Anyone who's skeptical that expensive Vancouver still holds the promise of a fixer-upper can put the Property Brothers to the test.
Identical twins Drew and Jonathan Scott, also known as TV's Property Brothers, are currently spending five months in their hometown Vancouver to tape episodes of their hit shows and they are on the lookout for renovation candidates.
The casting call is part of the job these days for the brothers, who have become HGTV's biggest stars. Their show got picked up by the U.S. channel last year and became an instant hit. Their other show, Buying and Selling, is also a top ratings earner for the American channel. In Canada, both shows are top-rated series for the W Network. They also have a new competition renovation show they've been shooting in Los Angeles, Brother vs. Brother, that will air in the summer. Their telegenic faces appear on television screens in 26 countries, and they have upcoming radio and book deals, as well as a product line and philanthropic interests. Basically, they are on fire, and they've got real estate to thank.
The Scotts are more than guys with great hair. They have spent the last 15 years buying and flipping properties, acting as landlords, and selling real estate through offices in Vancouver and Calgary, the two cities where they grew up. It was in Calgary where they got hooked on real estate at age 18. With "creative investing" they afforded the down payment on a $200,000, seven-bedroom house, which they flipped a year later for a $50,000 profit.
They are also involved in film production, acting gigs, and stage performance – Jonathan is an illusionist – but real estate enabled them to reach those goals. Their father was an actor, and they've been actors since they were children. Drew is making his feature film directorial debut with a romantic comedy. Now that they are lifestyle-TV stars, the Scotts only have time for TV clients these days. On TV, Drew is the realtor, but both of them are licensed.
"The whole reason we got into real estate is so we weren't starving actors," says Jonathan, on the phone from Palm Springs, where they are shooting another project they can't yet disclose. "It just happens that we made the right decision and our real estate company exploded and funded these other endeavours."
On the phone it's pretty much impossible to tell which one is talking. Jonathan is more of a sarcastic jokester, although the digs between them go both ways.
"If anything dumb is said, that's Jonathan," Drew offers helpfully.
Despite all their newfound fame, they haven't given up on real estate investing. Forbes recently ran a story on the brothers because of their investment savvy. When the recession hit in late 2008 and early 2009, they started purchasing properties in Las Vegas, where the market nose-dived. They bought up four-bedroom homes for around $25,000 and rented them out for $5,000 a month. Today, they are based in Las Vegas, along with older brother J.D., who works with them behind the scenes, out of their Scott Brothers Entertainment office there. They have production offices in Canada, as well.
Most of their property investments these days are in Las Vegas, where they can score a big house for $400,000, but they still find deals in Vancouver.
"We just bought another property in North Vancouver, and we take possession in three days," says Drew. "People think the market is inflated in Greater Vancouver, and there is no opportunity for investment, but I don't agree. I think there are opportunities in all areas of Canada, if you know what you are looking for."
While shooting in Toronto, they saw a lot of houses sell for a lot more than asking. One house sold for $160,000 above asking.
"People think they wouldn't have that in a down market, but you can still have that," says Jonathan. "Vancouver and Toronto have seen great growth still. Maybe it's not the same as years past, but there has been some great recovery. We are seeing multiple-offer situations constantly."
However, they do not advise that anyone should attempt to flip a property unless they've been playing the game for awhile. The Scotts have studied the market and know a good deal when they see one. As well, they have trades people who'll keep them on budget for a renovation. They can also afford to sit on property until the market picks up.
"In Las Vegas, you shouldn't be looking to flip because the margins are a lot lower, especially if you have no contacts with trades," explains Jonathan. "You're setting yourself up for failure. Expect to hang on to it for at least three to five years."
Adds Drew: "In Vancouver, because we grew up out there, I know the area. Our company is there, and I still invest in Vancouver. We know our margins on flips."
On Property Brothers, the Scotts help a couple choose a fixer-upper and do a renovation. The show contributes toward the reno, but the couple must also have their own budget for the project. The renovation is often done within a six-week time frame, which would normally be impossible. In other words, don't try this at home.
"That's not realistic," says Jonathan, the builder on the show. "What we do in six weeks on the show may take 10 to 12 weeks outside the show. It's a TV show. We haves sub trades lined up, permits ready. We are a top priority for trades and vendors. That helps us do things efficiently. People may not be able to get deals like we do.
"And if it's in a flip market, people might think, 'I can easily do that and make $20,000 to $50,000,' but if they haven't done it as long as us, they need to educate themselves and know the process," he says.
It's a soft market right now, so you have to educate yourself. For the Scotts, that involves choosing real estate wisely, as well as doing a smart, budget-conscious, design-savvy renovation.
"One reason our real estate company survived is we make very smart decisions. You have to be strategic," says Jonathan. "People cannot deny that our process works."
If you are a potential home buyer who wants to be on TV, go to their Property Brothers Facebook page for contact information.
"Our next season of Property Brothers, we're just doing reporters' houses," jokes Jonathan.