Birmingham B+, B and C

[Jay Baxter]

Hello Birmingham investors,

I'm a newbie trying to learn my local areas better before I purchase my first investment property, and had questions for Birmingham investors, contractors, PMs and Realtors.  I'd like to eventually own a mix of cash flow and cash flow with appreciation potential properties in B+, B and possibly C neighborhoods.  Based on what I've learned so far, I think the...  

• Birmingham cash flow with appreciation potential (B and B+) neighborhoods with strong opportunities for investors (loosely ranked) are Pinson, Gardendale, Trussvile, parts of Hoover, Leeds and Crestwood.  
• The purely cash flow (B- and C) opportunities are Center Point, Roebuck, Hueytown and parts of Hoover.  
• The areas where I'd love to get lucky for appreciation purposes if I could find a great deal are Vestavia and Homewood (A and B+ areas).  

Is this a reasonable assessment of the Birmingham metro RE investment landscape?  

Also, I would love any advice anyone is willing to share regarding talented and dependable local contractors, buyers agents that work with investors, or property managers. 

Thank you for your help!!!

Jay

[Clayton Mobley]

@Jay Baxter Full disclosure, I am the CEO of Spartan Invest, a full service turnkey outfit in Birmingham. I won't try to sell you, but I thought I might pitch into this conversation since I have plenty of experience investing here ;)

Firstly, while I think your ratings a largely correct, I would agree with @Jarrod Cook regarding the Over The Mountain (OTM) neighborhoods like Hoover, Homewood, and Oak Mountain. These are primarily A areas due to the schools and proximity to city center hotspots. You will not seem massive cash flow here, but you will likely see good appreciation. With that being said, finding a reasonably priced property there is difficult. I's also like to agree with @Toxey McDavid regarding appreciation being the icing on the cake. Typically, investors are looking for long-term buy and hold, so the cash flow part of the equation is more important than the appreciaiton. Of course, we always strive for- at minimum - capital preservation, but any substantial appreciation cannot be reliabily predicted in any neighborhood, so it helps to focus on the factors you can get a clear handle on up front.

Regarding areas with solid B potential -  Pinson/Trussville are a little more rural but people in AL tend to like being outside the city, so you'll still have plenty of renters. We have found that the time between leases is usually minimal in these areas, which keeps vacancy costs down. 

Hueytown is a solid B area but actually does carry a good chance of appreciation because of the Mercedes plant in Vance. Since Vance is MUCH more rural, people often prefer to live in Hueyville. Most of our leases signed in this area are for people who work in Vance but want to live closer to Birmingham proper.

Pleasant Grove has some solid properties that carry a similar chance of appreciation (near to Vance) and you can find some great deals. However, there is less rental demand there so you may find that you are in for a longer wait between leases.

We specialize in solid B properties, so we know these areas quite well. While I understand that many people have made good returns on C and D properties, I have to agree with you that Section 8 rentals tend to be more work than they are worth. Since we have two housing authorities in Bham and neither is particularly light on its feet, investors can lose a lot to wasted time for inspections, revoked or reduced vouchers etc. We find that, while the returns may be slightly lower with B properties, the reduced stress and more consistent tenancy (our average lease is 34 months) makes them a more suitable investment for most people. 

I hope this was helpful! Feel free to ask any questions you might have here or via DM, I'm happy to help in any way I can.

All the best,

Clayton