2625 Highland Ave #402

Birmingham, AL 35205

$129,900F

1 bd · 1.0 ba · 625 sqft · Built 1974 · Condo · Pending · 51 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $973/mo
• Mortgage (P&I): −$681
• Tax + insurance: −$132
• HOA: −$334
• Vac / Maint / Mgmt: −$204
• Net cashflow: $-379/mo
• Annual: $-4,544/yr
• Cap rate: 2.80%
• Cash-on-cash: -12.49%
• DSCR: 0.44
• 1% rule: 0.75%
• Cash to close: $36,372

Investor read

• This is a 1-bed/1.0-bath condo listed at $130k.
• At list price, monthly cash flow is $-379 ($-5k/yr) — negative.
• To cash-flow at today's rent, offer at most $122k (6.1% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $97k (25.1% below list).
• It's been on market 51 days — a 3% lower offer ($126k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $97k (25.1% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $898 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 67/100 on livability (#78 in AL) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A+, housing A+; Watch: amenities C-, schools F, crime F.
• Birmingham City (urban): math 4% / reading 20% proficiency, ranked #116 of 129 in AL (top 90%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 82% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: HOA is 34% of rent.
• Market conditions: Rents rising (+2.6%/yr); 125 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals at typical pace (median 22d on market — plan ~3-4 weeks tenant-placement turnaround); 2,114 units permitted in Jefferson County in 2024 (556 in 5+ unit buildings).
• Jefferson County population projected to shrink 4% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 3 sale attempts since 11y ago; this cycle's ask has dropped $10k (7%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $68k; list at $130k implies a 91% gain — meaningful room to come down on a strong offer.
• Cap rate 2.8% vs local median 6.2% in Birmingham — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• It's been on market 51 days. Have you received any prior offers? Is the seller open to a 25% concession, seller financing, or rate buy-down credit?
• Built in 1974 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• Crime grade is F in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?