talked about real estate flipping, high borrowing costs, the worst mistakes aspiring investors make, housing content on TikTok and where the following big market shall be.

Drew said he wants to speculate for the long run and usually doesn’t flip rental properties. When structuring your personal rental portfolio, it might be that for each ten houses added, just one or two properties are exchanged, he explained.

“Right now it doesn’t seem to be a turnaround in the market,” he said. “You just have to adapt to what makes sense for the current market.”

Jonathan said investors should evaluate each property by itself merits, even when rates of interest are high. In fact, he and his brother had just purchased a 20-unit apartment constructing because the small print of the deal were right, he said.

Their focus is on rentals, as high home prices and mortgage rates of interest have discouraged many Americans from purchasing property. The cost of owning a house is officially the very best on record, Redfin said recently.

When asked about all the true estate advice that appears on social media apps like TikTok, Jonathan didn’t hold back: “99% of the get-rich-quick people you see online are filled with ‘beeeep.’ If everyone could do it, everyone would do it.”

Drew identified that her upcoming series on HGTV “Supported by the Bros“” is meant to assist eliminate confusion amongst recent real estate investors or those that have sold just a few properties and will not be yet experienced investors.

“They’re overextending themselves because they’ve been watching these TikTok videos,” he warned. “They see this content that tells them, ‘You can do that.’ And then they spend their money within the worst possible ways. They’re not organized.”

In fact, an absence of organization is certainly one of the largest mistakes recent real estate investors make, Jonathan said, mentioning that they often attempt to be their very own general contractor and do their very own projects.

But they do not understand that a subcontractor’s no-show can have a snowball effect that spreads to all other parts of a project, he added. And the longer a rental property sits empty, “the quicker you dig yourself into a hole that you can’t get out of.”

Another big mistake investors make is blindly following their buddies’ advice, Drew said: “Don’t hearken to any idiot who has no idea about real estate or what he’s talking about. It’s normally the loudest voice within the group that you simply hearken to and that’s once you make big mistakes.”

The Property Brothers also gave their forecast for the following hot real estate market.

“I’ll be honest, I think Detroit is great,” Jonathan said.

The Motor City was certainly one of the hardest-hit markets through the last housing crash, because the Great Financial Crisis and recession forced auto giants General Motors and Chrysler to hunt government bailouts.

But because the post-pandemic real estate boom has pushed up prices in places like Florida, Midwestern cities have develop into more attractive. And in November, Detroit surpassed Miami for the primary time in annual house price increases.

Meanwhile, the Biden administration has offered the auto industry billions of dollars to encourage it to develop electric vehicles, whilst consumers have recently switched from electric vehicles to hybrid vehicles.

“If you look at the inside of a city, there is usually a certain area in the city that is really starting to be redeveloped, there is so much potential there and a lot of money ends up being invested. And that area is becoming a very valuable part of the city,” Jonathan told CNBC. “Detroit is like that on a national level. So much money is flowing in, so much is being renovated. I bet in 20 years it will be one of the most technologically advanced cities.”