- Birmingham Solid Multifamily Fundamentals
- Operational Value Add Opportunity
- Over $700k Recently Invested
- Effective, Affordable Management Team Willing to Remain
- Located in Opportunity Zone
Birmingham Solid Multifamily Fundamentals
The metro area boasts a low unemployment rate of 2.7% as of June 2024, indicative of its economic stability, which is bolstered by significant government employment. The city’s tech sector has seen exponential growth, attracting both startups and established companies. Notably, in June 2024, CModel Data announced its decision to relocate its headquarters from San Francisco to Birmingham. This move is expected to generate over 80 high-paying tech jobs by 2025.
Central to Birmingham’s economic vitality are its educational institutions, including the University of Alabama at Birmingham (about eight minutes from the asset) and Samford University (about 15 minutes from the asset). This academic influence seamlessly integrates with the business landscape, where major corporations such as Vulcan Materials Company (about seven minutes from the asset) and Encompass Health (about 15 minutes from the asset) are key players, contributing to a diverse and robust economy.
Despite a modest 0.2% annual increase in rents across the broader Birmingham multifamily market, workforce housing properties are demonstrating notably stronger performance. Rents in this segment have risen by 4.1% over the year ending in June 2024, demonstrating resilience to the pressures of new supply that have affected the higher-end market segments.
Pointe North is strategically positioned along a clear path of redevelopment, with revitalization efforts extending toward all the assets. This trajectory offers investors a unique opportunity for substantial long-term returns, particularly with a long-term hold strategy that aligns perfectly with Opportunity Zone requirements. As the area continues to develop, property values are poised to appreciate significantly, allowing investors to capitalize on both the immediate benefits of the Opportunity Zone tax incentives and the long-term value created through the surrounding redevelopment. This combination makes the portfolio an ideal fit for investors with a focus on sustained growth and wealth building over time.
Operational Value Add Opportunity
The current lease-up opportunity presents a compelling investment, with the property only 33% occupied and existing in-place rents averaging $611. The submarket supports an increase to $675—representing a potential 10% increase of $64/unit per month. Notably, 24 of the units have been renovated, with 16 fully remodeled down to the studs, enhancing their appeal to prospective tenants. Additionally, the current ownership is overpaying for insurance, incurring $1,800 per door. We have secured a competitive quote at just $1,200 per door, allowing for further cost savings and improved profitability.
Over $700k Recently Invested
Over $700,000 has been recently invested in property improvements. The initial rehab in 2020 saw 24 out of 48 units renovated, with 16 of those units completely gutted. Upgrades included HVAC replacements, electrical enhancements, updated plumbing fixtures, new water heaters, fresh paint throughout, appliance upgrades, new flooring, and updated cabinets, with a total cost of $628,580. In 2022, additional capital improvements were made, including a new metal roof and asphalt repairs, totaling $110,039.
