2024 2nd Ave #701

Birmingham, AL 35203

$329,000F

2 bd · 2.0 ba · 1,340 sqft · Built 1913 · Condo · Active · 255 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,358/mo
• Mortgage (P&I): −$1,725
• Tax + insurance: −$336
• HOA: −$669
• Vac / Maint / Mgmt: −$495
• Net cashflow: $-868/mo
• Annual: $-10,415/yr
• Cap rate: 3.13%
• Cash-on-cash: -11.31%
• DSCR: 0.50
• 1% rule: 0.72%
• Cash to close: $92,120

Investor read

• This is a 2-bed/2.0-bath condo listed at $329k.
• At list price, monthly cash flow is $-868 ($-10k/yr) — negative.
• To cash-flow at today's rent, offer at most $294k (10.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $236k (28.3% below list).
• It's been on market 255 days — a 12% lower offer ($290k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $236k (28.3% below list) — sets the bar for 1% rule.
• In year one you build about $1k of equity ($2k loan paydown + $-1k appreciation (-0.3% local appreciation)).
• 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 28% of rent; built in 1913 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 45 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals leasing fast (median 12d on market — plan ~1-2 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.
• 4 sale attempts since 14y ago; this cycle's ask has dropped $20k (6%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Climate carrying-cost: major wind risk, 27% chance of damaging wind over 30y; extreme-heat days projected 7→19/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 3.1% 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.
• At $2,358/mo this rent would consume 60% of the median local household income ($47k/yr) (locally 344% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

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 255 days. Have you received any prior offers? Is the seller open to a 28% concession, seller financing, or rate buy-down credit?
• Built in 1913 — 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?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• 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?