Birmingham, Al

[Tracy D.]

Hi all! 

I am considering moving to Alabama shortly due to aging parents who live there. I lived in Sylacauga before for a couple years a long time ago. Anyway...... I am considering buying near UAB, southside area. I dont have kids to worry about now. Im curious to hear from other local landlords. I generally prefer only to invest in class A neighborhoods. The area I most want to live really isnt though. But its my fav part of the city near Red Mountain. If i move there, I like to keep my houses close. Tell me what are your experiences with rentals in this area. I started with C and D rentals 15 years ago and never, ever want to go there again. How would you classify the area Im considering? Thanks

[Clayton Mobley]

Hey @Tracy D. Welcome to BP and welcome back to AL! I'm the CEO of Spartan Invest, and we've been doing turnkey rental investments all around Birmingham for quite a while, so I may have some info that will be useful to you. For more detail, I'd suggest checking out a post I did a while back (linked below), but I'll break down the important points for you here.

So, I guess my first major point is that if you've been happy with A properties because of the lack of headache, then you will probably love investing in B properties in Bham. A props in the Over the Mountain areas are great for zero hassle investment, but as has been mentioned by @Cooper B., they do not cash flow that well since the the higher rents also come with much higher price tags. In addition, A properties are often touted as good appreciation investments, but the truth is you can't really predict what neighborhoods will go up in value, and being in the high tier areas right off the bat leaves less room for appreciation, though they are more likely to appreciate than C/D areas. There is good rental demand in places like Homewood and Vestavia because of the school zone and proximity to the city, but you'll basically be trading monthly income for appreciation potential.

So how do you get the peace of mind of the A neighborhoods without sacrificing cash flow? Get yourself in on the B game! Birmingham has some really fantastic B neighborhoods that cash flow very well. And while they are not guaranteed to appreciate (as no property is) it's highly unlikely that they will lose value. Add in the fact that turnkey providers, like us, and flippers are constantly refurbing and upgrading properties, and the likelihood of appreciation in B areas is even higher since the value of individual properties is pushed up by renos and the proximity to other rehabbed homes. 

At Spartan, we focus on capital preservation while generating consistent, reliable cash flow. Some of our favorite areas to invest in are:

- Hueytown and Pleasant Grove: Though the latter is a little more rural (not necessarily a downside in AL) both are conveniently situated between Bham proper and Vance, so people that work at the huge Mercedes plant but want to live a little closer to a real city often choose these areas. 

- Centerpoint and Roebuck: Though the comparable sales here are good, which pushes prop values up. There is plenty of rental demand and properties here do not sit vacant for long. 

- Grayson Valley and Chalkville: Depending on where you are in these areas, you can be close to the Saint Vincent Hospital West, which means there are some very good tenants. Most of this area is also in the Clay Chalkville school zone, which makes it very desirable due to the schools' high ratings. If you invest here, make sure the property you buy is in the school zone, though, as some small areas are not included.

- Forestdale, Adamsville, and Graysville: These areas are a bit of a mixed bag. There are some areas here that are just as bad as C/D neighborhoods and will bring plenty of headache. However, there are also many amazing little pockets that are in high demand, so if you find a good property in a good area, you'll never need to worry about vacancy.

As I said, there's a lot more to this area and this blog post:

http://www.spartaninvest.com/blog/10-best-turnkey-...

and this thread post:

https://www.biggerpockets.com/forums/311/topics/22...

will offer more detail on other areas. The main point, however, is that you should do some research on investing in B properties because you may be missing out on solid cash flow in exchange for the assumed promise of appreciation at some distant time. B properties don't rent to Section 8 tenants, so no housing authority headache. The properties we invest in are also in good solid neighborhoods and rent for an average of $950, so the tenants we have are looking for a place to call home and can afford to live in a nicer area. 

I'm not sure if you are looking to self-manage and be a hands on landlord, do the refurbs yourself etc., or if you are looking to build an investment portfolio that just flows on its own. In either case, if you have any questions about the Bham market or about the turnkey model, feel free to reach out to me any time.

All the best on your move!

Clayton