Investing in Birmingham, Ala. real estate is almost like taking candy from a baby, and make no mistake about it – the competition for investment properties in Birmingham is fierce. With prices so low for both rental and flip properties, any investor worth his or her salt would be hard pressed to pass these bargains by.
The days are over for haggling over a few hundred bucks just to say that one had gotten a bargain on Birmingham investment properties. In Birmingham, real estate investors find themselves in constant bidding wars, and making offers that are equal to the asking price or more is commonplace. Not only is it commonplace, but for serious and experienced investors, a few hundred more than asking price for a rental and a few thousand dollars more than asking price for a flip property is well worth it, particularly considering the projected return on investment (ROI).
While some buyers consider short sales the beast of the real estate world that no one wants to confront, investors might rethink their stance when it comes to avoiding short sales because of the historically lengthy process. Investor and owner occupant buyers commonly view short sales as unreasonable with respect to the length of time it takes to close a transaction. Investors are in a hurry to buy the property. They are in a hurry to rehab and rent or flip the investment properties, and they are in a hurry to buy the next investment property. Nevertheless, when you consider the low competition for short sales, investors may very well be overlooking a goldmine of opportunity.
As a regular blogger on ActiveRain I often get tickled when I write about investment properties selling for $20,000 or less in metropolitan Birmingham and how these same properties are garnering rents from as low as $500 a month to as high as $950 per month. I can almost hear the gasp in the comments section of those posts.
According to data from the Birmingham Area MLS, in April 2012 alone, there were 122 properties sold for $20,000 or less (as shown in the graph below).
Of that number, the breakdown is as follows:
Number Sold Description
3 one- and three-bedroom condos
22 two-bedroom, one-bath single-family residences
46 three-bedroom, one-bath single-family residences
15 three-bedroom, 1.5-bath single-family residences
28 three-bedroom, two-bath single-family (some with two full plus 1.5 baths)
7 four-bedroom single-family residences
1 six-bedroom, 2.5-bath single-family residence
122 Total units sold for $20,000 or less from April 1, 2012 to April 30, 2012
Of course, there is always the issue of paying too much for a property – particularly when it comes to rentals, but for flip properties, you may pay slightly above market price for a home in need of repair and still do significantly well with regard to ROI when you rehab the property and thereby increase its value.
It would be a stretch to say that real estate investors have single-handedly increased sales in Birmingham as well as raised property values. But without question, real estate investors have played a major role in our local real estate recovery efforts, and for that, we should definitely applaud them. For some areas of the Birmingham real estate market, investors can be credited with the slow but sure increase in market values. They can also be credited for taking blighted properties and turning them into highly sought after gems that families can take pride in owning.
A great many of Birmingham’s real estate investors are taking great pride and care in producing quality products in the rehab process. The best real estate rehabbers do not have an arm’s length of repair issues when it comes time for the buyers’ home inspection. This allows buyers to be confident about the home that they are purchasing, particularly when investors have followed best practices and have obtained the appropriate permits from the City of Birmingham.
In the end, not only do Birmingham investment properties present a goldmine of opportunity for the real estate investor, they serve to boost the local economy, provide families with their dream homes, and remove the stigma and backlash of neighborhoods riddled with foreclosures.
Investing in the Birmingham, Ala. real estate market is a sound investment all the way around. But before deciding to do any type of investing, naturally one should consult an accountant and attorney.
Written by Charita H. Cadenhead, Broker/Owner of Bham WIiRE Realty, LLC