Getting Involved in BP and Birmingham Investing

[Jacob Glawson]

Hello Birmingham BP Family!

So, on the fantastic BP podcasts, Brandon, Josh, and usually their guests, recommend getting involved and being active in the BP community to learn more, get help, partner etc.  Well, this is me getting involved.  A little about myself:

1) I know nothing.  Well, maybe not nothing but probably less then the rest of you.

2) I have my first deal in the works and I'm hoping to close by next week.  Yay!  I'm ready to find the next deal.

3) I would love feedback from you guys on how you are finding "good" properties and where you are looking. I've been looking a lot in the Center Point area but I'm terrible at determining current value, ARV, appropriate rent, etc. I've somewhat partnered with a realtor that works a lot in this area and they have been really helpful. However, they don't really have a lot of time to dedicate to just me so I'm wondering how I can go about this process more independently. Or, maybe I should reach out to multiple agents?

4) If I can help you, let me know.  I will at least try.

Good luck and hope to hear from you soon!

Jacob

[Clayton Mobley]

Hey @Jacob Glawson Welcome to BP!

I focus only on B/B+ props, so your needs/specs may be different from mine depending on your goals, BUT here's a thread where we discussed this topic a while back that may be helpful:

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

The TL;DR version, here's a the content I gave about zip codes we invest in:

5 Best Turnkey Areas / Zip Codes For Class B Properties in Birmingham, AL

1. 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. 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. 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. 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. 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. 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.

Our average rent is $950 (but again, if you're looking for C class or Section 8 rentals, adjust that expectation). Since you're already in the market, you'll have better knowledge of these areas, but always remember that any neighborhood can change a lot street to street, so make sure to do some research on specific parts of each zip that meet your criteria. 

With regard to finding, vetting props, our system is going to be a lot different than the average DIYer (just based on economies of scale, the number of props we handle, and relationships established), so I'll leave that advice to others.

Birmingham is a fantastic rental market, so do your research and find people you trust for your team and I'm sure you'll do well.

Best of luck!

Clayton