Birmingham Conservative Areas

6 Replies

Hello everybody,

This is my first post on BP. I am looking to purchase my first home in Birmingham to live in for a few years and turn into rental property thereafter. I'm curious as to what areas some experienced folks would recommend as long-term, conservative areas for investment to someone who is getting started. 

I'm not looking to get rich quick off of a flip or anything. I would like something that I could hold onto for a long time and feel confident about for the life of the investment.

What price range are you looking for?  

Some good long-term areas, with good schools, where you should be able to fit within the "1%" rule (e.g., mostly white-collar middle-class areas) could include: Parts of Hoover, Gardendale, Trussville, parts of Leeds, Pelham, Alabaster, Helena, Calera, possibly some parts of Chelsea.

There are plenty of good lower areas that would cash flow better, and plenty of good higher areas that may offer better appreciation but less cash flow.

Account Closed 

We have one we just finished rehabbing. Here is the address:

416 Valley Rd, Birmingham, AL 35206

If you search the address you will be able to see it listed with all of the pictures. We have several upgrades in this house. 

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I am looking at a max of $200,000. I have not done all of my reading for understanding renting houses, so I do not understand why higher areas would offer less cash flow. If you have an article, post, or explanation for this, I would greatly appreciate it.

Originally posted by Account Closed:

I am looking at a max of $200,000. I have not done all of my reading for understanding renting houses, so I do not understand why higher areas would offer less cash flow. If you have an article, post, or explanation for this, I would greatly appreciate it.

Rents fluctuate within a more narrow band than prices.  This holds true throughout the country.  In other words, there is both a relative "floor" and "ceiling" on what rents the market will bear, in relation to property values.

A lower-end house for, say, $40,000 would rent for $800/month (about 2% "Rent-to-Value" ratio").  

Whereas a $120,000 house might rent for $1,200/month (1% ratio).  

However, a $300,000 house may only rent for about $2,000 (0.67% ratio).

You can see how the cash flow (in terms of rate of return) decreases with each of these scenarios.

There are of course a million shades of gray in between.

Try some searches for terms like "1% rule" or "2% rule" or "investing for cash flow" and that may land you on some further explanations.

hi- I live fairly close to Bham, and here's my take. Single people are moving back closer to the center of the city because of the traffic.  A property close to UAB would rent well, but there are always security problems in that part of the city.  People with kids are moving out of Jefferson county because of the schools, and the horrible mismanagement on the part of the county commissioners.   The "best" school zones are in Shelby county, Vestavia,Chelsea,  and I believe the  Homewood area.These are considered highly desirable areas.  I think you'd be pretty safe buying anything close to hwy 280 or interstate 65 south that you could find and do some work to in order to up your equity. They are rare, but they do happen in that area.  I warn you the traffic on those two highways can be horrific from 5-6pm. (see above, why single people are moving back to the city!)  If you've never been there, you may be surprised. A lot of people love it.