Seeking Birmingham, Alabama Turnkey Advice. (Investors Only)
Pro Competitive Dance Coach · Denver, CO · Member since 2015 · 42 posts · 9 votes
Seeking Birmingham, Alabama Turnkey Advice. (Investors Only)
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Clayton MobleyPro Member
Birmingham, AL · Member since 2014 · 875 posts · 947 votes@Sara Hodge First off thank you so much for starting this thread. This is a great dialog about the best zip codes in Birmingham for rental investment. Full disclosure: I own a turnkey real estate business and a property management company in Birmingham. I only enter the conversation for informational purposes, however. I have a lot of experience in "B" Neighborhoods in the Birmingham Metro Area. As we do not participate in "C" areas, I have limited knowledge here.
@TJ Sayers did a great job mentioning some of our most popular turnkey areas. I wanted to take the opportunity to go into a little more depth about the positives and negatives of some of the different areas that we like.
5 Best Turnkey Areas / Zip Codes For Class B Properties in Birmingham, AL
- 1. 35215 - Center Point/Roebuck Area - This is a fantastic area where you can get a lot of bang for your buck. There is currently high rental demand in this area, and properties priced accurately generally move off the market quickly from a leasing standpoint. There are also still some good deals out there in the area, and depending on whether you use a turnkey provider or do the renovation yourself, you can expect somewhere between 8.0%-10% ROI (with a Turnkey provider) all the way to 11-14% (if you go at it alone and know what you are doing). Recently this market has become a little saturated with many new entrants - primarily local investors but also some national players like Sayco and Havenbrook. In my opinion, long term capital appreciation looks good in the area as well as the fact that there are an increasing number of owner occupant comparable sales that are bringing the average sales price in the area up. Disclaimer: there is NO way to know which area will be good from a capital appreciation standpoint 5 or 10 years down the road. These are just assumptions based off the data that we have.
- 2. 35023 - Hueytown - This is another great area to get a good return for a reasonable price. Hueytown boast a slightly higher owner occupant to tenant resident rate, so you will find better comparable sales in the area, and thus sometimes a higher price of acquisition in this area. You should be able to still get 8-11% return in this area if you find the right deal. If you have to pay a little higher price, this may be offset somewhat by the huge impact this area has to grow with the new additions to the Mercedes Plant in Vance Alabama. Hueytown is conveniently located between Birmingham proper and Vance, so people wanting to live closer to the city often find their home in Hueytown verses the VERY rural Vance. Mercedes-Benz will have the capacity to manufacture 300,000 cars per year in 2015 (up from 185,000 in 2013)! The cool thing is they have no plans of slowing down. It's also worth mentioning the last 5 out of 6 leases we've signed with tenants in that area are working for Mercedes.
- 3. 35235 - Grayson Valley/Chalkville/Roebuck/Center Point - This zip code grabs several areas, but is primarily located in the Clay Chalkville school zone. This zip code snuggles right beside the 35215, but in this area, you can usually expect to get a small premium in rent verses 35215. In the southern part of the zip code (Roebuck area), you are close to Saint Vincent Hospital West where you get a lot of good qualified tenants. In the northern part of the zip code, you have the Clay Chalkville school zone that generally has a higher rating than comparable schools in Center Point and Roebuck. There are a good number of tenants looking to get their kids into the Clay Chalkville school zone, so if you buy here, that is definitely something you should take into consideration because there are parts of the 35235 that are not zoned for Clay Chalkville.
- 4. 35127 - Pleasant Grove - This area is very comparable to the Hueytown area (above), but it covers a slightly less dense geographical territory. We really like this area due to the Mercedes growth mentioned above, but it's also an area where there is a higher owner occupant rate. This is great for resell value and long term capital growth, but sometimes this can cause the property to sit vacant for a little longer between move-out and re-lease. Fewer tenants in the market = longer time to re-lease.
- 5. 35126 - Pinson/Clay - This area is a little more rural, but you need to remember you are investing in Alabama, and people like spots away from the city. There are also a lot of tenants in this area, so your time to re-lease after move-out is not bad. This zip code usually boast a better school zone (Pinson Valley), so there are quite a few people looking to relocate to this area. Even though it's a little further out, the I-59S commute into work is one of the easier travel routes in rush hour traffic (when compared to going north or south on I-65 or traveling on the dreaded HWY-280).
- 6. 35068/35071 - Fultondale & Gardendale - Okay, I promised the top 5, but I didn't want to leave these areas out. This is a high owner occupant area that was highly affected by the foreclosure crisis and has already come back a good bit. You might be hard pressed to find the same ROI deals in this area, and it may be beneficial to settle for 7-9% ROI because I believe the capital appreciation play is really good in these areas. The school systems in these two areas are a good bit better than the other school systems mentioned, and there is very little land left to build in these areas. Combine that with its close proximity to the city center, and I think your long term ROI may be better here than in any of the other areas. If capital preservation is a BIG factor for you, hunt for deals here. They can still be found on occasion.
There are several other areas worth mentioning that I would also recommend for Class B Investment: parts of 35214 - Forestdale, 35210 - Irondale, parts of 35022 - Bessemer, and any Hoover zip code: 35243, 35226, 35244, 35242. There are also some good areas south of Hoover (Pelham, Alabaster, Calera, Helena, etc.), but these can be quite a trek for your property manager, so make sure you have that figured out before investing too far from Birmingham proper. Again please keep in mind that I am a turnkey provider doing ONLY Class B (some Class A) properties that are not Section 8, so my opinions have a bit of a tilt, but hopefully this was a good breakdown on some good rental areas in the Birmingham MSA. Also, keep in mind that the ROIs mentioned above are based on all cash deals, so use your personal financing specifications to adjust accordingly. One more note, PLEASE be careful with any zip code including the ones mentioned above because there can be large swings in any one geographical area.
80 Replies
- Real Estate Investor · Birmingham, AL · Member since 2013 · 35 posts · 7 votes11y
Sara,
*** Disclaimer - I am a turnkey provider in Birmingham- but I won't try to sell you. The good/bad zip codes depend on what type of property you are looking for. Are you looking for B and C properties? I have found that the zip codes most investors really like at 35023, 25215 and 35235 - among others. These zip codes are B and C neighborhoods, varying street to street. Rents in these areas are mostly $700-$850 for a 3 bedroom 1 bathroom home. You can usually get a 10%-12% net return in these areas. I have never dealt with Birmingham Income Property, LLC. If you would like more detailed information about our market, or if you have specific questions feel free to contact me.
Thanks,
TJ Sayers
- Investor · Austin, TX · Member since 2013 · 5 posts · 3 votes11y
Sara,
I have purchased many properties grom TJ Sayer. Good guy, eccellent product. It would be good for you to define what your looking for as one man's good zip code is another man's hood.
Dan
- Real Estate Broker · Southeast · Member since 2014 · 175 posts · 63 votes11y
Great to see you on here! The zip codes you'd want to consider would be based on your goals. Neighborhoods are not just as easy as B and C, there are different types of B's and different types of C's. I guess the biggest question would be how many properties you plan on purchasing and how you plan on acquiring them. Then what your 5 year goals, 10 year goals, etc.. are. If your plan is to purchase multiple properties right off the bat my suggested strategy would be different than if you were going to purchase 1 by 1 with a few months or years in between each purchase.
I am definitely a turnkey provider, but I'm not trying to sell you anything :) just trying provide some insight to your question.
I hope this helps.
- System Administrator / Investor · Eugene, OR · Member since 2015 · 144 posts · 29 votes11y
Joey is a turnkey investor in Birmingham, he may be able to help.
@Account Closed
- 11ySpencer SuttonBusiness MemberInvestor · Birmingham, AL · Member since 2015 · 119 posts · 148 votes
Hey @Sara Hodge - I work with Birmingham's largest property manager (1,100 houses in the city) so I could give you some decent feedback (we don't sell turnkey).
There are definitely different types of B/C areas. And some groups will try to sell you a D/F property as a B/C...so be careful there.
And things can vary on any given street. You don't want to buy a great looking house on a street with two abandoned properties and one burnout. Unfortunately, it happens b/c people can buy that house for 5k, put 15k in it along with a tenant that's overpaying and won't stay in the house for more than 12 months....and sell it for 65k.
I have some investors we manage properties for who have used BIP for their turnkey and I believe they would be open to sharing their experience if you want. You can message me if you're interested and I'll reach out to them to see if they wouldn't mind.
Also, you can grab a free ebook on our site that goes into details about Five Turnkey Manipulations you should be aware of that we see in Birmingham a lot.
There is a lot of great opportunity in Birmingham for investors who do their homework and do it right.
Hope that helps!!
Spencer
- Registered Nurse (ICU) · San Jose, CA · Member since 2014 · 496 posts · 332 votes11y
@Jason W. this is an investor that really helped me! Good luck
- Investor · Birmingham, AL · Member since 2015 · 29 posts · 10 votes11y
Still waiting for a call back spencer
- 11ySpencer SuttonBusiness MemberInvestor · Birmingham, AL · Member since 2015 · 119 posts · 148 votes
Hey @James Irwin I totally missed that message from Wayne...my bad! I will call you today.
- Investor · La Crescenta, CA · Member since 2013 · 174 posts · 50 votes11y
@Sara Hodge Hi Sara, (me again)
I bought 5 rehabbed houses last year in the Center Point suburb northwest of downtown. Paid $60 - 65k with rents $800 - 850 (about half Section 8). On my one visit to the area, I saw a bedroom community with neat, well-kept houses from the 50's/60's on large (to Californians), tidy lots. Cash-flow is $3k+/mo after PM & expenses, but not counting PITI.
I can't speak to any other areas.
- Investor · Atlanta, GA · Member since 2014 · 2 posts · 1 vote11y
Hi Sara, I have bought from BIP in the past and would be happy to provide my thoughts. Feel free to PM me with any specific questions you have.
- Pro Competitive Dance Coach · Denver, CO · Member since 2015 · 42 posts · 9 votes11y
@Jarrod Cook thank you for everything. Your info is great! Good thoughts about the strategy planning. @Kevin Trumbull YESSSSS @Account Closed THANK YOU! I will be contacting you with questions seeking insight into your experiences. :) I'm so appreciative of your time!
This forum is so great. Thank you everyone for your honesty. Especially those of you who openly said you're a provider or management co... I love that. Too many crazies on here masquerading as investors with a hidden agenda; they aren't upfront like you are!!! :)
Kindly,
Sara
- San Francisco, CA · Member since 2015 · 786 posts · 717 votes11y
Originally posted by @Sara Hodge:
Hi All! Thank you for your help re: Kansas City. New question! Anyone who is a current turnkey investor in Birmingham, Alabama, have insight into good/bad zip codes to buy in?
*ALSO* Recommendations on your favorite turnkey companies? Has anyone purchased in this city from Birmingham Income Property, LLC? Let me know how your experience was!
AND NO TROLLING! If you're trying to sell me or if you're a marketer, BYEEEE... I'm interested in talking with other investors who can give me personal advice. :)
I invest in Birmingham. I'd stay out of Enslee and Fairfield and Bessemer. Message me if you want to know which turnkey I use there.
- Residential Real Estate Agent, Investor and Mentor · Birmingham, AL · Member since 2013 · 257 posts · 61 votes11y
This is a great thread! I will say that there is no right answer here for sure. Different investors have different requirements both from a financial perspective and security perspective. Some are cash buyers and some are financed. Some are savvy investors and some are brand new. Some are local while others are half way around the world. Point is, any real estate opportunity can be a deal to somebody. The deal must work for the one buying it. Feel comfortable in your decisions and local team members if you are going that route. Good luck Sara!
- Rental Property Investor · Rio Rancho, NM · Member since 2013 · 314 posts · 816 votes11y
I bought 2 turn-key rentals this year in Birmingham. I went through Norada Real Estate, which is a marketing company, with Decas Group being the actual turn-key seller and also my PM.
As far as the buying process and the parties involved, it went very smooth. Both Marco and Norada and J and Jarrod at Decas Group are great guys to work with and did their best to meet all of my demands (which there were quite a few) and help through the process as best as they could. I would recommend them for sure.
As far as investing in the Birmingham market in general, I would agree with the other people who posted here, that you need to understand what your goals are and what the Birmingham market is (and is not).
It's probably one of the cheaper markets in the US right now, so the returns can be quite good, but with that, you may be buying in lower quality neighborhoods (a lot of Section 8 tenants) and older homes (most are 1950 or older in my experience). This isn't necessarily a bad thing, just something to know.
As far as ZIP codes, I bought in 35211 and 35206. Both are C neighborhoods with most likely Section 8 tenants, but I wanted to diversify my real estate portfolio with higher cap rate properties. The price range here is $40k-$50k for 3/1 SFRs. Rent is around $750.
If you want a little more quality, 35215 and 35235 are much better areas. The prices go up to $60k-$70k with rents around $850. Cap rates are noticeably lower, but less Section 8 and newer homes.
I'll leave you once again with the importance of setting goals for your real estate investment portfolio and letting those goals drive your acquisition criteria. It will be much easier to focus on a geographical area if you know precisely what you want.
Feel free to contact me directly if you want more information.
- Rental Property Investor · Laguna Niguel, CA · Member since 2015 · 142 posts · 98 votes11yJim Workman how do your sec 8 houses compare to non sec 8? We are thinking about possibly getting a sec 8 house as one of our firsts. We've heard great things from some people and not so great from others.
- Rental Property Investor · Laguna Niguel, CA · Member since 2015 · 142 posts · 98 votes11yJim Workman how do your sec 8 houses compare to non sec 8? We are thinking about possibly getting a sec 8 house as one of our firsts. We've heard great things from some people and not so great from others.
- 11yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
I don't know Birmingham at a micro level, but zip codes are generally too broad of a geographic area to be useful and can lead to bad decisions. Many markets can vary neighborhood to neighborhood. I really recommend getting to know the area at a neighborhood level. Talk to a property manager in the area that deals with the class of property that you are interested in and ask them what areas are good and where to avoid.
- Birmingham, AL · Member since 2013 · 149 posts · 44 votes11y
Great thread and accurate feedback on most of the comments. The most important takeaway I can provide is working with a good turnkey provider. As we have many of them here in Birmingham, we always stress that you come to Birmingham to meet with them with the following itinerary:
1. View turnkey properties.
2. View properties under construction.
3. View potential properties to purchase>
4. Review how the turnkey provider provides financial information (always use the net rates). Visit their office, see their crews. Make sure it's not a one-man operation.
5. Meet with property management companies.
6. Meet with closing attorneys.You want to try and see a mix of at least 10 properties with each provider who will show you B and C class properties. Best on your criteria and comfort level, you can then decide which ones fit your needs.
Yes, you will get better returns with C class properties with a bit more risk and less appreciation while B class properties provide lower returns with less risk and greater appreciation. Birmingham is an excellent buy and hold market. Most investors are hear for the long haul and plan on holding for 7-10 years. This is not a buy and flip market. Average appreciation is 1.76% on average per year. We are a very conservative market and do not experience the wild swings in some of the larger markets. Slow and steady wins the race.
- Specialist · Birmingham, AL · Member since 2014 · 81 posts · 68 votes11y
Sara,
Welcome to BP! You are definitely in the right place to get the right information to make the right decision for you.
Birmingham is an excellent market to invest. Here's why...Although BHAM is not the sexiest market out there, it is a nascent market-not saturated with big hedge fund dollars gobbling up all of the properties and driving up acquisition costs for the local mom and pop turn-key operators. This translates into lower priced homes (compared to other markets for a similar type home in a similar type neighborhood) with higher margins which yields higher/better returns compared to your more popular/sexier markets.
To put in simply, your investment dollars go farther and generally earn higher yields than compared to your other more popular markets. I am not saying other markets aren't kicking off good returns, they are. But you typically find yourself paying a higher price for a similar home with a yield that is lower than if you purchased in a non-popular market, like BHAM.
The city of BHAM itself is one where a lot of capital investment is being placed. For example, the Birmingham Barons $64 Million Dollar state of the art baseball stadium called Regions Field, located on 1st Street in downtown celebrated its grand opening on April 10, 2013. Adjacent to the ballpark is the beautiful Railroad Park which was awarded the 2012 Urban Space Award Winner by the Urban Land Institute. The BHAM Shuttlesworth International airport unveiled the first phase of a $200M terminal modernization project in 2013. More than 3,800 new jobs and $843 million in capital investment were announced in 2012 for the BHAM Metropolitan area report. The prominent industries in BHAM include: banking, finance, manufacturing, transportation, distribution and logistics, biotechnology, IT, corporate mine & most importantly UAB school of Medicine was ranked 10th in the Nation for Primary Care. UAB is the highest employer in the city.
BHAM is a city that is flying under the radar. It is a growing city with a low cost of living index, with the population growing at a steady rate (not exploding like TX) with affordable housing and increasing job growth.
To answer your questions about specific zip codes and which ones are best to invest in, I have to agree with TJ Sayers. The most popular zip codes for investors are: 35023, 35215, 35235, 35126. However, within the zip codes are no-go zones that can vary from street to street. Having the right TK company on the ground there to help guide you with your purchase is key. Like Jarrod mentioned, you need to have a strategy in place. Just as you diversify your stock market holdings, you too also want to diversify your real estate holdings. For example, if your goal was to purchase 10 investment properties over the next 10 years, I would suggest your diversify your holdings in different zip codes and in different states. Like Jay Benoit said the deals have to work for you.
Some investors love Section 8 housing. Others do not. Your risk tolerance will determine which route you want to go or perhaps, you want to mix up your real estate portfolio with some Sect. 8 and non Sect 8.
The best advice I can give is this...PASSIVE INCOME ROCKS! If your goal in purchasing TK properties is to set yourself up in the future to either:
1. Supplement retirement
2. Pay for college for little ones
3. Retire from your JOB
...then having a plan in place to help you reach your passive income goal is the first step. If you want more information on how to create a plan, just PM me.
Good Luck and let me know if I can be of further value to you.
(And, yes, I am a TK provider in BHAM. I am a mother of 3. A business owner. A real estate investor myself & a coach)
- Rental Property Investor · Birmingham, AL · Member since 2014 · 45 posts · 21 votes11y
What a great thread! I love living and investing in Birmingham. America's best kept secret. Thanks to everyone who has shared their thoughts on this great investing market!
- Investor · La Crescenta, CA · Member since 2013 · 174 posts · 50 votes11y
@David Hodge Hi David,
You know, Sara is from your town. You should contact her;-)
My PM recently visited several of my houses, and they were well-maintained. I don't think they have visited the 100%-section-8 houses yet.
My understanding is that Section8 visits the homes and requires that they be kept up.
I'll update when I know more.
- Pro Competitive Dance Coach · Denver, CO · Member since 2015 · 42 posts · 9 votes11y
@Ryland Taniguchi @J Benoit @Anton Ivanov there are no words! THANK YOU for your supportive and thoughtful responses. I'm so appreciative of your encouragement, AND great advice. I'm taking it all in right now, but will contact you personally if I have any specific questions. Thank youuuuu!
- Pro Competitive Dance Coach · Denver, CO · Member since 2015 · 42 posts · 9 votes11y
@Jim Workman thank you for the insight and shout out... That @David Hodge is pretty cool looking ;)
- Rental Property Investor · Laguna Niguel, CA · Member since 2015 · 142 posts · 98 votes11y
@Jim Workman yes, let me know how they are once they visit. We probably won't do section 8 for our first couple homes but possibly down the line. @Sara Hodge doesn't just live in my town, she lives in the same house as me! I know, I lucked out on that one! :D Thanks for all the great feedback!
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Sara Hodge you have gotten some very nice responses from most of the active turn key folks in the area .. and active investors that have purchased there.
I started lending there in 2005 with a few of the turn key operators.. I quite like B ham as a market and I am one who tends to favor the stronger B class.. but I like topography of the city compared to some of the other mid west towns that are flat... West coast bias I guess.
However I know the guys I have worked with there and those 65 to 75k B's are pretty neat houses for the money.. many are mostly brick have nice under grade parking and bonus rooms.. real hard woods that get refinished... Nice stuff .. Oh and big lots
I do disagree a little with the lady who said the hedge funds have not found B ham they have.. its not blackstone or Colony but there are institutional investors there..
Joey Noel and Jim Workman are true retail turn key investors I would feel comfortable with their feedback and impressions.
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