Why Birmingham’s Fix and Flip Market is On Fire

Birmingham’s real estate market has proven to be a gold mine for serious investors because of its affordability and versatility. Nicknamed “The Magic City,” Birmingham has become the second-most popular market for real estate investors, ahead of traditional hot spots such as Tampa, Las Vegas, and Phoenix.

Properties are relatively cheap in Birmingham, with median home values coming in just around $103,000 and median listing prices sitting around $160,000. In addition, Birmingham boasts a cost of living that is 2% lower than the national average.

In addition to affordable home prices, Birmingham’s population and economic growth have skyrocketed over the past decade, landing Alabama’s capital city on the list of the nation’s best markets for buying and owning long-term rental properties.

These underlying factors are a big reason that buy-and-hold real estate investors in Alabama looking for rental property with steady returns are naturally attracted to Birmingham. Over the past five years, home values have increased by 75%, while median rents for 3-bedroom homes have grown by 41%, according to Zillow and Zumper. These strong property appreciation rates in the Birmingham market continue to appreciate much faster than most other top-performing real estate markets in the US.

Realtor.com forecasts that home sales in the Birmingham metro area will grow in 2022 by 8% while home prices in the region increase 6%, for a total of 14% expansion in the market, putting the city in the 25th spot out of the 100 markets, according to Realtor.com’s forecast.

The real estate market in Birmingham, AL offers all the things that fix and flip rental property investors are looking for. Affordable home prices, rising rent prices, and strong renter demand in neighborhoods like Highland Park and Central City. And even though home prices and rents are increasing in many of the city’s neighborhoods, Birmingham still has a relatively affordable cost of entry, providing fix and flip investors a great chance to boost cash flow or hold properties to build their portfolios.

What’s Fueling Birmingham’s Booming Real Estate Market?

Birmingham’s economy is fueled by large banking, healthcare, telecommunications, and education sectors. Even though industrial steel roots play a smaller role in today’s Birmingham economy, some of the major employers in the area are manufacturing power players.

During 2020, the city and its metropolitan area saw over $500 million in capital investment according to the Birmingham Business Alliance. In addition, 35 projects were announced, providing an additional 1,240 job opportunities.

Of those projects, nine represented new corporations in the region. Large economic growth projects included the likes of Amazon, FedEx, Lowe’s, Mobis, Buffalo Rock, Motion Industries, and others.

Jimmy Moore, co-Founder of Birmingham-based Camellia House investment partners, said in a recent interview with Lima One’s Real Estate of Things podcast that California start-up companies relocating to Birmingham are bringing hundreds of new career opportunities , adding to the city’s already sizzling job growth. (Subscribe to the podcast here.)

Through the work of entrepreneurial programs like Velocity Accelerator, the Innovation Depot, and others, the city has seen successful startups launch, such as grocery delivery service Shipt and Daxko, a software for health and wellness organizations.

The business climate in Alabama has been ranked among the best in the nation, while Birmingham has been ranked by Indeed.comfDi Magazine, and Business Facilities as one of the top 10 metro areas for growth in economic categories.

Birmingham boasts an unemployment rate of 2.8% – sitting below the national average of 3.6%, according to the Bureau of Labor Statistics. The city has also seen job growth of 1.5% with hourly wages increasing 4% YOY, according to the Birmingham Business Alliance 2019 Growth Report.

Birmingham’s solid economic base and outstanding real estate opportunities are perfect for both short-term investing through fix and flip projects and for rental property investors holding for the long term. Fix and flip investors will find plenty of potential purchasers for completed flips, or renters if they choose to pivot and hold the property.

Birmingham’s Fix-and-Flip Property Investment Opportunities

Alabama has become one of the best states to flip houses because the cost of living is low, and the average home price is lower than the national average. Birmingham has been recognized as the best city for flipping houses in Alabama for the same reason.

The low cost of homes in Alabama is good news for those interested in getting into real estate flipping because it reduces the amount of capital needed for a down payment and the total loan amount needed to purchase the property. In other words, the barrier to entry in Alabama is quite low.

Alabama’s foreclosure rate is another important aspect of its real estate market. The state of Alabama ranks fifth for the highest foreclosure rate.

Among cities with a population of 200,000 or higher, Birmingham ranked second on the list of cities with the worst foreclosure rates — one in every 3,053 housing units. This equals opportunity for fix and flip investors.

Birmingham Fix & Flip Data

Why Birmingham, Alabama’s Fix and Flip Market is On Fire

Real estate investors will find the greatest success when they invest in the right market. For fix and flip investors, Birmingham is that market. The combination of a flourishing economy, large economic growth products, and low median home values, Birmingham has become a ripe market for investment property.

Birmingham appeals to fix and flip investors because of the cost-effective options to purchase renovate homes. Quick turnaround times are also a plus for investors, giving them the confidence that their investments will turn a profit. Finding the right lender is also an important step to turning a profit.

Lima One Capital has the best fix and flip loans among private lenders for investors looking for a rehab loan for an investment property, with the option to easily and affordable transition the flip to a rental property with a rental loan.

As experienced lenders, we’re able to move quickly when you find the right opportunity. Our clients have different investment strategies, so we have designed our loan options to allow us to cater to their individualized needs. Contact us today to discuss your next deal, or if you have a deal in hand, you can speed up the process by applying now.