HIGHLIGHTS FROM THE PODCAST:
2:14 – The lay of the land
4:42 – Things to be aware of
7:48 – Up the hill near Ruffner Mountain
12:52 – Commercial district
14:37 – A Hindrance to East Lake’s development
FULL TRANSCRIPT OF THE PODCAST AUDIO:
Spencer Sutton:
When you and I were flipping houses back then, there just wasn’t a lot of retail going on. There wasn’t a lot of, I mean, we were wholesaling houses and most people were buying them for rentals. But now, there is a strong flip presence in these… Up in Southeast Lake. I mean, the prices that we’d never thought we’d ever see.
Matthew Whitaker:
I totally agree.
Spencer Sutton:
All right, everybody. Welcome back to another episode of the Birmingham Real Estate Investor podcast. And I’m one of your hosts, Spencer Sutton. And as always, well, not really as always. You weren’t on the last episode, but I’m glad to have you back, Matthew.
Matthew Whitaker:
I have tremendous FOMO, for when I just found out you had recorded a podcast without me.
Spencer Sutton:
And your fear is that it was really horrible. Which is not as good as when both of us do it. But-
Matthew Whitaker:
No. My fear is not that it’s horrible. That would be actually great, for my self-esteem. And my fear is that it would actually be better than anyone I’ve been on. It’d be higher to listen to.
Spencer Sutton:
Well, yeah. We did. I got tons of comments, tons of fan mail from the last one. So, I don’t know if you’ve ever gotten fan mail, but it was incredible.
Matthew Whitaker:
Only people throwing tomatoes.
Spencer Sutton:
That’s right. Of course, I’m kidding. All right. So, I mentioned this on the last episode, what we plan on doing. Everybody who’s listening, is we are going to start doing some deep dives into areas of Birmingham that investors are really, really interested in. We get calls every single day into our office. People asking about areas, people asking about houses, people asking about… Just kind of in Birmingham investment tips. And so, we know that people are very interested to learn more about these areas and neighborhoods. Because you can’t just say, well, “Hey, I’m an out-of-state investor. I’m going to invest in Birmingham.”
Spencer Sutton:
At some point, like we’ve talked about on this podcast, you have to dial it in and you have to get familiar with certain areas. Of course, we always encourage you to come to Birmingham and check it out. Drive the neighborhoods. There’s so much to learn, but what we want to do is give you snapshots. Deep dives into these little areas, so that when you do visit, you can drive and say, “Ah, this is exactly what they were talking about.” So Matthew, we’re going to start with East Lake. And kind of tell us a little bit about your history with East Lake from back in the day. You and I were buying houses back there.
Matthew Whitaker:
This is actually, think I bought another house from you in East Lake. I think the third house that I bought was from you, and in East Lake on Second Avenue North.
Spencer Sutton:
Oh, yeah. That’s right.
Matthew Whitaker:
East lake is very much a blue collar neighborhood. A lot of, kind of working class housing. The interesting thing about East Lake, is it was built over the course of probably three or four decades. And one of the things people will see, is part of East Lake is very flat. Part of it is on what we call The Mountain. Although, if you’re from anywhere out west, you would laugh if you saw what we call-
Spencer Sutton:
It’s a mole hill.
Matthew Whitaker:
A hill. It’s a hill. And as building techniques got more and more advanced, they were able to move from flat ground up onto the hills. I think that’s one of the things that’s interesting about East Lake, is that it’s very obvious the change.
Spencer Sutton:
Yeah.
Matthew Whitaker:
You can literally see the change in the neighborhoods. So first thing is, a lot of East Lake, they were built between the ’20’s and about the 60’s. And the 20’s are obviously all on the flat ground, 20’s and 30’s. So as you drive around East Lake, you’re riding around. Pretty much anything Avenue North and up to about 3rd or 4th Avenue South, you’re going to be riding-
Spencer Sutton:
It’s all flat.
Matthew Whitaker:
Flat ground. Yeah, very flat ground. And you will see that these homes are craftsman style, very simple homes. Typically two to three bedrooms, mostly one bathroom, unless it’s been renovated recently. And part of the challenge too, with buying houses that old, is that… Had the systems been updated, right?
Spencer Sutton:
Yep.
Matthew Whitaker:
These houses weren’t built with the idea that you had central heating and air. Obviously, they did have indoor plumbing. But, there’s all sorts of things. Like the electrical. A lot of times there’s knob-and-tube wiring that would need to be updated. So just knowing the date the house is built, especially in an area like East Lake, I think is super important. Kind of one of the first things I would say.
Spencer Sutton:
Yeah, that’s what I was going to say, is you can probably still find deals in the flat land areas of East Lake. You can still find houses that at least on paper, cashflow. But what are some of the things that people need to be looking for when they’re examining houses? So, you already said electrical, because you may have issues with electrical, plumbing. Because you may have issues with plumbing. Anything else that they need to be aware of?
Matthew Whitaker:
Yeah. Some of these older houses, the foundation starts to settle, even though it’s on flat ground. Years and years of maybe, dry seasons and wet seasons, makes those foundations settle a little bit. So really understanding the floors, really understanding the crawlspace underneath the house is important. You don’t want it to be wet and moldy and mildewy.
Matthew Whitaker:
The other thing I think is important, is really understanding the whole life cycle of that house. If you think of a house that was built almost 100 years ago. And it hasn’t been consistently updated, then it’s 100 years old. And is a house that’s made mostly of wood, going to last much longer if it’s 100 years old? I don’t know the answer to that. I don’t think so. I mean, most homes are consistently updated every, whatever number of years. Maybe 20 or 30 years, and all the rotten woods taken out. So, the last thing you want to do is inherit a problem, just because it’s a great deal. And you’re dealing with major issues, major foundational issues. Major issues on even just the structure of the house, just because the home is so old and it’s basically outlived it’s useful life.
Spencer Sutton:
Yeah. I think this kind of goes into what we’ve talked about before. Just really knowing what you’re buying, and being prepared for that. And understanding that there are going to be improvements that must be made. And if you don’t have the funds to do that, then what’s going to happen is, your resident, your resident, is not going to be happy. What you’re going to have are short-term residents, all the time. One year they move out. And what’s the most expensive time for an owner, is on that turn. It’s when a resident moves out and you got to go find another resident. You got to… There’s vacancy, there’s repairs that have to be done. So, understanding what you’re buying.
Matthew Whitaker:
These houses on the flat lands of East Lake, consistently rent for a 100 to 200 dollars less, than the newer homes, kind of up on the hill. So I think that’s also important to note, too. And so, you get a customer base that may or may not be harder on the house, just live harder in the house. So just know that, you are getting into that, kind of very low C class neighborhood. And just know that your repairs, the maintenance, because the age of the home, are going to be higher in that area. So plan accordingly.
Spencer Sutton:
All right. So, what’s-
Matthew Whitaker:
Doesn’t that mean you can’t make money, because a lot of people make a ton of money in that flat land at East Lake. It just means that you need to be aware of the costs that are associated with owning there.
Spencer Sutton:
Yeah. Be prepared for it. All right. So, let’s start moving up the mountain. The best-
Matthew Whitaker:
Up the hill.
Spencer Sutton:
Up the hill, as we call it, towards Ruffner Mountain. So what can people expect? So obviously, the houses are getting newer and newer, as you go up. So talk about that area and how it transitions. And then what can people expect? What are they going to be looking at us? It’s not going to be the same type of houses we saw in the flat lands. It’s going to be a bit different. So let’s talk about that.
Matthew Whitaker:
Yeah. I think a lot of this, is built in the 50’s and even the 60’s, as you go further up the hill. Which is further south and further east in East Lake. The rents get higher. You do have some gentrification there, where people are moving in and spending a lot of money on homes. So you can expect better systems. These systems were typically built for central, at least heat, which makes it easy to convert to a central air. And obviously, the housing stock being newer, you have less issues.
Matthew Whitaker:
A lot of these houses are built that have one and a half, two bathrooms. I think having one and a half or two bathrooms, is very important to our residents. They really love the idea of having extra bathrooms. And we’ll pay a premium for having extra bathrooms. A lot of investors now are converting some of the three ones into three one and a half, three twos. Just because of the extra premium they get for converting a closet or something into a bathroom. The other thing I would say is the closet surveyor. So if you think about it, anything built in the 30’s and 40’s, people just… Early 20’s, 30’s and 40’s. People just didn’t have a lot of clothes. And when you get into the 50’s and 60’s, people had more clothes. They still didn’t have as much as they do today, but they have bigger closets. Again, you run into more, kind of modernized homes.
Spencer Sutton:
Yeah. And it’s really interesting, in this area. So I just remember driving in this area, seeing a lot of Tudor style houses. Brick Tudor style houses, which I think are really interesting. When you and I were flipping houses back then, there just wasn’t a lot of retail going on. There wasn’t a lot of, I mean, we were wholesaling houses and most people were buying them for rentals. But now, there is a strong flip presence in these, up in South East Lake. I mean, the prices that we’d never thought we’d ever see.
Matthew Whitaker:
I totally agree. There’s also some craftsman style houses. The other thing I think is important, we need to be careful about up there, is because they’re built on the hill. A lot of these homes over the course of the last 60 years, started have foundation issues. Because, anytime you build a foundation and then you have a lot of pressure put on it over the course of 60 years. On one side where all that rainwater is pushing down, you need to have wall braces installed. Some foundation things looked at. Now, listen. I actually used to live in a house that was built in the ’60’s or late ’50’s, on the side of a mountain. So it’s not a big deal to get the foundation fixed. It’s just not something you want to find out after buying the house, that the foundation needs to be fixed.
Spencer Sutton:
That’s right.
Matthew Whitaker:
And so these homes, if you think about them, since they’re built on a slope, you may have at the top of that slope, whether it’s going forward sideways or backwards. You may have a little crawl space, which is two or three feet. And then, it extends up to sometimes as many as eight to 10 feet at the bottom. Just depending on the slope of the hill. And a lot of times, these are dirt underneath. So you’ll need to put some plastic down, to keep moisture out. Sometimes though, people have gone back in and actually filled it in with concrete. You run into a lot of them that’ll even have garages. Because there’s so much room that they were able to build kind of a one car garage, on one side of these homes.
Spencer Sutton:
So, East Lake as a whole. I mean, we really kind of talked about it in having two parts, right? So you have the north side and then you have the south side. But from what I can tell, is it’s almost kind of like Avondale in the earlier days. There was so much interest in Avondale, because a lot of things were happening. Are we seeing the momentum come down into the north part of East Lake, where more and more people are wanting to buy and redo those houses? Or is it still pretty split in two?
Matthew Whitaker:
Absolutely. Right now, it feels that both the flat area and the south side, investors are very much buying both of those. So, you’re seeing a real renewal in the area. And listen, investors are very healthy for our community. Because they have the capital to come in and buy the home and renovate the home. Like I said, if it’s been 100 years since anything has been updated, I mean, you can just imagine how that’s just not going to last. So, having investment dollars come in and renew a community is very important. There’s a East Lake Park, which I thinks really important to on the north side. You can see it as you land, coming into Birmingham. Very popular park. Very much an area where people go and hang out, and very much a really nice area.
Matthew Whitaker:
And then East Lake has its own commercial district, too. It’s kind of a long… Porto Madrid Boulevard. If you’re looking at a map and I think First Avenue North. And that may not be exactly right. But there’s a very commercial piece to East Lake. Mostly mom and pop shops, you’ll find there. But point is, it is a very thriving community. The other thing people like about East Lake, is just its proximity to Birmingham. So it is… Woodlawn is directly to it’s west, and then Avondale. So, you really only have to come over two communities. And if you hit the interstate, it’s literally, without traffic, a 10 minute drive, maybe less, into the city center of Birmingham. So you get a lot of people that live in East Lake, work in downtown Birmingham. Whether that’s for the hospitals. And look just, if you think about a hospital, you don’t need just doctors at a hospital.
Spencer Sutton:
That’s right.
Matthew Whitaker:
You need a whole support staff. And so, a lot of the people that support that hospital, live in areas like East Lake. So, which is probably 95% of the people that work for the hospital, is support staff. That’s not an actual number. I don’t know where I came up with that. But point being, when we think of hospitals, we think, “Oh, that’s where doctors live.”
Spencer Sutton:
Doctors, yeah.
Matthew Whitaker:
Well, no. You have this whole team of people that are basically helping support this hospital. Whether they’re cleaning, custodial, giving shots, whatever. So, a lot of these people live in this area, East Lake.
Spencer Sutton:
So, what could be maybe a hindrance to East Lake’s development? Continued renewal and revitalization? I was just thinking school systems, possibly. Right? So school systems. And then, what else? I mean, what types of things… Because we talk, and investors talk a lot about following really strong school systems. And East Lake is in the Birmingham school system.
Matthew Whitaker:
Yeah. And I think the Birmingham school system is getting better. I wouldn’t say that it’s a significant hindrance. What I would also say, is that the people that live in East Lake have always lived in East Lake too, right? People don’t move out of their communities, probably in Birmingham, as much as they may move out of their communities in other cities. I don’t know what people do in other cities. But in Birmingham, people just don’t move out of their communities. And so, you may have families that live… And this makes sense. I mean, this happens everywhere. You have families that live streets over from each other. So-
Spencer Sutton:
Yeah. They tend to be long-term residents, as well.
Matthew Whitaker:
Yes.
Spencer Sutton:
Because they’ve lived there for so long.
Matthew Whitaker:
Yeah. And there’s definite demand. I mean, you think about where it is, where it’s proximity is. Birmingham, it’s just east of the city center. It’s still the city of Birmingham. And so, it’s just way too convenient to not be an area where people would be desirable to live. Right? It’s not far out. I mean, you’re literally right in the mix of everything. And there’s been a lot of money poured into Woodlawn, which is just to the west of it, especially around the commercial district. There’s just been tons of money that is just poured into that area. Intended things to revitalize it. Again, just because Avondale another community just to the west, has been… It’s crazy, what’s happened over there-
Spencer Sutton:
It’s blown up.
Matthew Whitaker:
Over the last 15 years. And East Lake and Woodlawn are feeling the overflow I think, of that Avondale push. So Avondale-
Spencer Sutton:
I agree.
Matthew Whitaker:
Has a bunch of breweries and kind of a very cool mix of businesses, restaurants, kind of an entertainment district. And all of this, is not within walking distance. But definitely, you could ride your bike from one place to another.
Spencer Sutton:
Yeah. And I just feel like people are pushing. People in Birmingham are pushing for that to happen in Woodlawn and East Lake. They’re almost trying to will it to happen, which is great. I mean, it’s… Listen, we’re seeing things in East Lake that we never thought we’d see back when, 15 years ago. So, it’s been good for the community.
Matthew Whitaker:
Yeah. And again, it’s a really neat area, has a lot of history. And definitely, when you tell Birmingham’s story, is probably one of the top communities you need to tell about. Because it definitely is a part of Birmingham’s story.
Spencer Sutton:
Yep. So, anything else you want to close with, Mathew?
Matthew Whitaker:
I don’t think so. Well, let me say this. I said, “I don’t think so,” and now I’m going to say something. Rents there can range anywhere from $600, $650. Maybe for a two bedroom up to… I mean, we’re seeing some in the 1200, $1,300-
Spencer Sutton:
I was going to say, over $1,000 now.
Matthew Whitaker:
Range now, as you get further south and east, for the better product. And I’ll tell you, some investors are really pouring some money into some of these homes. You’re talking about either granite Corian countertops, stainless appliances. So, really a nice house. People are getting a really nice home. Whereas, when we first started renovating, we were putting in the cheapest things we possibly could. I think that’s one of the things that the institutions have done a really good job of. Is just showing this industry the value of putting nice things in, and getting a high return for that investment.
Spencer Sutton:
And having said all that, there are still, I’m sure, deals to be had in East Lake. So if you are looking, just if East Lake is your place, you want East Lake to be the place where you start buying houses or you’re already buying houses, just be patient. You can still find deals in East Lake and do well there. Well, all right. Well, that’s our episode here, all about East Lake. I hope this was helpful. If you haven’t already, please subscribe. We’d love to see a review from you. If you could write out a review, that would be awesome. Share it with your friends. And also I’m going to say, listen. We’re interviewing some great folks for our Atlanta Real Estate Investor podcast. You ought to check it out, as well. I mean, just really solid investors. Even though they’re investing in Atlanta, they’ve got some great things to share. So also, head over there and listen to that podcast. All right, we’ll be back next week with another episode, and we’ll highlight a different area. See you all next time.
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