Alabama Market Comparison

[Zachary Ferris]

My wife and I are looking to flip houses between central and north Alabama (Birmingham to Huntsville and anywhere in between). Any input from local investors in those areas on what looks good right now? We've looked at the Birmingham outskirts near Alabaster, Pelham, Chelsea and some others. Then in Huntsville we have seen the potential on the east side near the mountain. Any thoughts or experience? Thank you in advance!

[Jason Cory]

@Scott Starkey Birmingham is a good market to do all of the above that have been mentioned in the thread. 

There are buy/hold opportunities but I would invest in the city limits for these and avoid the areas the Turnkey 1% investors are working because you also have the Wall Street influence buying in these same areas. Any time you have a significant turnover in usage, i.e., homeowner to renter, the market will decline so you would always be buying at the peak of that particular market. See Centerpoint for reference to support that fact. What was once a stable $150k market has now seen most all investors bail for one reason or another. 

As far as flipping, you should stick to the suburbs where the schools rank in the top 20 in the state. Those will be your areas where there is an actual ownership demand. Alabaster is a good city. I'm partial to it because it's where I grew up. The Shelby County suburbs typically have one or 2 cities listed in the top 100 places to live in the U.S. every year. Alabaster, Helena, and Pelham are usually in the top 100 or just outside of it.

The appreciation play is also viable. Unlike most cities the economy in and around Birmingham is driven by UAB. Medical is a stable investment. It's not like other MSA's where you have large corporations that hire during upswings in the economy and lay-off during the downturn. Good or bad economy, people still get sick. Job security. When Alabama entered the foreclosure crisis the median value for the state was $145k and in 2009 when we were coming out of it the median value was $169k. While everyone else was losing value, Alabama was remaining stable. 

It's rumored that Huntsville will become the largest MSA in a couple of years. There are an excessive amount of smart people in and around Huntsville because of NASA. The difference between the markets is the long-term play. Birmingham functions due to medical. Huntsville functions due to NASA. Huntsville always suffers when the NASA budget is cut. It is more directly affected by the policies of Washington than Birmingham is due to the factors that drive each's economy.

In short, right now you can't really go wrong in either of the markets.