Real estate brothers Jonathan and Drew Scott still believe in building wealth through real estate investing, but there are important factors to consider in today’s market, they told CNBC’s Diana Olick at the recent CNBC Your Money event.
“I absolutely believe in home ownership as a good investment,” Jonathan said.
One of those key factors: People should only invest in real estate on their own schedule, Jonathan said. It may feel like you’re missing out if you don’t already own a property or don’t plan to buy one tomorrow, but acting on this emotion can hurt your ability to make a smart investment.
“It’s okay if you wait a few years, as long as you get your finances in the right position, save up a little bit,” he said. “Once you become desperate for a property, you will make a bad decision.”
Buyer’s remorse is common among recent homebuyers, with 82% of people who bought homes in 2023 or 2024 experiencing at least one regret, a recent survey from real estate company Clever found. Among those with regrets, choosing a home that requires too much maintenance is the most common reason, although nearly a quarter of respondents said they paid too much or agreed to an interest rate that was too high.
What to Consider Before Buying a Home
If you are confident that you want to buy, it is also wise to accept that you may not be able to time the market to give you the best results. Finding a home in your price range and getting the best mortgage rate will depend not only on your financial situation, but also on the economy as a whole.
That said, investing in real estate and buying a home is “not rocket science,” Jonathan said. “A lot of people think there is a secret to success, and it really comes down to budgeting.”
It probably won’t be as simple as giving up avocado toast or other small luxuries. According to the Federal Reserve, the average sales price of homes in the United States is well over $400,000, meaning a 20% down payment would cost about $80,000.
Depending on your financial situation, saving that amount of money may require some pretty big changes, like living with roommates or working a part-time job to supplement your income. Additionally, you’ll need to make sure your credit is in good standing before you even start looking for houses if you want to get the best mortgage rates.
When the time comes to start your search, make sure your expectations are in line with reality. You may have to compromise on location, size or amenities to stay within your budget.
Entering a difficult market
The Scott brothers agree that getting into real estate is a tough time.
Mortgage rates are expected to continue falling in the coming year, but home prices are expected to rise about 3% to 5%, according to forecasts from Goldman Sachs and Fannie Mae. And while inflation has returned to near-normal annual growth, prices for essentials such as rent and food remain significantly higher than they were a few years ago, making it difficult for hopeful shoppers to save.
“Now you have to find creative ways to market,” Jonathan said. This might look like buying a home with friends or family members other than your spouse.
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