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HIGHLIGHTS FROM THE PODCAST: 2:38 – Things to know about this area 6:51 – Common issues seen with these houses 13:06 – What to expect close to the interstate? FULL TRANSCRIPT OF THE PODCAST AUDIO: Spencer Sutton: This is an area that, I'm telling you, probably six years ago, got super hot, like super hot, like a lot of institutional money, a lot of interest. People from around the country, really around the world, were buying houses here. Spencer Sutton: All right, everybody. Welcome back to another episode of the Birmingham Real Estate Investor Podcast. I'm your host, Spencer Sutton, and I have a cohost and his name is Matthew Whitaker. Matthew, welcome to the show. Matthew Whitaker: Thank you. So glad to be your cohost. Spencer Sutton: Yeah. Well, you're trying out. You haven't made it yet. Matthew Whitaker: Is this still a trial? You're still kind of deciding- Spencer Sutton: Definitely. Matthew Whitaker: ... whether- Spencer Sutton: After a hundred episodes I'll make my decision. Matthew Whitaker: And I think we're on like 28 or 29, something like that. 30. Spencer Sutton: All right. So last episode we talked about East Lake and we forgot to even mention the ZIP code, which we should have, but it's 35206. Obviously you can find it on a map if you search for it. But 35206 is the ZIP code today. We're going to be talking about the 35215. We're going to be talking about Center Point, Roebuck, and Huffman area. Spencer Sutton: And this is an area that, I'm telling you, probably six years ago, got super hot, like super hot, like a lot of institutional money, a lot of interest. People from around the country, really around the world were buying houses here. It's been real popular. So we'll talk about some of that and maybe why it's even cooled off a little bit, but we think this is still a very popular area for investors where you can still find deals, great rental houses. So Matthew, let's kick this off. Why don't you give us an overview of what investors can expect in 35215 ZIP code? Matthew Whitaker: This was really ground zero during the recession for Birmingham housing that was hit by recession. A lot of investor activity. I would say the investor activity goes back 15 years. Matthew Whitaker: So it was very hot, still is a very hot area, and I would love to tell people why. So last week we talked about East Lake. Now we're going to move further out kind of east and north of East Lake. If you're looking at Birmingham, I-59 runs north and east, and basically it cuts between East Lake and Roebuck, which is kind of the first one. And if you look at a map, there is how A-75, which basically runs north. And this is the main artery through what we're talking about now, which is Roebuck, Huffman, and then Center Point. Matthew Whitaker: So the thing to know about this area is the closer you get to the interstate, the older the homes are, and the less they rent for. Now, that doesn't mean that they are bad homes. It just means, if you're going to understand the area, the closer you are to the interstate South, the cheaper rents you're going to get. Now, they're not super cheap, right? I mean, there's still homes that were built in the fifties and into the sixties. Spencer Sutton: But they're going to be smaller homes that are going to probably be more efficient homes than what you see as you go further out. Matthew Whitaker: True. You start out with more of a craftsman style home, and then as you move further north, you're starting to get into more of the brick ranchers and just true wood ranchers too. And the homes do get bigger as you move north. And when you get up all the way into Center Point, you start to get into the late sixties. Some of these houses were built in the seventies. So again, from start to finish, unlike a place like East Lake, all of these homes were built with fairly modern amenities. So they all have decent size closets on a relative basis. You're going to run into more one bathroom homes as you move south and into that kind of Roebuck and Huffman area. But as you move north, it increases exponentially how fast these homes get into one and a half bath, two baths, which we always talk about how super important to our residents is having more than one bathroom. Matthew Whitaker: The thing also to note is that Roebuck and Huffman are still city of Birmingham and then Center Point is its own city. So when we talk about the 35215 ZIP zip code, you can't lump all of these communities into one bucket because, just like East Lake, it kind of breaks when you get to Center Point. And we'll talk a little bit about why that is, but great area to invest. I'll tell you just a fun area to ride around. Beautiful homes. People really take care of their community in these areas. You know, what a great place for- Spencer Sutton: Working class, working class areas. Matthew Whitaker: Very working class neighborhood. Spencer Sutton: And really that is true. I mean, I love driving through Center Point. I'm trying to think of I sold you a house in Center Point as well. I can't remember. Matthew Whitaker: You did. You sold me all your dogs. Spencer Sutton: I sold you all the junk. All right. But I just remember driving in there. So many pockets in Center Point and Roebuck and Huffman that you just see pride of ownership. And that's what you want to see. Like if you are looking for a great rental house and you're driving down a street or a neighborhood and you see people, the lawn is taken care of, and things are clean and kept really nice. That's just pride of ownership. And those are the houses you want to own. Those are the houses you want to buy. Spencer Sutton: Yeah. You want to buy definitely around them. And then highway A-75 has a lot of commercial too. I mean, it is literally from top to bottom commercial. A lot of fast food restaurants. As you get closer to the interstate, there's car dealerships- Matthew Whitaker: Chick-fil-A, Taco Bell... Matthew Whitaker: Car dealerships are on there. So you get a lot of that commercial influence too. And then as you get off the road, it feels a little more rural, which is a hard word for me to say, by the way, than someplace like East Lake, where it feels very city. You start to feel like you're getting more into suburbs as you get into Center Point as well. So bigger yards, lot more land, a lot of trees. Sometimes these roads are built without gutter, so that's kind of interesting. And again, a newer home, I think that's one of the most important things about this area is that these homes, from a vintage standpoint, are much newer. As you get further away from the city center of Birmingham, obviously the housing stock gets newer. Matthew Whitaker: Yeah. I think comparing this to East Lake, like a 3-1 in Center Point and a 3-1 in East Lake, you're going to get more rent for the 3-1 in Center Point than you are in an East Lake, especially the north side of East Lake. Spencer Sutton: Yes, very true. So let's talk about what kind of issues are you going to see in these houses that need to be taken care of? Because this is really a good mix, like Center Point, Roebuck, Huffman, still a good mix of homeowners and rental properties. So what can somebody who's looking for a deal here expect to need to take care of in this area of town? Matthew Whitaker: You know, a lot of these homes probably haven't been updated since the sixties. But that doesn't mean that's a bad thing. You get a lot of people who have lived in these homes for a long time and maybe they fixed things when they broke, but there are some pretty heavy renovations that are needed in some of these areas. And, you know, most of the area is flat. The south side of Birmingham is where all the hills are. This north side of the city you get into much more flat. So you don't get into a lot of foundation issues, which is nice. Matthew Whitaker: One of the things that I have found is that residents aren't super excited about cutting big yards. And sometimes if you get a yard that's just an acre big, which is entirely possible, a resident may be like, eh, I don't want to rent this house because I don't have a tractor to cut the yard. Matthew Whitaker: Another thing I would consider is one of the things that's been very highly debated around town is buying in the city of Center Point. Say you have a government there that, best way to say it is, they're wanting to limit the number of rental properties in their community. And so they're putting all sorts of burdens on the landlord to fix things and update things that may or may not- Spencer Sutton: Have inspections. Matthew Whitaker: Yeah. They're putting a lot of pressure on the landlords. And so a lot of people have decided that they're don't want to buy in the city of Center Point as a result of that. Now kind of recent feedback is that some of that has loosened up. It got really tight there for a little while, but some of that loosened up. I think there's a new mayor there. And it sounds like it's maybe in a little bit better position. Matthew Whitaker: Yeah. And there is a lot of room, I mean, Center Point is pretty big. Like you're talking about a lot of properties, a lot of houses, so a really large investor community. So about six years ago, we were managing for an institution that was buying in there and they were literally buying houses every single week, renovating them, making them nice. You know, one thing I thought was interesting whenever I would buy houses in Center Point is it was always a great surprise because again, like you said, a lot of them were not updated from the sixties, but you would go in and there'd be carpet everywhere and you'd start pulling up some of that carpet and see that beautiful hardwood underneath. And that just made your day because that just increased the value, like the rental value, everything. And it was a beautiful thing. Spencer Sutton: Yeah, totally agree. The other thing, as I was sitting here, listening to you talk, I was thinking about some other issues. This has a lot of pine trees. And one of the early things that I learned was being aware of the trees on the property. Residents don't like big, tall pine trees. Just for people that aren't familiar with a pine tree. It's really tall, really skinny, has a very heavy top with a lot of pine needles that don't go away. It's an evergreen tree. So it doesn't go away even in the winter. So you get a lot of these trees that will fall because their roots just aren't very deep. So you get a lot of rain, you get a lot of wind, these pine trees are apt to fall and residents don't like living under a bunch of huge tall pine trees. Spencer Sutton: So being aware of that, when you're buying a house, anytime you cut down a pine tree, it's definitely an expense, but you don't get like any, if you renovate a bathroom, you get some extra rent out of it. You're not getting any extra rent because you cut down a pine tree. Matthew Whitaker: Don't, you have a story about that? Did you have a house that you had to cut down a bunch of pine trees? Spencer Sutton: It's exactly what happened. I mean, I spent probably, I don't remember the exact number, $4,000 or $5,000 cutting down trees that I'd never budgeted for and obviously got no return for it. So learn from the wisdom of the fool and- Matthew Whitaker: But you may have rented that house faster with those trees cut down than, you know... Spencer Sutton: That's true. Yeah. Matthew Whitaker: One cool thing about the area, there's also a community college up there, Jeff State Community College. And there's a lot of students. I know a lot of Birmingham, especially when kids are in high school, they will go to Jeff State and take extra courses. So Jeff State plays a major role in the Birmingham community as well. So pretty cool to have that community college up there. And then the other thing I think is important to notice, it has a main artery kind of out and east, which is Chalkville Mountain road, which is another kind of important road in that, again, there's a really nice retail area up there. A lot of food, a lot of nice restaurants. And actually you used to own a restaurant up there off of that road. Right? Spencer Sutton: I did. I owned the Moes Southwest Grill up there. Matthew Whitaker: Oh yeah. We won't tell some of those stories. Spencer Sutton: Oh I can tell some of those stories, those are great stories... Matthew Whitaker: But point being, I mean, if you live up here, you have access to great restaurants, you have access to great retail, you have access to the interstate and you're going from probably C class up to probably B minus neighborhoods. So blue collar working class neighborhoods. Spencer Sutton: Yeah. And as you get closer, like Matthew mentioned Jeff State Community College. I used to love to buy houses closer to Jeff State around that area because they were newer. I mean, they were in the sixties and seventies, I would imagine. Usually they hadn't been renovated, but they were still in great shape. They were bigger. They were mostly all 3-2s. So you could expect higher rent. So the rent in those areas was always going to be, now is probably, I don't know, around $1,100-$1,200 a month for those 3-2s. Matthew Whitaker: No, it's way more than that. It's probably in the $1,500 range. Yeah. Spencer Sutton: Wow. And then what can you expect closer to the interstate? Matthew Whitaker: Yeah, I think, in those areas, you're going to talk about $900-$1,000. Spencer Sutton: For a 3-1. Matthew Whitaker: Correct. And then it gets up to $1,500. I mean, it could get as high as $1,800 as you move kind of past Center Point into the other communities. But you're ranging from $900 all the way up to at least $1,500. Spencer Sutton: And there is just like East Lake, a resurgence in some of these areas for retail. So there's a lot of people who are flipping houses and getting prices that we never thought we'd see back then. So anything else you want to share about this area? 35215? Matthew Whitaker: No. I think if you are looking to invest in Birmingham, this is definitely an area everybody asks about. And if you are looking to invest in Birmingham and this is an area you at least need to understand. Spencer Sutton: Yeah. It's a great area. Spencer Sutton: Next episode, we'll come back, we're going to highlight another area of Birmingham that people are always asking about. So you'll have to come back and find out what that area is. If you haven't already subscribed, go ahead and do that. Leave us a review, share it with your friends and we will see you on the next episode.