Wholesaling in Birmingham, AL: Evaluating Properties

[Account Closed]

Hey BP and Birmingham Community,

I hope this post finds you all doing well. 

A few weeks ago I began my first direct mail campaign. A lot of my DM responses come from areas that are considered "C" and "D" class neighborhoods. I'm sure as you've read, the mainstream philosophy on finding buyers seems to be that if you're sitting on a smoking hot deal, then finding buyers ought not be a problem.

Nevertheless, my limited experience tells me that even a "great deal" in these areas are only for those with experience in these particular neighborhoods. Moreover, Birmingham has a huge blight problem so a lot of the calls I field are regarding these 100 year old, grandiose houses that are simply too expensive to rehab and turn into a profitable investment. Other times the property might be in decent shape, but would still be too much to rehab and pull a profit from. 

My understanding of these neighborhoods is that the name of the game is turnkey. Pro-formas from local turnkey companies show that the average product is a 900-1200 sq ft 3BR/1BA house, entirely renovated (i.e., new roof, hvac, etc) ranging in price for about $40-$50k-ish when it's all said in done. 

What I would like to know is how much buyers typically put into these properties? Am I incorrect to assume that turnkey companies have to buy a salveagable structure at $10k tops and have the rehab under $20k in order to sell as a fully renovated turnkey investment at $50k-ish that commands a $650-$750 per month rent? This assumptions means that wholesalers need to be buying recoverable properties pretty cheap (obviously, less than $10k). 

The intention of this post is not to complain; I'm genuinely curiously to figure out how the local market works so I can know what to look for and make things happen. Of course, if you're a Birmingham buyer I don't expect you to divulge proprietary information. However, if I can get a feel for a buyer's rehab numbers and the property they typically purchase to rehab, then it'll be more likely that we'll be on the same page if I try to send through a deal.

Thanks for taking the time to read this.

Best,