Sizing up Birmingham AL vs Northern Jersey (my back yard)

[Rob Barry]

On a trip to inspect my SFRs In Georgia I took two days to drive neighborhoods in Birmingham, AL. I'm pulling about a quarter mil out of some SFRs and trying to decide on buying a block of SFRs in Birmingham or stepping up to a small multi in Northern Jersey. In B-ham you've got loads of B- C+ inventory that you can buy distressed and get rent-ready for $50s-$60s all in, rent out for $800 and get appraised for $75k-$85k. I like that the market hasn't recovered too far from the GFC but with the aggressive incentives for business and jobs coming to the area, it feels like an area on the cusp of a Stage 2 Buyer's Market. But alot of it is very rough. Burned-out homes, more renters than home owners, windowless cars parked on lawns - and not at all far from the "good" areas. Also the homes are mostly older construction. Lots of brick though. In Northern NJ, i could try to find a small multi in the $2m range at a mid 5 cap, but it seems very competitive and is much less of an emergeing market. Would haeve to put all my eggs in one basket too . Anybody have some wisdom to share on what their approach might be?

[Tae Kim]

@Rob Barry

Hey Rob - good to see a fellow Northern Jersey member here. I grew up in Bergen County myself, but currently reside in Brooklyn.

Though I can't speak much on investing in Northern NJ/NYC metro because I never really considered it, there are the obvious advantages and comfort levels associated with investing in-state as i'm sure you're familiar with. I do, however, own a 2 SFR buy-and-hold rental portfolio in Birmingham with plans to continue investing down there. Regarding your ranges and #'s - yeah I would say those are generally plausible, but Birmingham is a street-by-street market with large variances even within the same neighborhood. Take a look at this forum post, which notes neighborhoods by grade, median price, etc.:

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

If you have any questions, i'd be happy to chat with you and bounce ideas off each other

Tae