I'm in the process of looking for a rental in the Center Point area of Birmingham. I am working with an agent, but of course, I'm weeding through a lot of listings.Are there any rules of thumb that more experienced investors in the area use when selecting properties?
For example, is there a school I should be close to? Is there a part of the area or street that has higher crime and should be avoided? Is there a type of house that doesn't rent well?
Any advice would be appreciated.
A lot of that depends on what it is you’re trying to accomplish. Centerpointe is a mix of class D and class C properties. Most the people who buy their are buying for cash flow.
There are plenty of value add opportunities in that area. There is many houses that need updates and have significant deferred maintenance.
However, if you lack the funds to perform a rehab you may want to look elsewhere as turnkey properties are not as common.
Personally, we blast offers on anything price below $80,000 for a Single Faimly. I typically put offers in at 40% of market value. We use a five day walk through contingency. Typically no one excepts. At best the seler’s Agent will give a verbal counter offer. We ask them to put their counter in writing. That locks them in for three days and provides time to look at the property.
If they do put a counter offer in writing it shows some level of motivation. After I run the numbers I sent him an offer that works for me.
For the initial offer, you could use a letter of intent style offer letter, rather than a formal purchase agreement. This has the downside of not being taken seriously.
Or you could ask your agent for a standard purchase agreement and fill them out yourself or you can ask your agent for standard purchase agreement and fill them out yourself.
It takes a bit more time but looks like a serious offer especially if you include $1000 earnest money check to be deposited in escrow if they except
Hi @Wilson Lee . Thanks for the response. That sounds like a great strategy. In my case, I am looking for more of a turnkey property there. I will be using conventional financing, and while I do have the funds for a rehab, right now, I'm not looking to do much more than cosmetic updates.
You mentioned that it's a C and D area. I actually wasn't aware that there are D class properties there. I would be targeting more of the higher class of properties there. Can you give me a general idea of where those types of properties are located in the area?
It can vary street to street to street. Areas closer to Pinson or Trussville are nicer. Areas closer to Tarrant are more class D.
Yes, @Wilson Lee is correct. There are many D class properties in Centerpoint and it can vary from street to street. You will also need to consider your prospective tenant and their willingness to pay premium rent for a nicer house. Nicer C class can command close to $1,000 in rent, but your pool of solid prospective tenants shrinks as well.
It's best if you actually walk the house and see the street for yourself. The last thing you want to do is to purchase a nice turnkey on a street that is deteriorating.
Best of luck to you!
@Daniel Mills I have a few properties in center point and it is a good place for rentals. That said it’s really block to block. If you are doing this remotely. Make sure you connect with at least three to five other investors investing in the area.
Thanks. This is great information. Let me ask you this. Say I decide I want to make a really "safe" investment in Birmingham where one street doesn't make or break the deal. What area would you recommend? Is that more of the south in Pelham, Hoover, and Helena? If so, is there much rental demand down there or are people mostly buyers?
Hi Daniel, Like the others have said, CenterPoint can vary greatly from street to street and neighborhood to neighborhood. I had a number of rental there for years and liked them, but I know the area pretty well. I also have several friends that have rentals in the Pelham, Helena, Alabaster area and they really like that area. Of course the home prices are substantially higher but it is a totally different market. A lot fewer rental properties in relation to owner occupied so that can be a good thing in the long run.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.