In 5-10 years when millennials start making families, there will be even higher demand for good homes in good school districts.- 25K in cash from your equity does not give you enough 20% downpayment to buy anything better as a rental around here

I wonder if there is a school there.

Pay attention to what school districts are selling quickly, how much rehabbed houses are going for, how much houses that need work are good for, ectAlso spend time going to open houses to get an idea for what the market is like.  

yes, there were two multi-family buildings in Berkeley near the school for $1 each (might still be there), but I think the deadline expired to sell them. part of the deal was that they would HAVE to be relocated within Berkeley, and Berkeley just doesn't have those types of lots available.

It's important to me that we purchase in a school district that I'd be willing to send my own kids.

I started my real estate curiosity by taking a real estate sales person and appraisal course through Allied Business School and realized I didn't want to be a sales person but rather an investor. 

Buy in the best part of town or school district, and maybe the appreciation will take care of your desire to hit a home run. 

The tenants buy out, depending on how long they have been there, are there kids going to local schools, etc.

Ours was a single family and the other persons was a 2 bed condo; I think once people can't move before school starts the rental market here diminishes a lot.I didn't contact people who had looked previously because I figured if they were still looking they would see my price drop on the websites.

One response was from a coordinator for a group called the Opportunity Council, which helps transition people in school get back into the workforce.