Is BUYING in a GOOD SCHOOL DISTRICT even that important anymore?

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Is BUYING in a GOOD SCHOOL DISTRICT even that important anymore?

Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes

The reason for this post is because I often read other investors post about looking for a property in an area where they have good schools. We did that. We bought a home in Burbank, California, a very expensive suburb of LA, because the school system was rated really high compared to the other schools in nearby cities. But after a year of my wife checking our kids out of school early to take them to acting auditions, she got fed up with the annoyance of the school system (not to mention the socialistic and extreme liberal political climate of the schools in LA). So she pulled them out of school and started to homeschool them. So it really didn’t matter as much whether we lived by a good school or not at that point and we could have purchased a cheaper property that was bigger and nicer for a lot less by going just a little farther outside of Burbank.

I am starting to see a lot of alternative schooling options now-a-days, especially in Arizona where I also live and invest. Here are some alternative schooling options. You can:

  • Go to your neighborhood school
  • Get an exception to go to another school outside of your area (this happens all the time by the way)
  • Go to a charter school
  • Go to a Montessori school
  • Go to a private school
  • Go to an academy 
  • Do online school
  • Do home school
  • Do a mix of online and home school
  • Do a co-op school

And I’m sure there are others I’m not familiar with. So if in your listing for the property you are renting or selling you state the excellent alternative schools in the area, does it really matter which school district you buy in if the boundaries are a lot less ridged than they used to be?

What are your thoughts?

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Donald SaintVal
New to Real Estate · Boca Raton, FL · Member since 2019 · 27 posts · 37 votes
7y

It absolutely still matters, and no less than before. The number one factor for any parents when buying a home is area schools. Yes there are alternatives, but most who are searching for the alternatives are those who cannot be in their desirable school district. 

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  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    7y

    Apparently, to a lot of parents, it is important.

    Have a SFR rental in a good district. Parents commit fraud, claiming they live in the district, but actually not. In recent years, the problem grew so big that when tenants with children rent, I have to furnish the school a signed affidavit certifying they are REAL tenants, and agree that if I fraudulently certify a student, I have to reimburse the school for damages equal to years educational expenses for each year the student is there, plus a fine.

    Then, one year a tenant down the street saw me at my rental and asked how he can rent it from me since his landlord is selling. But I had a good tenant there for many years. Out of curiosity, asked him if he checked with local rental agents. He said "yes, for quite a while, and nothing is available in town. I hate to switch my kids to another school midstream". Have to feel sorry for the man.

    I live in a duplex with a rental apartment and is considered in one of the best districts in NYC. I own the place for 25 years, and I've been getting mail addressed to the parents of students who never lived here through the years. I know it couldn't be former tenants at this point, too many years went by, and far too many to say people made a mistake registering their kids. I don't know what you would do, but I haven't gone to the school to advise them the student doesn't actually live in my building. I would feel bad doing that, but felt the school system should've known and confirm the residency of their students. It's not my duty to squeal.

    0Reply
  • Bevla Reeves
    Real Estate Agent · Scottsdale, AZ · Member since 2011 · 471 posts · 296 votes
    7y

    @Shiloh Lundahl That's such an interesting question that just ran across my mind the other day!  That issue hasn't been a factor to my buyers, perhaps because most of them are investors or childless.

    0Reply
  • Stone Jin
    Rental Property Investor · Chandler AZ and Sylvania, OH · Member since 2009 · 708 posts · 561 votes
    7y

    @Shiloh Lundahl my entire out of state investing strategy hinges on the fact that people will pay more to be in the best school districts.  I firmly believe that in today's economy where both parents work that public schooling for their children is their number 1 priority.  The tops 5% of earners out there can do whatever they want however most will never go with an untraditional option like home school.  Just like most people choose to give birth at a hospital when home birth or birthing centers exists.

    2Reply
  • Chad Tabary
    Specialist · New Orleans, LA · Member since 2017 · 7 posts · 5 votes
    7y

    It's food for thought, but the majority are still out there searching for neighborhoods based on schools.

    0Reply
  • Sam Shueh
    Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    7y

    During the Great Recession when the property values tanked an army of people wanted to purchase. Those who fought their way through competitive biddings in super achieving school districts found their investment doubled in 10 years. Those who cared about financial analysis and return got 3.5X. 

    The ones who bought in blue collar poor achiever school district received 5-6X return! This is in San Francisco South Bay.

    The annual return rate for local top CA public schools with famous residents was 8%. Those in above average school and safe neighborhoods received 13% annual return. The more aggressive risk taking came out with 22% return.

    Often the bad neighborhood became better as no one except billionaires can afford homes in top schools and are willing to live across the road for service workers. The demographics do change over time. In this case, super-affluent are putting their own money creating charter schools where parents help out over worked teachers in previously service workers neighborhoods. Parenting is the key.  Palo Alto High School teachers are no better educated than those from low income neighborhoods.

    It is really distance and convenience to major employers that dictates home price. When you have high percentage of high income families the public schools have quality students. Most Spelling Bee contestants on TV can only afford public schools(high mortgage).   

    0Reply
  • Anthony Wick
    Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    7y

    @Tanner Marsey

    No offense, but you living in San Diego and giving an example of $1 mil houses and earners is literally missing 99% of the population. In other words, your area and examples don’t mean much to us 99%ers.

    0Reply
  • Tanner Marsey
    Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes
    7y
    Originally posted by @Anthony Wick:

    @Tanner Marsey

    No offense, but you living in San Diego and giving an example of $1 mil houses and earners is literally missing 99% of the population. In other words, your area and examples don’t mean much to us 99%ers.

    You’re 100% right. Just an observation/reality of a few small markets out here on the west coast. I imagine this same situation exists in a lot of big cities/expensive markets.  

    0Reply
  • Andrew Ford
    Fayetteville, AR · Member since 2018 · 1 post · 0 votes
    7y

    I still have renters that will move across town (northeast AR) and pay a higher rent to be in a more desirable school district.  There are exceptions because there are rules, and a majority of the population falls into the rules category, and an even higher percentage of renters will fall into this category. 

    Also many of my friends, who are very financially stable, are currently considering their next primary residence based on school district boundaries.  They have kids that are less than a year or in some cases are planning to have children soon, yet they are still competing for properties in areas with higher rated school districts.

    So I think the desire to live in a highly rated school district (relative to other local school districts) is still a major driver across the majority of economic classes.  I think it's a more potent driver in areas where incomes (and opportunities to bypass this system) are lower.

    0Reply
  • Anthony Wick
    Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    7y

    @Tanner Marsey

    On the other hand, if I could afford San Diego I’d love to move there! Coldest and most snow here in Iowa last winter since 1886.

    0Reply
  • Rob Massopust
    Real Estate Broker · Santa Ana CA [South Coast Metro] · Member since 2016 · 459 posts · 202 votes
    7y

    I think the fairly new concept of how technology is changing the need/aspect of something in Real Estate. 

    More options are coming on board that make some things obsolete. 

    ie: Flat Screen Tv's fit anywhere and are in kitchens, bedrooms, garages etc. We could not do that.

    Flat screens today - Autonomous driving cars might make garages and streets more obsolete in the future.

    Technology is changing the school system but it is still always best to factor in properties within better school districts because they tend to be in better and cleaner areas and people want that for their family. 

    If you do not need a good school system then you can save by being in Sylmar but you will not command a higher price when you decide to sell. But you might be able to save alot in the interim.

    0Reply
  • Michael Goldsmith
    Member since 2019 · 73 posts · 23 votes
    7y

    I grew up near a bunch of home schooled kid.  None of them turned out quite right... socially speaking.  Don't do that to your kids.  Kids need to be around other kids in a social environment.  That's how they learn to be part of a group, and their peer group needs to see them consistently in order to accept them- and that means at school.  Especially  nowadays, most parents don't just let their kids go wandering around the neighborhood in search of new friends.  So just being a neighborhood kid isn't enough.  They need to learn to deal with bullies, and I hope that they don't have to learn that one at home.... lol.  Home schooling keeps kids in a little social bubble, and in my experience, leaves a lot of them socially stunted.  If you can afford a private school, great.  Go for it.  But don't keep them in what is, ostensibly, solitary confinement.

    1Reply
  • Randy E.
    Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Shiloh Lundahl:

    The reason for this post is because I often read other investors post about looking for a property in an area where they have good schools. We did that. We bought a home in Burbank, California, a very expensive suburb of LA, because the school system was rated really high compared to the other schools in nearby cities. But after a year of my wife checking our kids out of school early to take them to acting auditions, she got fed up with the annoyance of the school system (not to mention the socialistic and extreme liberal political climate of the schools in LA). So she pulled them out of school and started to homeschool them. So it really didn’t matter as much whether we lived by a good school or not at that point and we could have purchased a cheaper property that was bigger and nicer for a lot less by going just a little farther outside of Burbank.

    I am starting to see a lot of alternative schooling options now-a-days, especially in Arizona where I also live and invest. Here are some alternative schooling options. You can:

    • Go to your neighborhood school
    • Get an exception to go to another school outside of your area (this happens all the time by the way)
    • Go to a charter school
    • Go to a Montessori school
    • Go to a private school
    • Go to an academy 
    • Do online school
    • Do home school
    • Do a mix of online and home school
    • Do a co-op school

    And I’m sure there are others I’m not familiar with. So if in your listing for the property you are renting or selling you state the excellent alternative schools in the area, does it really matter which school district you buy in if the boundaries are a lot less ridged than they used to be?

    What are your thoughts?

    Shiloh, this is a two-pronged question.

    For people like you and me, it doesn't matter as much.  I bought a personal house in a school district where I knew my three young children would never attend one day of classes.  The neighborhood was perfect for us, but the school district was lacking.  Today, I have a son in high school (which I drive 20 minutes each way because the city will not send the buses this far from the school); a daughter  in elementary school (which is 15 minutes each way, but is on the way to my son's school); and another daughter in middle school whom I home school.  For me, it doesn't matter where we live.

    For most families, home schooling is not an option.  For many families driving 40-50 minutes round trip twice a day is not possible because of inflexible work schedules.  Therefore, if the parents are concerned about school districts, then it most definitely in most home-buying/renting decisions.  

    0Reply
  • Brit F.
    Rental Property Investor · DFW · Member since 2017 · 143 posts · 120 votes
    7y

    @Shiloh Lundahl,

    Yes, public school districts matter to both OO and NOO. Even specific schools within the same school district matter. Take a look at rental & sales comps near district boundaries and school boundaries. There can be substantial differences.

    In my area, creating a metroplex-wide fluid school system, enough for public districts to not matter, would take substantial taxation/legislation changes....which isn't likely.

    0Reply
  • John Clark
    Member since 2018 · 1k+ posts · 1k+ votes
    7y

    Good school districts are always crucial, for both renting and for owners.

    0Reply
  • Lucky K.
    Wholesaler · Phoenix, AZ · Member since 2016 · 9 posts · 6 votes
    7y

    Yes, Good school districts are always important, for both renting and for owners. Not just school districts, some schools are doing really good, like Basis Schools in Arizona https://www.basised.com/ , they are #1 in USA. My strategies is buy and hold near to Basis schools. 

    0Reply
  • Nancy P.
    Naperville, IL · Member since 2018 · 330 posts · 357 votes
    7y

    If you are talking about REI, of course people make money in poor school districts. If you are talking about for your own home, yes it matters. The people who can afford a parent to stay home and absorb the costs of homeschooling are the same people who care a lot about resale value and the perception of school quality is paramount. I say this as the wife of a man who quit his job in Houston and moved us back to Chicago suburbs because the quality of Texas schools was subpar compared to Naperville. My two kids went from being bored in Texas gifted and talented programs, to struggling to be average in Naperville. But they felt far less stifled creatively and were both happier.

    0Reply
  • Gina SternPro Member
    Investor · Boca Raton, FL · Member since 2019 · 1k+ posts · 161 votes
    7y

    @Shiloh Lundahl depends on the person or should i say family.

    [email protected]561-430-2616
    0Reply
  • Adam Wallen
    Rental Property Investor · Grand Rapids, MI · Member since 2018 · 46 posts · 10 votes
    7y

    @Scott Mac

    Interesting perspective... do you believe the quality of school teachers and access to educational supplies is the same across the board?

    0Reply
  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    7y

    @Shiloh Lundahl

    As so many have already said ... it depends. In Denver, we still get some people who really care about school district, but especially for the younger couples, as soon as they see the perfect home outside of the right school district, it seems that district matters a lot less to them at that point. In Colorado Springs, I think it matters slightly more, but even then, a lot of our buyers are house hacking or doing an Airbnb or short term rental, so they don't care as much either. 

    Interested to read what other says. I'm sure it depends on the market and the type of buyer you are/type of client you work with.

    0Reply
  • Account Closed
    Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
    7y

    I don't think it's that important right now for a different set of reasons. 

    Good school districts make for desirable home owner neighborhoods, and good appreciation potential. We're at the peak of a market, though, where investing in volatile, appreciating markets is a lovely recipe for equity loss in a downturn. Assets with less price fluctuation and higher cash flow tend to be in neighborhoods that don't have great schools. 

    I'm investing in working class markets now. If it were 2011 I'd pick neighborhoods with good schools/low crime/income growth as indicators of appreciation potential.

    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    My lowest ROI is a nice home in a great school district. It cost me a lot more than my six other rentals, and my rent is less than 1%. My tenants seem to have a higher turnover rate at this location due to them looking to buy as their incomes increase. On the other hand, my cheaper properties tend to attract "lifers" who don't ever want to leave. I get over 1% of purchase price in rent at these and don't have to worry about the yards at these properties. Most of the homes in these hoods look like rentals and their appearances aren't as attractive. For me, it's all about ROI. Am I proud of my nicer properties? Yes, but I'm happier to get a much higher return on my "beaters" with tenants who don't ever want to leave.

    1Reply
  • Medi Sarwary
    Pleasanton, CA · Member since 2016 · 73 posts · 48 votes
    7y

    Still matters in certain areas. 

    In the suburbs of the bay area for example, the school district is commonly the top priority for potential home buyers. Parents do everything they can to obtain a local address for their kids. I've seen cases where parents use a relatives or friends home address just to be able to send their child to that school. Folks who have the capability to buy in most areas but lack the funds to buy in a good school district choose to rent in that area just for their child's future. 

    A friend of mine explained the rationale and it makes a lot of sense. Your child has a brighter future if she/he goes to a great University. The best way to get them into said University is with a good high school education with a track record. You have two options at that point, a great private school or a high ranking public one. In the Bay, sending your kid to St.Francis will run you 25k a year and 100k by graduation (minimum). A public school will be a fraction of that. 

    If your child's education is important to you, that 100k will be either paid to a private school or you would factor that into the price of a home in a top ranked school district. Most choose the latter.

    0Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    7y

    People with more money can send their kids to private school. 

    People with more time can home school their kids. 

    In general a  flip , better school district , better price, it matters. 

    In general a rental, better district matters, to a point.  I think the district has to be good enough to attract decent tenants.  And frankly it isn't about numbers because I have had people say I went to  x district and I want my kids to go there.  It isn't about test scores as much as district climate. 

    School Choice and charter schools have done alot more to take school district out of the equation then homeschooling. Homeschooling is not an alternative for the average family. It does protect kids from exposure to a lot or things, I am not sure if that is good. You can't protect them forever. As for its impact on REI, 0.

    0Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    If appreciation is your thing then yes a better school is going to give you the benefits in that regard . If cash flow is what your wanting then I’d say it doesn’t really matter . The lower the neighborhood income the more cash flow and the low income areas have crappy rough schools . I have some rentals in good and bad schools and guess what ? rent is about the same ,however if I was flipping or doing other stuff besides buy and hold it would certainly play a role .

    0Reply
  • Son D.
    Rental Property Investor · boston, MA · Member since 2017 · 202 posts · 222 votes
    7y

    @Shiloh Lundahl I would say it absolutely matters in REI because it matters to the majority of buyers and renters. It drives up home values and rents. While ratings may seem to be merely subjective and every school has all different kinds of students, schools in towns with deeper pockets and bigger budgets tend to show better results. Parents in those towns are also more vocal if they feel their child's teacher is lacking. Those cities are considered highly desirable. Generally around here the city's reputation goes hand in hand with school systems which matches with buying and renting prices.

    0Reply
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