Top 3 Cities in Alabama for Investors
When it comes to investing, real estate is one of the top contenders. The returns are bigger and you have more control over your assets. For example, many start their journey of investment in stocks. Although this may potentially give you a high reward, there’s also a substantial amount of risk and volatility. One day your stock investments are possibly worth millions and the next, it can disappear.
With real estate, the longer you hold onto the property, the more value you accumulate. Currently, as the market continues to advance, real estate is becoming more valuable. This means that when you buy a property as the market improves, so does the value of your home. This builds over time which in turn, creates equity. The equity is where investors make their money. However, there are other important factors to consider.
Real Estate Investment? In Alabama?
That’s right, you heard correctly! You read article after article on real estate, and then the big question starts to surface. You know that real estate investing is the place to be, but you’re not sure where to start or what’s safest. One of the most overlooked, yet hottest booming markets right now is in the lovely southern Gulf Coast state of Alabama.
For starters, it ranks as one of the cheapest states in the country, the nation’s lowest tax rates, and the low cost of living. This makes Alabama profitable for many investors. Savvy investors are seeing a capitalization rate upwards of 9 to 18 percent. This is great, and you can see that, but the Gulf Coast of Alabama is a broad place to start looking for a prime investment. Let’s take a journey along this coast and explore the best places to invest, together.
- Birmingham
The first on our tour of rich real estate investment is in Birmingham. Birmingham is ranked as the #8 hottest housing market in the US by CNN Money in 2014. Due to its strong local economy (with stable jobs in manufacturing) and the fact that it is home to 4 Fortune 100 companies, this location is booming with real estate and investment values. This city has seen sale prices on homes increase by 7% year after year with no signs of slowing down. Considered as one of the most affordable markets (along with Alabama having the lowest property tax in the nation), Birmingham is second to none.
This charming city has the second-lowest property taxes in the state. With a low cost of living and median home prices at $99,900 it’s not difficult to see why investors are flocking to this area. In January 2019, the median list price for properties came in at $250K with the median sale price coming in at a whopping $350K. If you’re looking to invest in real estate, this is one market where you can find impressive returns on your investment.
- Mobile
Located on the stunning Gulf Coast, Mobile is the unexpected beachfront property location that many have never considered before. It is the 3rd largest city in Alabama and is home to the one and only Salt Water Port in the state. While more investors are flocking to this area and home prices beginning to climb, it’s continuing to prove to be a growing market.
This year has seen an increase in home prices by 8.4% and is expected to increase by 4.5% over the next year. If your considering investing in real estate in Mobile, now is the time to do so… especially since you won’t have to worry about any local government crackdowns.
Due to the large student population (with Mobile being home to 5 colleges), short term rentals are a hot commodity there. The city of Mobile saw this and made an agreement with AirBnB. This means, not only will your property be oceanside, these short term rentals will have high profitability potential.
- Montgomery
The Capital of Dreams, a historic ripple in time, and eyes on the future. Alabama’s state capital has held strong as a hot market for real estate investors. Over the past year, home values have increased by 4.3% and are expected to increase by 3.2% over the next year.
In addition to this, much like the other cities mentioned, Montgomery boasts a low cost of living at 5% lower than the US average. The median home values are shockingly low as well. At a median of $87,100, it’s truly an investors market.
Montgomery is home to 8 colleges and with such a large student population, there is no shortage of need for short term rentals. This means you'll have less to worry about when it comes to getting a return on your real estate investment.
Now That You Know, Give it a Go
Real estate investing can be a tricky and overwhelming thing, but if planned correctly, you will be able to quickly notice the buzz everyone’s talking about.
As you can see, Alabama is ripe with the fruit of advantages when it comes to real estate investing. These three locations are showing massive potential for high returns. When you take into consideration the low taxes, low cost of living, and profitability potential – this is one hot market you need to start diving into.
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