Property Investing: Is Buying Near Schools a Good Investment?

  • Posted 18 Jun

Property Investing: Is Buying Near Schools a Good Investment?

Property investors are always looking for great deals with the best returns for the lowest amount of risk. All real estate investing has some level of risk, but studies show that buying near schools can be a good long-term investment.

Many online real estate services offer proximity to schools as search criteria, and surveys show that distance to a good school is a major deciding factor for where families want to live. In a recent REA Group survey, 31 per cent of home hunters said that local schools were an important part of their property decision.

In fact, education is so important that some families begin researching and planning a move long before their kids are old enough to attend school. How does this benefit you as an investor?

Here are some of the pros and cons of buying property near schools:

Infrastructure is key 

People want to be part of a community, whether they are in a position to buy their own home or will be renting from an investor. For this reason, smart investors pay attention to local infrastructure such as schools, hospitals, and shops when scouting out the best location to buy properties.

By purchasing property near a desirable school, you’ll attract high quality family tenants and your property will have fewer vacancy periods. Housing near schools is always in demand, as long as the quality of the school remains high.

Excellent financial returns

In terms of capital gains, a home near a good school can offer excellent returns. Rental rates are also higher in general near a desirable school. Parents expect to pay as much as 10 per cent above the typical neighbourhood rates for a premium location. These properties also tend to be lower hassle, as tenants typically stay longer and you’ll have less turn over to deal with.

Potential downsides?

The biggest downside of investing near a popular school is the premium you’ll pay in terms of higher real estate costs. In some Australian communities, buying a home near a good school can add up to $50,000 extra to your mortgage.

For most investors, that is a cost they are willing to bear because they believe it will pay off over time. However, spending the additional money on one property means you won’t have it to invest in other ways.

And you don’t have a guarantee that the school will continue to be desirable over the long term. School quality can decline, and in some cases the school may close entirely or relocate to another neighbourhood. In that case, you’ve got the extra overhead without the premium rental income.

Despite the risks and added expense, many investors believe that buying property near schools is a smart investment.

Are you thinking of purchasing property for your family or as an investment? Australian Credit and Finance is ready to help with your home buying experience. Contact us today and we’ll answer all your home loan questions.

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