Is Birmingham AL a good cash flow market to invest in?

11 Replies

@BJ Gibbs

You should be able to find property with decent cashflow in Birmingham AL. 

The average rent to price ratio for the entire municipality is hovering at 0.67% and has been steadily rising for the past few years.

I would focus my search efforts on the western side of town if you are looking to maximize cash flow, just be carful about not investing in a part of town that is considered high risk.

Map below should rent to price ratios for census tracts in Birmingham. Data if from the American Community Survey 

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I used to live in birmingham al and encouraged my buddy to invest in rental properties. Some of the areas in the west and north of downtown are very sketchy which is where he invested. However, he did very well in the houses he invested in. Let me know if you have any questions. 

@Kenny Woodward

Do not invest in city of Birmingham or eastern Jefferson county.

Buy the schools. Hueytown is good. McCodory is ok. Pinson valley is ok. North Jefferson county is ok.

Also love anything in StClair county and Shelby county. Those last two will cost you 40-50 k for 20%DP but your rent will be 1300 to 1400 month.

Good luck. jP

Originally posted by @BJ Gibbs :

Looking at investing here. Curious as to your thoughts

Welcome aboard BJ. As B-Ham has piqued your interest I figured I'd drop you a link to The Ultimate Guide to Grading Birmingham Alabama Neighborhoods. Also have similar guides for Cleveland, Ohio and Kansas City, Missouri. Good luck on your investing in whichever market it is that you choose. One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

I agree with the majority here, the rougher areas of Birmingham have a much higher risk involved with them and should be avoided by newbie and out of state investors. The D and F neighborhoods of Birmingham have stronger cashflows but fewer exit options on the backend, you will usually be selling to another investor. I've seen some flippers moving in on select neighborhoods within these areas and coming out well.