Interested in BIrmingham Cash Flow Investing

8 Replies | Birmingham, Alabama

Hey all,

Been looking for markets outside of my area to potentially invest in and came across Birmingham, AL. Ive been seeing alot of info regarding central point, but what about downtown Birmingham around zip codes 35208, 35204, and 35205. 

Are these areas run down, do you see any revitalization happening in the near future? Other investors currently in the area? This is all strictly for buy and hold investing with MFU.

Any good contractors / property managers that I could rely on down there?

Thanks for any insights on the area!

Birmingham is a good market for long term rental properties as long as you buy in the right areas. Inner city has the most upside given the prices & demand is driven by tenants not owners. You will lose money eventually if you attempt to invest in the suburbs for renting. They don't cash flow enough to sustain the investment. Any vacancy or negative fluctuation in the economy/market & you start losing money. Inner city isn't affected by fluctuations like suburbs are because they receive more assistance so they are more stable investments even though 99% of people on BP are going to disagree only because of demographics. They cost less & cash flow more. It's easy math.

Stay away from centerpoint. It's going in the toilet because too many tenants have taken over what was once a predominantly owner occupied area. 

I live in 35205 you mentioned. It's the historical area of Birmingham. Properties will be old, most on the historical registry, cap rates will be 4-8%, & prices high. 

35204 will be lower prices & somewhat of a forgotten area of Birmingham. It's a run down area without any gentrification visible or planned in the near future.

35208 is a similar area as 35204 but it is more appealing to the eyes & gentrification has started. There is a large recreational athletics facility called the crossplex in 35208. A crossplex village is under construction with hotels, shops, etc for it. Even getting a Starbucks in the village.  

Birmingham doesn't have gangs & such. It has good & bad pockets. I have a vacant house in 35208 that I leave the door open & it doesn't get vandalized.  

A lot of what you hear about so called bad areas, war zones, is just hype. This is where you make the most money investing to rent. 

3 bedroom houses should rent for a minimum of $750 anywhere in the city of Birmingham so there's no sense in spending $100k+ to get a $1,000 tenant. That's spending twice as much for an extra $250 that you don't get because your loan payment absorbs the extra rent spending twice as much. 

Here's a post about the different sub-markets in Birmingham. 

https://www.biggerpockets.com/forums/48/topics/549...

Thanks @Jason Cory . That was extremely comprehensive and helpful. Will definitely keep all this information in mind. I plan on going down to Bham and checking out the area to get a good feel of it after what your telling me and what i have been researching so far. 

One last question though; Is Birmingham dying as a city? I have read that it is plauged with the brain drain. Unlike areas like huntsville. I just cant seem to find good info from actual locals. Im tired of reading articles!

Originally posted by @Joel O. :

Thanks @Jason Cory. That was extremely comprehensive and helpful. Will definitely keep all this information in mind. I plan on going down to Bham and checking out the area to get a good feel of it after what your telling me and what i have been researching so far. 

One last question though; Is Birmingham dying as a city? I have read that it is plauged with the brain drain. Unlike areas like huntsville. I just cant seem to find good info from actual locals. Im tired of reading articles!

Birmingham is far from dying. It's growing with cranes everywhere for new development. 

I'm not sure about the brain drain because it was published when Amazon was looking for an additional HQ that engineers are hired faster here than any other city. 

@Joel O. I'm not sure where you could have heard that Birmingham is a dying city, unless they were talking about the town in Michigan (or England?).  Come on down for a visit and I guarantee you'll want to invest here, if not live here.  I don't make this statement lightly - I grew up in Austin in the 80s and 90s and have lived in Bham since 2011, and over the past 7 years I've seen and felt a lot of similarities between Bham now and Austin circa 1990s.  However, the BBQ here will never be as good as Austin's, so there's that ... I digress...

Birmingham is a charming city with good weather, great food, and a certain comfort to life.  I never would have thought I'd end up here (my wife's hometown), much less feel as good as I do about staying here for the long haul.  The last few years we've seen several large employment centers move to Bham and it's lately been somewhat of an under the radar hot bed for tech startups (not to mention Shipt) - overall it has, and always has had, a strong entrepreneurial presence.  The real estate market is hot here too, but it's got enough diversity of submarkets for you to find GREAT cash flow.  The high end areas are killing it in the retail space, but it's tough for a buy and hold investor to find a deal with decent cash flow (though I did find one ;) ).  The key is just to hit the pavement, or find a local partner who will do it for you, to learn which parts of the Class B-to-C areas are good and which to stay away from, because some of these areas are block-to-block.  I wouldn't say crime is too bad for a city of this size, but it's more of a blight problem in certain inner city pockets.  However all of the attraction of investors, plus a new mayor who seems to be up for the task, those rough areas are slowly being turned back over.

Feel free to holler at me if you are thinking about coming in town.  I also have a good property manager I can refer you to.

@Joel O. Just to echo @Tal Simpson , I was very pleasantly surprised when I visited Birmingham. I got the sense there was a lot of development and progress. And everyone I talked to had a genuine excitement for the city, the real estate market and the future. The new mayor seems to have injected a lot of optimism as well. I really enjoyed my visit and came away very impressed. I highly encourage you to visit. 

@Jason Carter @Tal Simpson this is exactly why I prefer getting info from locals, and people on the ground than reading reports and blogs and generic research. I’m glad you all chimed in and have me an honest opinion on bham. I’m definitely planning on making a trip down and checking the area out! Already have a good idea of where I would like to visit specifically, but hearing your opinions makes it so much more worth while. 

@Jason Cory Extremely helpful posts! I live in Atlanta and am only starting my process, but I have heard positive things about Birmingham and think it could be a good place to start. I do not own any rentals as of yet.  FYI- I submitted an investor form at LAS so I'll go from there. Thanks!

Originally posted by @Jeremy Stapp :

@Jason Cory Extremely helpful posts! I live in Atlanta and am only starting my process, but I have heard positive things about Birmingham and think it could be a good place to start. I do not own any rentals as of yet.  FYI- I submitted an investor form at LAS so I'll go from there. Thanks!

 Sounds good. I'll contact you Monday. It's always a good idea to get started in your backyard while you're learning though.