How are school ratings impacting rental properties in Chatt?

Question

Hello everyone, I have been seriously looking at properties in Chatt and target at properties with good cash flow for rental. I have passed on a few properties in 37412 (southern part of East Ridge) and 37411 (Sunshine I believe it's called? It's a bit north of Brainerd) because the schools are ranked below 5 (especially high school).

I wanted to get everyone's thoughts on how important schools are when evaluating if a deal is good or not. I don't care much about the appreciation of the property, but more concerned about the rental demand will be way less if the neighborhood doesn't have good schools.

Any insight will be appreciated!

Yinglu

Josh Braun · Answer

Hi Yinglu - school data usually ranks further down on our list when evaluating Chattanooga deals. In order, we usually look at these factors first: 1) value/equity opportunity of the deal, 2) proximity of the unit to downtown, employer hubs, retail and colleges/tech centers, 3) rent ratios to other units nearby, 4) general population mix/makeup of the area and 5) current rental inventory on the market for the area.

Ty Conner · Answer

Hi Yinglu,

I agree with Josh. Chattanooga has very few school districts that rank above 5. Most affluent families in Chatt send their children to private schools and magnet schools because the schools they are zoned for are not very good.

Heath M. · Answer

I've never had anyone ask me about the school system.  It's WAY down on the list of things to care about in my opinion.  The neighbors and the neighborhood will tell all you need to know about it being a good deal.  Some parts are street by street around Chattanooga...

Mallie M. · Answer

Thanks Josh! I would say certainly say the same thing about you and your PM company. I know a handful of investors happy with your high level of service in this industry. You've already got some great resources just in this thread :) @Yinglu Wang

Josh Braun · Answer

@Yinglu Wang not a problem, happy to give some thoughts. @Mallie Messri is a great resource and is awesome also :)  Yes, I have some relationships with investor friendly lenders and have a great PM company. Feel free to reach out to me directly if you need any suggestions.

Mallie M. · Answer

@Yinglu Wang Absolutely! I have not personally bought any investments in Chatt, yet! We've been wholesaling in this market for about a year now and I learn a TON from all the investors I work with in this market. My first purchase in Chatt will most likely be a multifamily property under 4 units and I would definitely consider the markets you mentioned. I'd be happy to chat in depth and share my knowledge on certain neighborhoods within and bordering Hamilton County.

Yinglu Wang · Answer

Mallie - thank you for the inspiring notes. I totally agree that finding a good lender and PM is the key. Have you personally invested in Chatt?

Yinglu Wang · Answer

That's really interesting to know! Thanks for the insight!

Yinglu Wang · Answer

Thanks a lot Josh! Super super useful insight! My goal is good cash flow on rental properties so your sequence of thinking definitely helps!

Related - do you happen to know any local investor friendly lenders and PMs?

Thank you!

Mallie M. · Answer

Hey! @Yinglu Wang I second Josh's criteria for evaluating property values in Chattanooga, I'm actually going to take note of that myself. I believe the school ranking system in relation to property values is more relevant in areas like N. Georgia, whereas Chattanooga has many other factors attributing to its growth. I wouldn't stray away from East Ridge, Brainerd or East Brainerd or areas similar to these, they are certainly growing and are strong rental markets. What I would do is focus on evaluating the deal in total based on the factors Josh mentioned as well as the rental return you'll net after all renovations and expenses. If you're unsure as to what properties in a specific neighborhood can rent for it may be in your best interest to find a great property manager to align yourself with who can run quotes on every property in question. Property values can vary significantly in Chattanooga so regardless of which neighborhood you're considering it will benefit you to hone in on that specific area in which the home is and do research on the activity and rental rates within maybe up to a mile radius of that home. If your main goal is rentals I would say two of your best resources would be an experienced and active local broker and property manager. Best of luck and looking forward to seeing what you do in Chattanooga! :)

How are school ratings impacting rental properties in Chatt?

Most Popular Reply