All Forum Posts by: Danny Gonzalez

 I agree Wendy.  There's wealth to be built in any city across America.  In my experience, if you know what questions to ask and you have the right processes in place, you can find great contractors and great PMs in any market.  

I agree completely. The one caveat is that if you’re in a high-cost-of-living area and can’t invest locally due to the prices, don’t let that stop you from capitalizing on the benefits of real estate.

I live in Miami, and the returns I get in Alabama are just significantly higher. But yes, if investing locally is an option for you, it’s usually a great way to go. 

Nope, it’s a ‘my market doesn’t get hyped by gurus and still delivers consistent returns’ thread. Just shining a light where it’s deserved.

Quote from @James Hamling:

@Danny Gonzalez while I appreciate the enthusiasm and effort, the elephant in the room is that all you gave was talking points. I don't see any facts in here, math, data, statistical reasoning, data..... 

Now, I could go into a long list but I will summarize in 1 statement and 1 picture; there's a reason why Blackrock is a big MN MSA buyer/holder. 

This is why the Twin Cities MSA is so famously known by "old $". They call it "Good Ole Reliable". Because it just keeps on making MONEY. 

It's not emotional attachment why Midwest, upper Midwest and MN are the "crown jewels" of rock-solid returns. 

MN has one of the top tourism industries in US. Also one of the top mining industries. International trade including the US's most inland sea port. The top Engineering economy in US and top in the world for several segments including bio-medical and agricultural to name a couple. 

It's for this reason, a vibrant multi-faceted economy with exceptional economic diversity and strength in high revenue sectors such as finance, engineering, bio-medical and more, that all comes together to make some of the highest incomes in the nation, best income security, high living standards, all the things that create a desirable place to live and thus, appreciation in housing. 

Less vulnerabilities to economic swings given diversity. 

Minerals rich, intellectual resources rich, strategically positioned for data centers of tomorrow which is why all of them are building multi hectare facilities at this time. 

And keep in mind, in REI we make profits on the %, would you rather earn 6% on $400k or 6% on $140k???? It's a universe of difference.

@James Hamling Appreciate the thoughtful response and detailed breakdown of the Twin Cities market. There’s no doubt that it’s a strong, diverse economy with many appealing factors for real estate investors.

That said, the goal of my original post was to spark discussion and highlight Birmingham as an often-overlooked market for out-of-state investors, especially those seeking solid cash flow and consistent appreciation without the higher barriers to entry in markets like the Twin Cities.

I agree that data and hard numbers are crucial for evaluating markets—so let me add some additional points to my argument for Birmingham:

1. Affordability and Cash Flow:

• The median home price in Birmingham is significantly lower than in Minneapolis ($211,000 vs. $343,000 as of 2023). This means lower upfront costs for investors and better cash flow potential on rental properties.

2. Population Growth Trends:

• While Minnesota has a robust and diverse economy, Alabama has been part of the broader Sunbelt trend, with cities like Birmingham benefiting from population growth driven by warmer weather, lower taxes, and an affordable cost of living.

3. Economic Developments in Birmingham:

• Major projects like the Carraway Hospital redevelopment and The Star at Uptown showcase Birmingham’s trajectory toward revitalization and attracting both businesses and residents.

4. Risk Mitigation:

• Birmingham’s historically steady appreciation rates may not match the peaks of the Twin Cities, but they also come with less risk. It’s the kind of market where investors can find a balance between cash flow and appreciation without betting solely on future market growth.

Finally, to your excellent point about profits being tied to percentages:

• The Twin Cities’ higher price point (e.g., earning 6% on $400K) can be advantageous if you have the capital to deploy. But for many investors—especially those just starting—the entry point in Birmingham (6% on $140K) offers a far more accessible way to build wealth while still benefiting from solid returns.

It’s all about the investor’s strategy and goals. For some, markets like the Twin Cities make sense. For others, Birmingham offers unique advantages that shouldn’t be overlooked.

@Jared Smith I completely agree—Birmingham isn’t the only city where investors can achieve solid returns. Memphis is certainly worth considering and has garnered significant interest from investors, similar to Detroit’s surge in popularity over the past five years. However, that buzz has translated to increased competition, making it more challenging to find truly great deals.

Huntsville is another solid market, but based on my research, the rental demand doesn’t quite match Birmingham’s. With Birmingham’s population at approximately 1.1 million compared to Huntsville’s 400,000, the scale of rental opportunities naturally differs. Additionally, Huntsville’s market seems more homeowner-focused, which can make it less attractive for investors wanting strong rental demand.

You’re absolutely right about the importance of understanding the nuances of any market. In my opinion, that’s what separates great investors from the rest—the ability to spot an undervalued asset and act on it quickly with confidence. That depth of knowledge comes from truly immersing yourself in a market.

I’m here to make a bold claim: Birmingham, Alabama, is a better market for out-of-state investing than any other Midwest market. Yes, you read that right. And I’m curious to hear your thoughts—whether you agree, disagree, or fall somewhere in between.

Here’s why I think Birmingham deserves more attention, especially for out-of-state investors looking to build a steady, cash-flowing portfolio. My argument boils down to five key points:

1) Population Trends Favor the South

Let’s face it—people are leaving the cold behind.

The U.S. Census Bureau shows clear population trends favoring warmer climates. Alabama, for example, grew its population by 4.2% from 2010 to 2020, and Birmingham has directly benefited from this trend. Meanwhile, key Midwest states like Illinois and Michigan saw population declines during the same period, with Illinois losing 0.6% and Michigan remaining stagnant.

2) It Flies Under the Radar

Markets like Detroit, Cleveland, and St. Louis dominate the Midwest investing conversation. But what about Birmingham?

Less attention means less competition, which translates to more deals, fewer bidding wars, and greater opportunities for investors willing to explore this under appreciated market.

3) Exciting Real Estate Developments Signal Growth

Birmingham is transforming before our eyes with projects like:

• The Star at Uptown: Revitalizing the old Carraway Hospital into a mixed-use district. 

• The Silos at Parkside: Turning industrial spaces into vibrant communities.

These projects (and more) demonstrate a city investing in its future. Even the permitting process has become more investor-friendly, further encouraging development.

4) It’s in the Path of Progression

Birmingham is strategically located just three hours from booming cities like Atlanta and Nashville—both of which experienced explosive growth over the last two decades. As these cities become overcrowded and overpriced, Birmingham naturally benefits as a more affordable alternative for transplants.

5) It’s Stable and Consistent

Birmingham may not have the meteoric rises of markets like Austin or Orlando, but it doesn’t have their wild swings either. Its appreciation over the past 50 years has been steady and predictable, which is exactly what cash-flow-focused investors should want.

Birmingham doesn’t get the respect it deserves from out-of-state investors, but it should. The data supports it, the developments confirm it, and the trends validate it.

Of course, you can make money in any market—but for a steady, cash-flowing portfolio with growth potential, Birmingham checks all the boxes.

I’d love to hear your thoughts. Am I overlooking something, or does Birmingham deserve a bigger spotlight in the investing world? 

@Fernando Domingo That’s a tough spot to be in—sorry you’ve had to deal with that. I own and operate Freedom Ventures PM here in Birmingham. While I can’t promote myself directly on Bigger Pockets, feel free to look us up on Google or send me a DM.

We pride ourselves on providing high-level customer service and addressing the exact issues you’ve experienced. I’d be happy to hop on a call to see how we can help you turn this property around and get things back on track. 

@Jon Averette

Great to connect! I've been investing in the Birmingham market for over 5 years now. Currently, I own 26 doors and run a property management company that oversees 350+ units. While we manage a few in Tuscaloosa, our primary focus is Birmingham—it's a fantastic market for value-add and BRRRR strategies.

If you’d like to hop on a call, feel free to DM me. I’d be happy to share insights and tips to help you get started and work toward achieving your goals. Real estate can be intimidating at first, but with the right guidance and mindset, it’s absolutely achievable. 

@Paul Cijunelis

So I’m not in the IL market, but I’ve owned a PM company for 5+ years, and here are some lessons I wish I’d known when starting out:

1. Hire a VA Early: If you haven’t already, bringing on a Virtual Assistant is a game changer. They can handle time-consuming tasks like lease renewals, tenant correspondence, and basic admin work. This frees you to focus on higher-value tasks like growing your portfolio, owner communication, and big-picture strategy.

2. Adopt a Portfolio Management Structure: Early on, I ran a departmental structure (separate teams for maintenance, leasing, collections, etc.), and it caused inefficiencies and communication breakdowns. Moving to a portfolio model—where a pod (1 PM + 2 VAs) manages all aspects of 200+ units—streamlined operations and improved accountability. It reduces the “bouncing ball” effect of tasks being passed between departments.  I do have an accounting department that handles the payables.  

3. Consider a Maintenance/Construction Division (When the Time Is Right): Margins in PM are thin, but bringing maintenance in-house can be a strong revenue stream. Plus, it gives you more control over quality and timelines. Be strategic—don’t rush it, but plan for it.

4. Understand Property Management's Role in Your Bigger Vision: For me, PM is a spoke in the wheel, not the whole business. While PM itself won’t create significant wealth, it opens doors: when clients sell, you list the properties; when investors buy, you manage and maintain their assets. It’s also great for building a trusted brand in your market.

5. Customer Service is KING: Prompt responses and proactive communication are non-negotiable. When tenants and owners feel cared for, word spreads. Happy clients are your best marketing tool.

6. Be Selective About Clients and Properties: Early on, I took on every property and owner. Big mistake. Some owners delay repairs, underfund turns, and create headaches for tenants, which ultimately falls on you. Develop a clear set of criteria for onboarding clients and stick to it. Quality over quantity.

7. Master Delegation and Automation: PM is a complex industry with many moving parts—marketing, maintenance, leasing, screening, and more. Write out clear SOPs for every process, hire great team members, and hold them accountable. Systematize as much as possible to create scalability.

PM is a challenging but rewarding business. Five years in, we’re at 350+ units, and while it’s not an easy journey, it’s one of the most fulfilling ones. Congratulations on taking this step—Godspeed!

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