117 3rd Ave S

Birmingham, AL 35205

$88,000B-

4 bd · 1.0 ba · 1,428 sqft · Built 1920 · SingleFamily · Pending · 24 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,289/mo
• Mortgage (P&I): −$461
• Tax + insurance: −$329
• HOA: −$0
• Vac / Maint / Mgmt: −$271
• Net cashflow: $228/mo
• Annual: $2,738/yr
• Cap rate: 11.48%
• Cash-on-cash: 18.51%
• DSCR: 1.82
• 1% rule: 1.46%
• Cash to close: $24,640

Investor read

• This is a 4-bed/1.0-bath single-family listed at $88k.
• At list price, monthly cash flow is $228 ($3k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $88k).
• It's been on market 24 days — a 2% lower offer ($87k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $87k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $608 of loan paydown is wiped out by about $3k 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-, crime F, employment 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.
• Zoned schools: Washington K8 (math 5% / reading 18%, grade F, #556 of 627 statewide, top 89%, 567 students, 92% FRL); Parker High School (math 2% / reading 2%, grade F, #291 of 305 statewide, top 100%, 826 students, 90% FRL).
• Watch-outs: flood insurance adds $152/mo; built in 1920 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+2.6%/yr); 125 active listings in the ZIP; 23 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 61% of comp listings sitting > 30 days — soft ceiling on asking rent; 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.
• Climate carrying-cost: in FEMA flood zone AH (mandatory federal flood insurance); major wind risk, 27% chance of damaging wind over 30y; extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 11.5% vs local median 6.2% in Birmingham — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• This rent runs 30% of the median local income ($51k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• Built in 1920 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• 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?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.