For investors- how important a good school district?

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For investors- how important a good school district?

Maayan Cohen
Alpharetta, GA · Member since 2018 · 14 posts · 2 votes

How important it is in the screening process for buyers investors,  to look for investment properties that are located ONLY in a good  school district areas really? 
especially when you see lots of properties in the neighbourhood that were leased relatively quickly ( in 2-30 days) - numbers are working to the investors ! 
Also Townhomes in this community sell quickly and over asking price ! 
what are your thoughts on that? Working with first time investors ! 

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Michael Plante
Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
5y

40 years never looked at school rating

I look at current rents and sold for prices 


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  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    5y

    @Maayan Cohen

    It depends on what your goal is.   

    If you want a family with 3 kids, and a dog, to probably stay there 5-15 years, school districts matter as once the kids are in school, they won't want to move-- yes, it matters.    People will pick a house based on schools, and will absolutely look the other way for cosmetic stuff if it's the right schools. 

    That being said, everyone needs a home. There are a lot of great, non-family tenants! My houses are in one of the worst school systems in VA (it's getting better!), I only have a few families, most our tenants are older (50+) who really don't care about the schools and instead care the most about cheaper rent.

    Focus on who your ideal tenant is, and the risk vs. reward of all the options.  

    1Reply
  • Tim S.
    Investor · California, CA · Member since 2016 · 367 posts · 375 votes
    5y

    Depends on your model, what type of tenants you want to attract. In my case I like to buy properties around or just above the median price.  The schools don't need to be 8-9 but I don't want 1-3 schools either.  Same reason as above, I prefer longer term stable tenants. I'm buying 3/2 single family homes, families tend to like these homes.  If you are not targeting families, then schools don't matter. 

    1Reply
  • Joanne Tsai
    Investor · Millburn, NJ · Member since 2018 · 141 posts · 100 votes
    5y

    you can't cashflow well if you are buying in great school districts. Most people who want to live there will have the money to buy a house there (check the own/rent ratio). or they will try there for a year and buy a house. We did that when moving back to the east coast, and in 6 months, we bought our own house.

    I won't go into the worst school districts either, but somewhere middle makes more sense. You do want to buy in B/C neighborhood to avoid headaches.

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y

    I like investing in locations that feed into good schools. I like to purchase a property close to a good elementary school. My last purchase was one block from the top rated elementary school in town. I listed it on Zillow and within an hour someone wanted to apply to rent it, sight unseen. 

    So why do I care about schools? 

    - The houses are easier to rent because more people want to live there. More demand also means higher rents.

    - No negative to people who don't care about schools. I have a single guy living in a four bedroom house one block from a great elementary school. He has never complained to me that the school down the street was too good. 

    - In my city the neighborhoods with good schools also have low crime and better kept homes. There is a direct correlation between student performance and parental involvement/expectations. The same person who helps their kid study for tests is more likely to take good care of the property. 

    - Better appreciation because house prices are driven by home owner demand. Houses by good schools sell for faster for more money.

    Schools affect your investment, just like square feet, crime or any other property detail. We can argue how much difference it makes, but everyone agrees houses in good school districts have a value and rent premium. At the end of the day, it is market dependent. Maybe a good school is important in my market but not as important in another. Some cities have no good schools or all good schools. If there isn't much difference, then it may not matter.

    I agree with @Joe Villeneuve that this is a math problem, comparing investments. That being said, the math in my city is much different. There is not a 5X value premium in my market between best and almost best. There isn't even a 5X premium between the worst and best in my market. 

    2Reply
  • Sandra Morrison
    Investor · Cincinnati/Fort Thomas, KY · Member since 2015 · 207 posts · 183 votes
    5y

    @Maayan Cohen i think it depends on what you want in terms of cashflow, appreciation, tenants, marketability. I do know that in my part of the country as a former relocation consultant for a fortune 500 transferees, there are many areas that have nothing to do with the public school district but more to do with what individual private school is there. The location of the private school does not affect your taxes but can impact the market ability and appreciation and profitability of your investment. My clients at the time looked at niche.com and greatschools.net and THEN would pick their preferred private or public school, tour the schools and THEN look at housing in those areas. I think many people pick housing whether rent or own and the school is an after thought. They may never even tour the school before deciding on where they are living as it does not drive their decision. After having that job I did choose to live in the best school district in my state but I would not invest here as the numbers are nowhere near as profitable as they are in other A-B areas of the city. I like to balance maximize cashflow and with minimal maintenance/rehab/tenant drama. You have to choose your end metrics and then find an area that fits.

    0Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    @Maayan Cohen it’s not important at all where we invest. Most of the public schools are crap in the city of Buffalo. Hopefully continued investment in RE in the city will turn the tide.

    Irish Jones Realty4.947 Reviews
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    1Reply
  • Michael Plante
    Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
    5y

    After posting here, I went and looked at the school ratings

    highest rated is a 4 out of 10.   Most are 2 and 3 

    Also noted a house just went under contract for $699,000     So 


    I’ll stick with what I have always done.  Look at what properties rent for, what they sell for and how much I can get them for, and not bother with looking at school ratings 

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