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HIGHLIGHTS FROM THE PODCAST: 0:50 - Introduction to hot areas in the Birmingham 2:01 - Class A 5:28 - Class B 7:41 - Class C 13:18 - Class D 14:40 - Areas to stay away from 16:18 - Areas that are bouncing back FULL TRANSCRIPT OF THE PODCAST AUDIO: Spencer Sutton: Because for a lot of our investors who are out of state, a lot has changed over the past, even 12 months, but definitely, over the past 36 months, we've seen a ton of change. I think it's a good idea to give an update on all of these different areas. Spencer Sutton: All right, everybody. Welcome back to another episode of The Birmingham Real Estate Investor Podcast. I am your host Spencer Sutton. And today, I don't have Matthew with me, but I don't need Matthew today because we are going to really dive into the best places in Birmingham to invest. And we're mainly talking about buying rentals. Obviously, you can decide if you want to fix and flip because there's fix and flips and rentals being bought in many of the areas that we will be discussing. Spencer Sutton: This is the intro episode and so what I thought would be a good idea, is just to give a broad overview of the areas of Birmingham, where we're seeing a lot of activity, where people are still buying properties, renting properties. Obviously at Evernest, we manage a lot of those, we manage 600 or 700 houses here in Birmingham, so we have a good idea about what's going on. So the episodes that are going to be following this, are going to be Matthew and myself. Spencer Sutton: We will be dissecting, doing specific areas. We're going to look at Eastlake. We may take a bigger area like Center Point and Clay-Chalkville, Roebuck- Huffman area, and say, "Okay, what do you need to know about these areas?" So we're going to do that over the next several weeks, just to give you hopefully, some more information about what you can expect when you're looking to purchase there. Is it a good idea? What's happening? Boots on the ground, what's going on in the markets? Because for a lot of our investors who are out of state, a lot has changed over the past, even 12 months, but definitely over the past 36 months, we've seen a ton of change. I think it's a good idea to give an update on all of these different areas. Spencer Sutton: So I'm going to dive in. For those of you who are listening to the podcast, that's great, I'll be describing these areas. Again, I'm going to do an overview and so the way I've got it set in my mind and wrote it down on my notebook is just, I'm going to start talking about Class A, Class B, Class C, Class D, F areas of town, properties, areas, and what you can expect. So if you're listening to it, perfect, I'll be describing it. If you have access to our video, that we will also post, then most definitely, I'm going to be sharing my screen. We're going to be looking at a map and I'm going to be walking through these areas. Spencer Sutton: So here we go, let me share my screen and we will get after it. All right. So what I'd like to do is, I would like to start with Class A properties. And for anybody very familiar with Birmingham, you are probably well aware of these areas. It's where most people are not buying rental houses. And the three main areas, when I talk A, we're talking A-plus areas, are Mountain Brook, probably the number one area in Birmingham, Vestavia and Homewood. There are obviously pockets of these little municipalities that have rental houses, maybe even some multi-unit. I know Vestavia has some multiunit, Homewood has a few multi-unit, Mountain Brook, not that much at all. Spencer Sutton: But typically, these are high appreciation areas. It's April, 2021, I don't think you're going to be finding deals in these areas, with as tight as the market is, tons of demand, not a lot of supply. All right. So moving a little bit South, we'll come down South, down this, it's called Highway 280 and it's moving Southeast, we will look at areas. So other A Class areas are going to be down in North Shelby County, so areas like Meadowbrook, areas like Inverness, even on further South and down towards Indian Springs, these are all going to be considered A Class areas. Spencer Sutton: And then as we move around, you're going to have a city or a municipality that is really big in Birmingham, it's called, Hoover and here it is on the map. It's South, I mean, Hoover is all over the place. I mean, you can go down 65 South, it's down in North Shelby County, I mean, Hoover is all over the place. And you will find a lot of Class A properties and also some B, B plus areas in Hoover and same thing with the Oak Mountains and Invernness. Then we also have to the far East, we've got Trussville, that's going to be considered Class A, it's got some B Class properties there. And then further down South, I would say probably, Chelsea. So Chelsea is just further down from Inverness and Oak Mountain. Spencer Sutton: So Class A, in some of these areas, you'll have Class B properties, but don't get too hung up on that. These are high appreciation areas, where typically, you don't find a lot of deals to be had for the rental market. Great areas for fix and flip. If you heard our interview with Matthew Gregory, he is buying and flipping houses in Class A areas all over Birmingham. If you heard our interview with Bruce Glenn, Bruce Glenn had a great interview and he is flipping houses all over in these Class A areas. So that's Class A. Spencer Sutton: Let's move on to Class B. We think there's a lot of opportunity in Class B. If I were buying, I would really focus my attention on Class B areas right now. I just think there's a lot of opportunity, if you're patient and as long as you don't have in your mind that you have to buy, "I've got about 10 houses this year or 15 houses this year." If you're just going to take it nice and easy and just look for deals, I think these Class B areas are going to be great. Spencer Sutton: So I'm going to start over here on the East of my map, eastern part of Birmingham, and I'm looking at areas like Pinson. So this is actually Northeast, up Highway 75. I'm looking at Pinson. I'm looking at, well, hold on, nevermind. I had classified Pinson as C plus. So let me go to B. I am going to start here on the East though, but I'm going to start with Moody and Leeds. So you can see Leeds right here. Moody right here, is going to be directly East, down Interstate 20. If you're listening to us, you can just go down Interstate 20 and you'll run into Leeds and Moody. We think those are great areas. Spencer Sutton: And then coming around, going South, I'm going to be looking at, just South of, down to Highway 65. We're looking at Halena, Pelham and Alabaster, are great areas. And then, even I would go as far down to Calera, we actually manage a lot of properties in Calera, a lot of garden home communities down here in Calera. And then as we move further West, McCalla, there's some great areas of McCalla. And if you didn't know this, Amazon Fulfillment Center is right around here in Bessemer, so a lot of people have moved here to McCalla. Spencer Sutton: And if you keep going down I-20 towards, I want to say, towards Tuscaloosa, then you're going to run into the Mercedes plant. So a lot of jobs in this area makes McCalla, I think, a Class B area for properties. You can find deals, you can even find deals and there's different parts of Bessemer, that I think are good. You just have to know the market really well, when you get into those areas. So those are my Class B parts of Birmingham that I wanted to highlight. Spencer Sutton: And so, let's go to Class C. Class C to me, there's a lot of areas in Birmingham that would be considered Class C. So I'm going to start again, here on the far East. I'm going to start Northeast, what I'd said before, which was Pinson. And so Pinson is up here Northeast, up Interstate 79 and we move to Clay-Chalkville. So on the map here, it's going to say Clay, and it doesn't really say Chalkville right here, but we locals, we call it Clay-Chalkville area, really good school systems. You can find good deals, a little bit older houses. Typically, you're going to start to find some three-twos, so there's a mix here. Spencer Sutton: When you get into Pinson and you get into Clay in Class C, I would say, Clay-Chalkville, I would say you're getting closer to Center Point, so there's a lot of three-ones in Center Point. Clay and Pinson are going to have some three-twos. So they're a little bit newer than the Center Point houses, as the building went further and further out. So I think the three-twos. And if you are... I did an interview yesterday with a gentleman from Atlanta who's an investor. He has about 38 rental properties and he was just adamant, he would not buy a three-one. He was only buying three-two, but that's just his buy box. And so if three-twos are a part of your buy box, then I would say Clay-Chalkville, Pinson, are some good areas to try to find those. Spencer Sutton: Then as you move a little bit, I'm even going to say, as we move around here to the East, I'm going to say Irondale, which let me see if I can find it on the map. Here's Irondale, this is a great area of town. If you listened to our interview with Price Hightower. Price, I mean, he has bought many, many houses, I'd say, well over 100 houses in Irondale, and I think Matthew Gregory has, as well. As we move around, I'm even going to say parts of South Eastlake are a part of this C area. Now, Eastlake is one of those that can go either way. It's C, it's B, you have to know the streets, you have to know where you're buying. And so I would just caution anybody who thinks that they can just buy any kind of property in Eastlake, and it's going to be a good deal. That's not going to be the case. You really need to do your homework and understand what it is you're buying in Eastlake. Spencer Sutton: So, let's go to the western part of town. These areas for Class C are going to be areas, Northwest is going to be Forrest Dale, Adamsville. As you move around, I would say, Pleasant Grove, Hueytown, parts of Bessemer are going to be C Class. Let me see if I missed any of them? Oh, and then straight up North here, is Gardendale. Gardendale is a really good area for some C Class, maybe even some newer construction. So probably some B type areas in Gardendale and up there closer to Mount Olive. Spencer Sutton: And the great thing about this is, is that all of these areas that I'm mentioning are within, if people worked in downtown Birmingham, if they worked at UAB, if they worked at the university, if they worked at the hospital, if they worked at any one of the financial institutions in downtown Birmingham, these are not long drives. Even Calera, which was way down South, is probably a 30 minute drive into work, 30, 40 minute drive into work. That is not all that far, all things considered. Spencer Sutton: But even with COVID, a lot more people are working out of their houses, so you even see people moving further and further out. So what about areas of this western part of Birmingham that are considered in Forrest Dale? I think I mentioned Forrestdale, that's definitely a C Class, great area. As we get into the western part of Birmingham, I did want to say, there are areas of Bessemer, Midfield, Ensley, that are C Class areas. I've owned houses in Midfield that were like pockets, they were on great streets, had great little neighborhoods, but then you have to be very, very careful where you're buying. Because it's not just everywhere in Midfield, it's only specific areas. Spencer Sutton: And you can just go right down the road to Lipscomb and you're talking about a totally different atmosphere. You move a little bit North over here to Fairfield, just not as much opportunity to find good C Class areas. Ensley is very spotty. Again, you have some really strong areas of Ensley that I think are really good rental properties and then you have areas that you just really want to stay away from. So it's knowing those types of things. So we're going to dissect, we'll really get into, in one of these episodes and talk about the western part of town and Matthew, and I will dig in and get more granular about Ensley and Midfield, Fairfield, all these different areas right here, so that you can have a better idea about what you're looking at. Spencer Sutton: And then, let's just talk about real briefly, the D Class areas of Birmingham. So these are areas that again, you have to have an incredibly high-risk tolerance, because you're going to be dealing with areas that don't produce a lot of jobs. You're going to be dealing with a good bit of Section 8 in these areas, which some of you may be wanting Section 8 properties, and that's okay, we've seen a lot of people who do that. You're dealing with older homes, you're dealing with three-ones. Spencer Sutton: They're going to need more maintenance. The upkeep is going to be... The residents are typically going to be harder on them, especially if they're Section 8, they're going to live in the home more. They're going to flip more light switches, flush more commodes. There's just going to be a level of repair and maintenance that you're not going to get if you say, buy over in Moody. Let's say far East, which I would consider probably some B Class areas, would be Moody. Or if you bought further South in Halena or Pelham or Alabaster, even further in Calera, you're going to find newer houses, not as much wear and tear on the houses and the plumbing's going to be better. Spencer Sutton: In these older areas, these D and F areas, and even parts of the Cs, you have the opportunity, I mean, there's a possibility that you could be dealing with galvanized piping, as opposed to copper or something else. So you just have to understand what you're getting into before you buy it. So the D and F classes, I would say, in West End, I'm just going to pull in, I consider all of this part, West End. I mean, you could throw in parts of Lipscomb and Fairfield and Midfield and all this. Spencer Sutton: When I say West End, this is the area I'm talking about. I bought a lot of houses here, but it's not for the faint of heart. And I would say, stay away unless you know what you're doing. Let me say, going over here to the eastern part of town, areas that I would stay away from, if I were you, are going to be Tarrant, it is not landlord friendly. Actually Center Point has become less landlord friendly, which you don't see, a lot of the institutions that pulled out of Center Point, it was a big focus five years ago, six years ago. I would stay away from Tarrant, also near Tarrant is Inglenook. Spencer Sutton: So those two areas, I'm not going to ever buy and if somebody brings me an opportunity or says, "Hey, I'm considering buying a house in this area." I'm going to tell them, "I would not buy it. Please don't do it." Not that we won't manage it. I mean, we'll manage a house there, we have managed houses there, but it's not a great part of town. And then, an area that could be coming back, that people talk about a lot is, there's two areas that I would say, that could be coming back, that people talk and I just don't really know. Spencer Sutton: But before we do an episode on these areas, I'll find out. One of those is Woodlawn. Woodlawn is talked about a lot, and there's a lot of positive things I think that have gone on in Woodlawn, but it's still very, very iffy. It's going to be, here it is. Okay. I was just missing it. So Crestwood, Matthew Gregory was talking about Crestwood. He's done over 100 houses, I think in Crestwood. Literally across these train tracks, is Woodlawn. I have bought an apartment complex, right here or it might've been right here. I can't remember. Anyway, total disaster, lost a lot of money. Spencer Sutton: But there's still a lot of development that goes on in here, so this could be coming back. We'll get some more information before we do our podcasts on it. And then if you go over here, up 65, a lot of North Birmingham, people talk about Norwood and Druid Hills and all of this stuff. UAB has a stadium being built. So North Birmingham, even farther up, is really coming back, is what people say. I mean, I have heard story after story, we're talking retail, of selling houses, retail fix and flip, fix and rent, good stuff. So we'll get some more information before we have our podcast on it. Spencer Sutton: So anyway, that's just the broad overview. I hope that helps you understand Birmingham a little bit more, from a 30,000 foot view. What we're going to do next is, we're going to come back and start picking these areas apart, doing some deep dives, talking about the types of houses, the benefits of buying here, some of the dangers you need to be watching out for. And then we'll also, I'm going to be talking to our team leaders, people who are on the ground, on a daily basis, driving these streets, who are doing deals, I'm going to get the latest information. Spencer Sutton: We're going to share some of that with you, so that hopefully, this podcast will be a great place to learn from. Now, if you go over to The Atlanta Real Estate Investor Podcast, you can also hear some great investment tips from our guests there. I mean, these people are investing in Atlanta, other parts around the country, but they're really bright. They share some really good tactics and strategies that you could probably use right here in Birmingham. So go and check that podcast out, and if you haven't subscribed, go ahead and do it. We will see you on the next episode of The Birmingham Real Estate Investor Podcast.
