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Best Places to Invest in Birmingham – Forrestdale & Adamsville


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HIGHLIGHTS FROM THE PODCAST:

0:43 – Introduction
2:13 – The history of homes in this area, what to expect

FULL TRANSCRIPT OF THE PODCAST AUDIO:

Matthew Whitaker:
These houses are what I would consider solid C through B minus. This is just kind of your solid working class neighborhood. I’ve always joked, if I could own a bunch of homes in this area, I would absolutely do it.

Spencer Sutton:
All right everybody, welcome back to another episode of The Birmingham Real Estate Investor podcast, I’m one of your hosts, Spencer Sutton, and I have Matthew Whitaker here with me, Matthew, welcome to the show.

Matthew Whitaker:
Awesome, glad to be back and excited about the area we’re going to talk about today.

Spencer Sutton:
That’s right, we’ve discussed Eastlake, We’ve talked about… So that’s 33206, we’ve talked about 35215, which was Center Point, Huffman and Roebuck, and now we’re going to move West and we’re going to move a little bit Northwest towards Forestdale, up Highway 78. If you’re looking at a map of Birmingham up Highway 78 towards Forestdale and Adamsville. And so Matthew, you’ve done several deals in this area, so why don’t you kick us off and give us a broad overview of this area?

Matthew Whitaker:
Yeah, so I totally suggest bringing up this map, that way we can describe how the area grew. As you’ll see, there’s I-22 that basically connects Birmingham with Memphis, and that hasn’t always been there, so that interstate hasn’t always been there. 78 was kind of the original highway that connected Memphis and Birmingham. Over the years, they added pieces of the interstate, but to really understand this Northwestern side of town, you’ve got to understand that I-22 is brand new.

Matthew Whitaker:
So if you drive down I-22, it’s just trees on both sides, almost as soon as you get out of Birmingham. 78 is where all the commercial, all the housing grew out of, and so as you’re heading, starting from Birmingham, the first place you’re going to hit is Forestdale, the next place you’ll hit is Adamsville, and then Graysville, I would also book in with that, before you hit kind of another major junction where I-22 and 78 meet.

Spencer Sutton:
All right great, so tell us a little bit about the history, what kind of homes you can expect here as you’re going up Highway 78, what is the mix here? Are we talking about three ones? What year were most of these homes built? What can investors expect in this area?

Matthew Whitaker:
I love this area. It’s very similar, the housing stock is very similar to the 35215 zip code, which is that Northeast of town. You were just talking about Roebuck and Center Point, and just like Roebuck and Center Point, the newer homes are further North and West. I won’t say it’s as consistent because this area is a little more rural than the Center Point, Roebuck, Huffman area. But most of these homes were probably built in the fifties and sixties, they have much bigger yards on a consistent basis, a lot of three bedroom, one bathroom. You will start to find some bigger homes as you move away from 78, that are more like three, one and a half, three, two and homes that were built in the seventies and eighties.

Matthew Whitaker:
So it’s really a mix of the fifties through the eighties, and the schools here are really good. Minor High School is the high school that most of these children go to. And it’s just a really great area for investing. We’ve bought a lot of houses, if you zoom in on Midway Road, Hazelwood Road, Union Grove Road, and the roads coming off of those, the first house that Spencer actually sold me was on Cherry Avenue right there, which is right off of 78 heading North. Look, this is a really great area just because again, the age of the homes, people desire to live here, and it’s just a good community place to live.

Spencer Sutton:
When I think of this area, I think there’s still a great degree of home ownership in this area, so it’s not like just a rental area. So you still have a lot of people who own their homes, who grew up in the area, and so you’ll also find a lot of pride of ownership in some of these smaller neighborhoods.

Matthew Whitaker:
I would say homes start renting in about the eight to 900 range, and I wouldn’t be shocked to get 1500, 1600 for some of those newer, three bedroom, two bathroom… When I say newer, built in the seventies, maybe eighties, three bedroom, two bathroom homes. Again, very similar to the North Eastern side of town, just probably about half, maybe even a third of the number of homes up here in the Northwest side.

Spencer Sutton:
And if you start looking a little bit further West, we do get people who inquire and ask us about, “Well, what about Mulga? What about Docena and Minor and some of these areas?” And you can tell me your personal opinion Matthew, I’ve always said these are probably not the best areas to buy rental houses in, just because I think the demand for those rental houses is not going to be as great as some place in Forestdale, Adamsville, or Graysville.

Matthew Whitaker:
Yeah, I think you can certainly find a deal and do a onesy twosy in one of those smaller communities, but I like to invest where everybody else is, where the people are, where there’s a lot of demand. And when you go to one of those little smaller communities, it’s really hard because the demand is so small, you’re just not making a bet that will pay off consistently over long periods of time. Whereas, if you invest in anything off of that Highway 78, we know people want to live there and we know that we can lease those homes.

Spencer Sutton:
Yeah, and plus also, if you are more interested in flipping properties, you still have a great opportunity to flip houses for sale in Adamsville. These are still great communities where people are looking to live, not just rent, but buy their home and plant roots there.

Matthew Whitaker:
This is very convenient to Birmingham, people come in 78, come in I-22 that work downtown, maybe work at one of the hospitals. There’s American Cast Iron Pipe Company, you’ll see, which also is called a CIP Co. Very big employer here in town. It’s not unreasonable for people to travel 20 to 30 minutes from Graysville into town and work in town. So most of Birmingham is very convenient, maybe during rush hour it’s a little less convenient, but we’re not talking about just crazy travel time into work. So somebody could hypothetically live in Adamsville, work in Birmingham, these houses are what I would consider solid C through B minus. This is just your solid working class neighborhood. I’ve always joked, if I could own a bunch of homes in this area, I would absolutely do it. Give me a hundred homes in this area, that would really excite me. Some of my favorite rental homes I’ve ever owned have been in this area.

Spencer Sutton:
Including Cherry Avenue that I sold you?

Matthew Whitaker:
Yes, that one probably would not make the list, but Midway, I had one on Midway Road that was a great rental, had a awesome resident live there.

Spencer Sutton:
Yeah. Isn’t it really interesting, as I look around different parts of Birmingham, we really grow fond for certain areas based on the quality of tenant we have. Hey, I had a great experience, I had this tenant. I had one in Clay-Chalkville for nine years, just over nine years, and I thought, “Man, I love Clay-Chalkville. If I could own a hundred houses in Clay-Chalkville I would.” Because we get in our mind that this is the place to be, but I will say this, Matthew and I have talked on this podcast before about, if you’re looking to invest in Birmingham, finding an area, becoming an expert, looking for deals specifically in these areas just so that you know them. I think you can definitely do this right here on 78 and Forestdale, and Adamsville, and Graysville, you could become an expert. You will find deals, you can build a rental portfolio, a great rental portfolio of properties here in this area that have some really good cashflow and then more than likely some appreciation along the way.

Matthew Whitaker:
I think you nailed it though, the better the area, the better the resident. I don’t think that, that was by a happenstance that you liked the area, it’s a great area, attracts great residents live in that area.

Spencer Sutton:
Yeah. And the temptation for a lot of investors, especially out of state investors, is like, “Wow, I see this deal here that I could buy in, I don’t know, McDonald’s Chapel or wherever, with great cash flow.” But they don’t really understand that with that cashflow, you’re taking a large amount of risk. I think for-sale Adamsville area is, again, that B minus to C area that is just middle of the road, just a strong, strong rental place.

Matthew Whitaker:
When I first started selling or helping investors buy houses from out of town, especially people from California where land is at a premium, one of the interesting things they always asked me was the lot size of the home. In their mind, the lot size was reflective of the value of the home.

Spencer Sutton:
Yeah.

Matthew Whitaker:
And one of the misconceptions that a lot of investors come in here and make, is that the lot in Alabama, maybe it’s different. If I’m buying California, I want to know every inch I’m buying. But if I am buying in Birmingham, Alabama, the lot size can actually be a hindrance. You wouldn’t want a home sitting on a huge lot, because what would happen is that resident would have to cut grass and when you’re in Birmingham, Alabama, the grass has been growing now for about six weeks. So you start cutting it in March and you quit cutting it sometime in November.

Matthew Whitaker:
And if it’s a big yard, that’s going to actually even be a deterrent to a resident. Now, you don’t want, depending on the neighborhood, maybe a resident does want a yard, but they don’t want acres and acres of yards. I think there’s a common misconception that lot size equals value and it just doesn’t in Birmingham.

Spencer Sutton:
And we have to even educate people who live here, who want to rent their home if it’s on a lot of acres, that’s one of the things we will talk to them about like, “Listen, are you going to provide lawn care? You don’t have to, but I’m telling you finding a tenant that wants to buy a riding lawn mower and mow three or four acres is not going to be easy to find.”

Matthew Whitaker:
And Adamsville, Forestdale the communities that are neighborhood communities in there have generally reasonable lot sizes. But as you get out a little bit, you may run into some issues with… I just thought that was important because it’s a common misconception. In fact, what’s funny is, this is rural enough when I Google searched Adamsville and I was bringing it up on my screen, the picture of Adamsville, at least in my Google, was a John Deere tractor. So I don’t know if that’s center of Adamsville or what, but I don’t know where Google came up with that. But it is, you don’t go too far from there and you get into a bunch of hunting land, a bunch of farm land, it really is more rural Alabama, not too far from there. So not that Graysville is the end of the world, but it does seem to drop off a little bit when you get there.

Spencer Sutton:
Google is trying to tell you, if you buy a rental house, go ahead and buy a John Deere tractor at the same time. Just get it ready for your tenant, it’s going to be good. You combine a John Deere tractor for your farm when you let your rental houses pay for your farm.

Matthew Whitaker:
That’s right. That’s a good idea.

Spencer Sutton:
All right everybody, thanks for being here on this episode, we’ll be back next week with another episode on a different area of town, and we’re going to bring a special guest on with us. And we’re going to start talking about some deals, so we’re going to start looking at certain deals, and so you can get a picture in your mind, like what can I expect if I am to purchase in this area? Some deals that we’ve recently done through our brokerage service. So we look forward to having you back with us. Listen, if you haven’t already subscribed, do that, leave us a review on Apple, it helps other people find this podcast. And then you can always just share it with your friends, we’d love to have as many listeners who enjoy it. All right, we’ll be back next week.