The School District Focused Real Estate Strategy w/Sean O'Dowd
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Episode Description
Welcome to the Freedom Point Real Estate podcast! In today's episode, guest Sean O'Dowd shares how he identifies which specific school districts to target with his scholastic real estate strategy, what inspired him to focus on this unique niche versus other RE strategies, how he balances family life and career growth, and more.
Sean is the managing partner of Scholastic Capital, a real estate private equity firm focused on single-family homes in elite high school districts. Scholastic Capital buys single-family homes in high-end school districts and then rents them to tenants for 3+ years. Sean, his wife, and their two kids reside in the Chicago suburbs.
CONNECT WITH SEAN O'DOWD!
Website: https://scholasticcapital.com/
LinkedIn: https://www.linkedin.com/in/sean-odowd/
CONNECT WITH JEREMY DYER!
Website: https://startingpointcapital.com/
Instagram: https://www.instagram.com/startingpointcapital/
LinkedIn: https://www.linkedin.com/in/jeremydyer
Facebook: https://www.facebook.com/startingpointcapital
Book a Call! https://calendly.com/startingpointcapital/discuss-investing-with-jeremy-dyer?month=2023-12
Summary
Tip #1: Target High-Demand, Landlocked Markets
"We're looking for areas that are 90% owner-occupied with no more land for development and strict multifamily zoning restrictions."
Scholastic Capital focuses on areas with limited housing supply and high demand driven by elite school districts. This strategy ensures properties maintain high rental demand, offering stability and consistent returns. Investors benefit from this long-term approach, as constrained supply keeps occupancy rates high.
Tip #2: Use Data to Identify Top School Districts
"If over 2% of a graduating class goes to Harvard, MIT, or Stanford, it's a strong indicator of a highly desirable district."
Sean explains the importance of leveraging data like school rankings and college admission rates to pinpoint target markets. By identifying these high-demand districts, Scholastic Capital ensures their properties attract long-term tenants who value educational opportunities, aligning investor goals with tenant priorities.
Tip #3: Focus on Long-Term Leases
"Our average lease is two and a half years, giving us income predictability and reducing vacancy costs."
Long-term leases lower turnover and operational costs, providing predictable cash flow for both the business and investors. This strategy also creates stability for families, fostering tenant loyalty and further reducing vacancies.
Tip #4: Tackle Unique Challenges of Elite Areas
"Our largest line item is property taxes—high taxes fund these elite school districts, making them desirable but costly to invest in."
Investing in high-demand school districts comes with challenges like high property taxes and dispersed single-family units. Proper planning and operational efficiency are key to managing these hurdles while maintaining profitability.
Tip #5: Tailor Operations for Family-Oriented Housing
"If you've got four people in a home, your fridge is opened 60 times a day—wear and tear is significant."
Family-oriented rentals require proactive maintenance planning due to increased usage of home systems and appliances. Scholastic Capital's operational model accounts for these factors, ensuring properties remain in excellent condition while maintaining tenant satisfaction.
Tip #6: Build Competitive Advantage with Custom Tools
"We've built custom software to filter MLS listings quickly, helping us identify ideal properties efficiently."
Sean emphasizes the importance of technology in streamlining property acquisition. Custom software enables Scholastic Capital to act quickly in competitive markets, ensuring they secure the best opportunities before competitors.
Tip #7: Leverage Off-Market Opportunities
"We use high school graduation lists to identify potential sellers—empty nesters ready to downsize."
Creative sourcing strategies give Scholastic Capital a competitive edge. By targeting families likely to sell, they tap into off-market opportunities and build their portfolio with less competition and better pricing.
Tip #8: Prioritize Investor Confidence
"We distribute returns monthly because long-term leases give us confidence in consistent cash flow."
Scholastic Capital’s approach focuses on maintaining transparency and predictability for investors. Monthly distributions foster trust and align business operations with investor expectations.
Tip #9: Balance Work and Family Life
"We schedule defined time for family—like my son and I going on ‘buddy walks’ every day."
Sean shares how maintaining work-life balance is crucial in a high-growth business. Structured time for family creates harmony, ensuring personal priorities are met while sustaining professional success.
Tip #10: Build for Future Opportunities
"We aim to create a data-rich portfolio that a larger institution can easily underwrite and value."
Scholastic Capital’s long-term vision includes building a scalable, data-driven portfolio. This focus on high-quality operations positions them for lucrative future exits while maximizing current performance for investors.
