Interested in BIrmingham Cash Flow Investing

[Joel O.]

Hey all,

Been looking for markets outside of my area to potentially invest in and came across Birmingham, AL. Ive been seeing alot of info regarding central point, but what about downtown Birmingham around zip codes 35208, 35204, and 35205. 

Are these areas run down, do you see any revitalization happening in the near future? Other investors currently in the area? This is all strictly for buy and hold investing with MFU.

Any good contractors / property managers that I could rely on down there?

Thanks for any insights on the area!

[Jason Cory]

Birmingham is a good market for long term rental properties as long as you buy in the right areas. Inner city has the most upside given the prices & demand is driven by tenants not owners. You will lose money eventually if you attempt to invest in the suburbs for renting. They don't cash flow enough to sustain the investment. Any vacancy or negative fluctuation in the economy/market & you start losing money. Inner city isn't affected by fluctuations like suburbs are because they receive more assistance so they are more stable investments even though 99% of people on BP are going to disagree only because of demographics. They cost less & cash flow more. It's easy math.

Stay away from centerpoint. It's going in the toilet because too many tenants have taken over what was once a predominantly owner occupied area. 

I live in 35205 you mentioned. It's the historical area of Birmingham. Properties will be old, most on the historical registry, cap rates will be 4-8%, & prices high. 

35204 will be lower prices & somewhat of a forgotten area of Birmingham. It's a run down area without any gentrification visible or planned in the near future.

35208 is a similar area as 35204 but it is more appealing to the eyes & gentrification has started. There is a large recreational athletics facility called the crossplex in 35208. A crossplex village is under construction with hotels, shops, etc for it. Even getting a Starbucks in the village.  

Birmingham doesn't have gangs & such. It has good & bad pockets. I have a vacant house in 35208 that I leave the door open & it doesn't get vandalized.  

A lot of what you hear about so called bad areas, war zones, is just hype. This is where you make the most money investing to rent. 

3 bedroom houses should rent for a minimum of $750 anywhere in the city of Birmingham so there's no sense in spending $100k+ to get a $1,000 tenant. That's spending twice as much for an extra $250 that you don't get because your loan payment absorbs the extra rent spending twice as much. 

Here's a post about the different sub-markets in Birmingham. 

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