Property Brothers on the real estate investors most likely to get hurt by a downturn

Homebuilding last month leapt to its highest rate in 12 years, newly released construction data says. But the havoc wrought by last decade’s housing bubble has buyers wondering how to protect themselves if the market goes south.

Drew and Jonathan Scott, co-hosts of the HGTV show “Property Brothers,” offer simple real estate investment advice for the moment a market downturn approaches: Find the sweet spot between panic and patience.

“If you are organized and you are keeping up on what's happening in the market and you're seeing indicators of what's going to happen, I think you can play it a little safer,” Jonathan Scott told Yahoo Finance Editor-in-Chief Andy Serwer.

“Whereas I think people all of a sudden freak out. They panic. They want to sell,” he says.

Cautioning against the opposite miscalculation, Jonathan Scott adds: “People who are affected the worst when something like that happens are the people who react too late.”

Drew and Jonathan Scott made the comments during a conversation that airs in an episode of Yahoo Finance’s “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.

Born in Vancouver, they came to prominence fixing up homes in HGTV reality series like “Property Brothers” and “Brother vs. Brother.” Each week, 18 million people watch them in 160 countries; another 10 million follow them on social media. They’ve capitalized with a line of home furnishings and a digital home-design service.The most precarious investors are those who stretch to afford a property outside of their budget, Jonathan Scott said.

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10 lessons we learned from the 'Property Brothers'
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10 lessons we learned from the 'Property Brothers'

An Offer Isn’t the End Of Things

Buying a house isn’t like buying an appliance. Even with Drew’s real estate savvy and resources (and a team of HGTV experts to back him), bids he makes on the show are often counter-offered or rejected entirely. Never lose faith guys; there are other fish (fixer-uppers) in the sea.

Image credit: HGTV

Rehabbing A Fireplace Will Transform A Room

Even when working with a tight budget, Jonathan and Drew know the value in refacing and re-outfitting old fireplaces as a first order of business. (Psssst: They usually do so with stone slabs or white casing.) And they most always opt for a modern option with a gas insert and remote control. No mess, no stress, people.

Image credit: HGTV

A Baller Backsplash Is A Winning Choice

The bros are fans of bold kitchen tiling and often opt for cut glass (metallic or multicolored), porcelain in an interesting shape or basic subway tiles jazzed up with a herringbone layout or metal border. And there’s no need to stop at the backsplash, either (take ’em to the ceiling, go crazy). Something extra = extra ROI, folks.

Image credit: HGT

Chrome Fixtures Provide An Instant Update

Ever the poster boys for contemporary design, a striking majority of Property Brothers flips are outfitted with gleaming, modern chrome fixtures and range from sconces and chandeliers to bathroom faucets and kitchen drawer pulls. (Perhaps because they’re great for catching one’s reflection?)

Image credit: HGTV

Neutral Palettes Need A Color Punch

You’ll never be faced with a whitewashed farmhouse reno from Jonathan and Drew. Even with neutral-inclined clients, the brothers always find a way to work in a bold, punchy color to give a space dimension—like these creamsicle-upholstered barstools in a cool-toned, open-concept kitchen.

Image credit: HGTV

Wallpaper Is For Everyone

Statement wallpaper is both bold and pricey, and is often a deterrent for many buyers. The Property Brothers’ favored fix? Paper a lone accent wall in a foyer, living or bedroom. This wallet-happy maneuver adds a professional, polished and visually interesting touch on a shoestring budget.

Image credit: HGTV

Don’t You Dare Forget The Wet Bar

Entertaining without a proper built-in minibar? Blasphemy, the Brothers say. There is always a way (and room in the budget) to work this high-end amenity into a family room or basement rec space. (“Think about what appeals to future buyers” is their modus operandi.)

Image credit: HGTV

Always Add Bling To the Bathroom

While their tastes for renovations veer toward masculine, Jonathan and Drew appreciate an additional something fancy and feminine in the toilette and are aware of the added value it brings (bathrooms sell houses, guys). Jewel-like extras, like a pretty tile, antique mirror or mini chandelier will go a long way with the wives' club.

Image credit: HGTV

When In Doubt, Dark Wood Throughout

A majority of Jonathan-executed renos feature flowing hardwood flooring in a dark matte stain. The look is versatile, timeless, sophisticated and, yes, a touch masculine, too. (Hey, they can’t help it.)

Image credit: HGTV

Sacrifices Always Have To Be Made

Above all, when it comes to a renovation wish list, the brothers have taught us that it just isn’t possible to tick off every amenity while sticking to a budget and timeline. “Need” those Carrara marble countertops? Be prepared to skip the back deck rehabilitation in the interim.

Image credit: HGTV

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“Anytime you make an excuse to buy a property, like, oh, well, maybe this isn't the best time, but I'm going to make it work, and you overleverage,” he says. “That's when you lose your shirt.”

Jonathan Scott’s twin brother, Drew, offered similar warnings for those who overspend for a property that puts them in a tough financial position.

“We work mainly with homeowners,” he says. “They have their one big investment in their life, their home. But if they're not overleveraging to get into a new house, if the market's going up and down a little bit, well, you can protect yourself. You're only going to miss out if you're forced to sell.”

In 2008, when the housing bubble burst, the Property Brothers escaped nearly unscathed, Jonathan Scott said.

“There were a lot of people who lost a lot of money,” he says. “We were fortunate when the crash happened, at that time we only had one property left at the time.”

“We knew people who were picking up on housing and they lost out big, because they didn’t have any of their own equity, it was all loans,” he adds.

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Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer.

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