Early into your real estate investing career, you’ll start to realize that it’s more about people than property.
You can study all you want about houses, but the more you know about people and what they’re looking for in a house, the more profitable you’ll be.
This is exactly how the investing pros look at property. Here’s one great example to get you started:
Let’s start by putting yourself in a potential buyer’s shoes.
So, let’s say you (the buyer) are hunting for a home to live in for the next 10+ years. You have a wife, 2 young children, and a dog.
What’s going to be the most important thing you look for when you’re checking out prospective homes? A pool? An extra bedroom? Plenty of bathrooms? Time of commute?
Well, for many Americans in that position, they care about one thing more than all else…and they’re willing to pay 40%+ more to get it!
Let’s look at some home examples to break it down. There are 3 similar homes in 3 different parts of Townseville. Here’s what each one looks like…
Home 1:
- 4 bedrooms, 2.5 bath
- Includes a pool
- 10 years old
- Fenced in yard
- Located in average school district
- 20 minutes away from downtown
Price: $490,000
Home 2:
- 4 bedrooms, 2.5 bath
- High ceilings
- Sport court in backyard
- 8 years old
- Fenced in yard
- Located in poor school district
- 15 minutes away from downtown
Price: $470,000
Home 3:
- 4 bedrooms, 2.5 bath
- No extra features
- 12 years old
- No fenced in yard
- Located in top school district
- 35 minutes away from downtown
Price: $705,000
Consider this: The average American family puts the highest value on the education their children will receive. That’s why Home 3 is worth 50% more than Home 2, and over 40% more than Home 1!
Without any special features, like a pool or sport court, Home 3 has the highest price tag by far simply because it’s located in the top school district.
It doesn’t matter that the commute for someone working downtown will be significantly longer for someone in Home 3 than in home 1 and home 2. Sure, that could have a small impact on the value, but it’s nothing compared to which school zone the family will be living in.
Examples like this one are coming to fruition in real life all over the states these days.
A family in Ohio was more than happy to pay twice as much per square foot as they would have in other suburbs to live in Upper Arlington because that’s where they’d gain access to the top school system.
So, check to see what school district your home is located in if you don’t already know. If it’s in a good one, it could immediately be worth 50% more than you thought!
AND… as you’re venturing into your property investing career, consider locations where new schools are being built. If you get in early enough, you can hunt those profits just like the pros!
