Birmingham AL and surrounding areas for multifamily?

[David de Luna]

I'm looking for that magic combination of upward appreciation and upward rent growth in affordable metro areas. I know that's a needle in a haystack sometimes, but looking at Birmingham, it seems like the appreciation isn't there but the prices are low on multi and the rents are higher than what I would normally see at those price points. Any feedback on Birmingham and outlying areas as profitable for 10+ units?

[Jonathan Mednick]

@David de Luna - I am an investor and broker here in Birmingham for the last 7 years and have done hundreds of turnkey, flips, wholesale and rentals in this market. I also work with a lot of investors from out of state.

Like other markets, Birmingham has become competitive. You can expect approximately 8%-9% cash on cash return on SFH properties that we offer. Most are in the $85K-100K range using 1% rule for rents.

Finding good solid multi-units are extremely challenging in Jefferson and Shelby. It's a small network of local investors and management companies that communicate between each other and when something does become available, it's rarely becomes public. When they do, they are over priced with lower than expected returns. Multi units that do become available are usually in the lower income/war zone areas requiring heavy rehab. Those returns are 10%+ if you are willing to do the heavy lifting and take on the risks. You have to go out in to more rural counties to find these types of multi-units but rural has its own set of challenges.

Finding renovation crews is also a challenge. We currently run 6 crews but they are dedicated to our own projects. It took us 4 years to bring on crews that deliver quality at an affordable rate on each project.

Birmingham is a great market to be in but our long game here is focused on cash flow, not appreciation.