Seeking Birmingham, Alabama Turnkey Advice. (Investors Only)

71 Replies

Hi All! Thank you for your help re: Kansas City. New question! Anyone who is a current turnkey investor in Birmingham, Alabama, have insight into good/bad zip codes to buy in?

*ALSO* Recommendations on your favorite turnkey companies? Has anyone purchased in this city from Birmingham Income Property, LLC? Let me know how your experience was!

AND NO TROLLING! If you're trying to sell me or if you're a marketer, BYEEEE... I'm interested in talking with other investors who can give me personal advice. :)

Sara,

*** Disclaimer - I am a turnkey provider in Birmingham- but I won't try to sell you. The good/bad zip codes depend on what type of property you are looking for. Are you looking for B and C properties? I have found that the zip codes most investors really like at 35023, 25215 and 35235 - among others. These zip codes are B and C neighborhoods, varying street to street. Rents in these areas are mostly $700-$850 for a 3 bedroom 1 bathroom home. You can usually get a 10%-12% net return in these areas. I have never dealt with Birmingham Income Property, LLC. If you would like more detailed information about our market, or if you have specific questions feel free to contact me.

Thanks,

TJ Sayers

Sara,

I have purchased many properties grom TJ Sayer. Good guy, eccellent product.  It would be good for you to define what your looking for as one man's good zip code is another man's hood.

Dan

@Sara Hodge

Great to see you on here! The zip codes you'd want to consider would be based on your goals. Neighborhoods are not just as easy as B and C, there are different types of B's and different types of C's. I guess the biggest question would be how many properties you plan on purchasing and how you plan on acquiring them. Then what your 5 year goals, 10 year goals, etc.. are. If your plan is to purchase multiple properties right off the bat my suggested strategy would be different than if you were going to purchase 1 by 1 with a few months or years in between each purchase. 

I am definitely a turnkey provider, but I'm not trying to sell you anything :) just trying provide some insight to your question.

I hope this helps.

Hey @Sara Hodge - I work with Birmingham's largest property manager (1,100 houses in the city) so I could give you some decent feedback (we don't sell turnkey). 

There are definitely different types of B/C areas.  And some groups will try to sell you a D/F property as a B/C...so be careful there.  

And things can vary on any given street. You don't want to buy a great looking house on a street with two abandoned properties and one burnout. Unfortunately, it happens b/c people can buy that house for 5k, put 15k in it along with a tenant that's overpaying and won't stay in the house for more than 12 months....and sell it for 65k.

I have some investors we manage properties for who have used BIP for their turnkey and I believe they would be open to sharing their experience if you want. You can message me if you're interested and I'll reach out to them to see if they wouldn't mind.

Also, you can grab a free ebook on our site that goes into details about Five Turnkey Manipulations you should be aware of that we see in Birmingham a lot.  

There is a lot of great opportunity in Birmingham for investors who do their homework and do it right.

Hope that helps!!

Spencer

@Jason W. this is an investor that really helped me!  Good luck

Still waiting for a call back spencer 

Hey @James Irwin I totally missed that message from Wayne...my bad!  I will call you today.

@Sara Hodge   Hi Sara, (me again)

I bought 5 rehabbed houses last year in the Center Point suburb northwest of downtown. Paid $60 - 65k with rents $800 - 850 (about half Section 8). On my one visit to the area, I saw a bedroom community with neat, well-kept houses from the 50's/60's on large (to Californians), tidy lots. Cash-flow is $3k+/mo after PM & expenses, but not counting PITI.

I can't speak to any other areas.

Hi Sara, I have bought from BIP in the past and would be happy to provide my thoughts. Feel free to PM me with any specific questions you have.

@Jarrod Cook thank you for everything. Your info is great! Good thoughts about the strategy planning. @Kevin Trumbull YESSSSS @Account Closed THANK YOU! I will be contacting you with questions seeking insight into your experiences. :) I'm so appreciative of your time! 

This forum is so great. Thank you everyone for your honesty. Especially those of you who openly said you're a provider or management co... I love that. Too many crazies on here masquerading as investors with a hidden agenda; they aren't upfront like you are!!! :)

Kindly, 

Sara 

Originally posted by @Sara Hodge :

Hi All! Thank you for your help re: Kansas City. New question! Anyone who is a current turnkey investor in Birmingham, Alabama, have insight into good/bad zip codes to buy in?

*ALSO* Recommendations on your favorite turnkey companies? Has anyone purchased in this city from Birmingham Income Property, LLC? Let me know how your experience was!

AND NO TROLLING! If you're trying to sell me or if you're a marketer, BYEEEE... I'm interested in talking with other investors who can give me personal advice. :)

 I invest in Birmingham. I'd stay out of Enslee and Fairfield and Bessemer. Message me if you want to know which turnkey I use there.

This is a great thread!  I will say that there is no right answer here for sure.  Different investors have different requirements both from a financial perspective and security perspective.  Some are cash buyers and some are financed.  Some are savvy investors and some are brand new.  Some are local while others are half way around the world.  Point is, any real estate opportunity can be a deal to somebody.  The deal must work for the one buying it.  Feel comfortable in your decisions and local team members if you are going that route.  Good luck Sara!

@Sara Hodge

I bought 2 turn-key rentals this year in Birmingham. I went through Norada Real Estate, which is a marketing company, with Decas Group being the actual turn-key seller and also my PM.

As far as the buying process and the parties involved, it went very smooth. Both Marco and Norada and J and Jarrod at Decas Group are great guys to work with and did their best to meet all of my demands (which there were quite a few) and help through the process as best as they could. I would recommend them for sure.

As far as investing in the Birmingham market in general, I would agree with the other people who posted here, that you need to understand what your goals are and what the Birmingham market is (and is not).

It's probably one of the cheaper markets in the US right now, so the returns can be quite good, but with that, you may be buying in lower quality neighborhoods (a lot of Section 8 tenants) and older homes (most are 1950 or older in my experience). This isn't necessarily a bad thing, just something to know.

As far as ZIP codes, I bought in 35211 and 35206. Both are C neighborhoods with most likely Section 8 tenants, but I wanted to diversify my real estate portfolio with higher cap rate properties. The price range here is $40k-$50k for 3/1 SFRs. Rent is around $750.

If you want a little more quality, 35215 and 35235 are much better areas. The prices go up to $60k-$70k with rents around $850. Cap rates are noticeably lower, but less Section 8 and newer homes.

I'll leave you once again with the importance of setting goals for your real estate investment portfolio and letting those goals drive your acquisition criteria. It will be much easier to focus on a geographical area if you know precisely what you want.

Feel free to contact me directly if you want more information.

Jim Workman how do your sec 8 houses compare to non sec 8? We are thinking about possibly getting a sec 8 house as one of our firsts. We've heard great things from some people and not so great from others.
Jim Workman how do your sec 8 houses compare to non sec 8? We are thinking about possibly getting a sec 8 house as one of our firsts. We've heard great things from some people and not so great from others.

I don't know Birmingham at a micro level, but zip codes are generally too broad of a geographic area to be useful and can lead to bad decisions. Many markets can vary neighborhood to neighborhood. I really recommend getting to know the area at a neighborhood level. Talk to a property manager in the area that deals with the class of property that you are interested in and ask them what areas are good and where to avoid.

Great thread and accurate feedback on most of the comments. The most important takeaway I can provide is working with a good turnkey provider. As we have many of them here in Birmingham, we always stress that you come to Birmingham to meet with them with the following itinerary:

1. View turnkey properties.
2. View properties under construction.
3. View potential properties to purchase>
4. Review how the turnkey provider provides financial information (always use the net rates). Visit their office, see their crews. Make sure it's not a one-man operation.
5. Meet with property management companies.
6. Meet with closing attorneys.

You want to try and see a mix of at least 10 properties with each provider who will show you B and C class properties. Best on your criteria and comfort level, you can then decide which ones fit your needs.

Yes, you will get better returns with C class properties with a bit more risk and less appreciation while B class properties provide lower returns with less risk and greater appreciation. Birmingham is an excellent buy and hold market. Most investors are hear for the long haul and plan on holding for 7-10 years. This is not a buy and flip market. Average appreciation is 1.76% on average per year. We are a very conservative market and do not experience the wild swings in some of the larger markets. Slow and steady wins the race.

Sara,

Welcome to BP!  You are definitely in the right place to get the right information to make the right decision for you. 

Birmingham is an excellent market to invest.  Here's why...Although BHAM is not the sexiest market out there, it is a nascent market-not saturated with big hedge fund dollars gobbling up all of the properties and driving up acquisition costs for the local mom and pop turn-key operators.  This translates into lower priced homes (compared to other markets for a similar type home in a similar type neighborhood) with higher margins which yields higher/better returns compared to your more popular/sexier markets.

 To put in simply, your investment dollars go farther and generally earn higher yields than compared to your other more popular markets.  I am not saying other markets aren't kicking off good returns, they are. But you typically find yourself paying a higher price for a similar home with a yield that is lower than if you purchased in a non-popular market, like BHAM.  

The city of BHAM itself is one where a lot of capital investment is being placed. For example, the Birmingham Barons $64 Million Dollar state of the art baseball stadium called Regions Field,  located on 1st Street in downtown celebrated its grand opening on April 10, 2013. Adjacent to the ballpark is the beautiful Railroad Park which was awarded the 2012 Urban Space Award Winner by the Urban Land Institute.  The BHAM Shuttlesworth International airport unveiled the first phase of a $200M terminal modernization project in 2013. More than 3,800 new jobs and $843 million in capital investment were announced in 2012 for the BHAM Metropolitan area report.  The prominent industries in BHAM include: banking, finance, manufacturing, transportation, distribution and logistics, biotechnology, IT, corporate mine & most importantly UAB school of Medicine was ranked 10th in the Nation for Primary Care. UAB is the highest employer in the city. 

BHAM is a city that is flying under the radar. It is a growing city with a low cost of living index, with the population growing at a steady rate (not exploding like TX) with affordable housing and increasing job growth. 

To answer your questions about specific zip codes and which ones are best to invest in, I have to agree with TJ Sayers.  The most popular zip codes for investors are: 35023, 35215, 35235, 35126.  However, within the zip codes are no-go zones that can vary from street to street. Having the right TK company on the ground there to help guide you with your purchase is key. Like Jarrod mentioned, you need to have a strategy in place. Just as you diversify your stock market holdings, you too also want to diversify your real estate holdings.  For example, if your goal was to purchase 10 investment properties over the next 10 years, I would suggest your diversify your holdings in different zip codes and in different states.  Like Jay Benoit said the deals have to work for you. 

Some investors love Section 8 housing. Others do not. Your risk tolerance will determine which route you want to go or perhaps, you want to mix up your real estate portfolio with some Sect. 8 and non Sect 8. 

The best advice I can give is this...PASSIVE INCOME ROCKS!  If your goal in purchasing TK properties is to set yourself up in the future to either:

1. Supplement retirement

2. Pay for college for little ones

3. Retire from your JOB

...then having a plan in place to help you reach your passive income goal is the first step. If you want more information on how to create a plan, just PM me. 

Good Luck and let me know if I can be of further value to you. 

(And, yes, I am a TK provider in BHAM. I am a mother of 3. A business owner. A real estate investor myself & a coach)

What a great thread! I love living and investing in Birmingham. America's best kept secret. Thanks to everyone who has shared their thoughts on this great investing market!

@David Hodge   Hi David,

You know, Sara is from your town.  You should contact her;-)

My PM recently visited several of my houses, and they were well-maintained.  I don't think they have visited the 100%-section-8 houses yet.

My understanding is that Section8 visits the homes and requires that they be kept up.

I'll update when I know more.

@Ryland Taniguchi @J Benoit @Anton Ivanov there are no words! THANK YOU for your supportive and thoughtful responses. I'm so appreciative of your encouragement, AND great advice. I'm taking it all in right now, but will contact you personally if I have any specific questions. Thank youuuuu!

@Jim Workman yes, let me know how they are once they visit.  We probably won't do section 8 for our first couple homes but possibly down the line.  @Sara Hodge doesn't just live in my town, she lives in the same house as me!  I know, I lucked out on that one!  :D  Thanks for all the great feedback!

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