Not seeing the 1% rule with Turnkeys in Birmingham Al

9 Replies

I am looking at SFR turnkey properties in Birmingham, Al area. All the properties being offered are closer to .08% for monthly rental.

Just wondering if I should look elsewhere. I need turnkey for a 1031 exchange, then go from there. Also, good property management is important.

Thanks for listening

There are multiple areas of Birmingham where you can do  1%  or better.   I have an owner who is selling a house in Tarrant that will get you significantly better than one.  The municipality of Tarrant is difficult to work with from a management point of view but that is factored in. 

Originally posted by @James Runkle :

I am looking at SFR turnkey properties in Birmingham, Al area. All the properties being offered are closer to .08% for monthly rental.

Just wondering if I should look elsewhere. I need turnkey for a 1031 exchange, then go from there. Also, good property management is important.

Thanks for listening

If you're looking to exceed the 1% rule in B-Ham perhaps you need to move down an asset class level. You may be looking at B grade properties. Check out some C grade properties. For more info on the differences and risks associated with going down a level you'll want to check out The Ultimate Guide to Grading Birmingham Alabama Neighborhoods

 

Look at Hueytown/McCalla. That’s were the jobs are and demand for homes. Amazon distribution centre along with spin off manufacturing jobs from Mercedes 40 miles down the road. Not Bessemer. Neighbourhood range from A to B- with rent from 850 to 1400 for newer homes. Good luck. 

@James Runkle I wouldn't focus so much on the 1% rule as much as I would cash on cash ROI. AL has such low taxes in many places that you can have very high returns & cash flow with less than a 1% rule. In other locations where taxes and insurance are much higher, you could easily have a home that is way above the 1% rule, but it's negative cash flow or even break even. My point is there is so much more to consider than simply the 1% rule. Hope this helps!