Investing in Birmingham real estate is an excellent way to start a successful and profitable investment portfolio. Investing in rental properties can be lucrative and rewarding, but you have to understand the market, the process, and how to evaluate your results.
Buying your first investment property in Birmingham can be stressful and overwhelming. If you want to dial down some of that anxiety, make sure you’re prepared, educated, and surrounded by experienced professionals.
Set Your Investment Goals
What do you want to accomplish with your real estate investments? Think about this first property in particular as well as a long-term strategy. Do you care more about cash flow or long-term appreciation?
For many first-time investors, a single-family rental property makes the most sense, and there’s a large market for those in Birmingham. However, they are not the only option. You might also consider buying a multi-family property, which might be a duplex, triplex or fourplex. Maybe you’re more interested in a small apartment building.
What you choose will have to fit with your investment goals. If you aren’t completely sure about those goals, buying any piece of rental real estate will feel overwhelming and stressful.
Prepare Yourself Financially to Invest
You’ll have different hurdles to hop over when you’re financing an Investment property versus a primary residence. The requirements are likely to be a bit stricter, so be prepared with clean credit and a healthy down payment. If you can pay in cash, you should consider doing that, but remember that a mortgage can help free up liquidity, leaving you with more money in the bank to take care of things like maintenance, vacancy loss, and even additional rental property investments in the future. Birmingham real estate isn’t so expensive that you need to worry about over-extending yourself with debt.
Talk to a Birmingham property manager once you’ve identified a property you’re thinking you might like to buy. You’ll get some reliable information on rental values, whether renovations and repairs will be required before it’s rent-ready, and insight into the likely tenant pool. This information will help you map out your expected income and expenses, thus reducing the financial stress of buying a property.
Know the Birmingham Market
You’ll need to know everything you can about the local Birmingham real estate market and the rental market. Before you buy, make sure you know which locations are especially good for high quality tenants. You’ll need to know the school districts and how far it is from a property to dining, grocery stores, and entertainment.
Investigate the supply and demand of the specific property type you wish to invest in. The strength of the market and the particular investment you make will vary by location and neighborhood. Consider if your potential rental property is located in a viable, growing area. Take a look at whether rental values have risen or dropped in the last few years and whether homes have been consistently appreciating. These things will help you make smart investment decisions.
Surround Yourself with Investment Partners
The best way to set yourself up for success as a real estate investor and reduce your stress while buying your first property is to surround yourself with experts. You’ll want to work closely with a real estate agent, mortgage broker, inspection company, and most importantly – a Birmingham property management company. With these professionals in your network, you’ll get some valuable advice and resources.
We’d be happy to help you get started as an investor. Contact our team at Decas Group.