It’s hard to argue with a purchase price of $160,000 and a median monthly rent of $1,300, even in a high interest rate climate. Those median figures are why Birmingham, Alabama, has topped Realtor.com’s list of the top 50 U.S. cities for investors.
Birmingham had the highest net share of investor homebuyers in the nation in 2025, with 21% of sales going to investors and 14.4% of sellers also being investors, giving it a net investor purchase share of 6.6%.
A Cash Flow City
While “cash flow” seems to be a quaint, bygone term for many investors, in Birmingham these days it’s still very much in play.
“In Birmingham, the money is in the rent check, not the resale,” Cameron Walker of Clever Real Estate told Realtor.com. “That’s the whole story of why investors hold.”
Realtor.com’s top 10 list of cash-flowing cities is as follows, along with the percent of investor buyers holding properties:
- Birmingham, Alabama: 6.6%
- Memphis, Tennessee: 6.2%
- Kansas City, Missouri: 5.7%
- St. Louis, Missouri: 4.6%
- Pittsburgh, Pennsylvania: 4.4%
- Columbus, Ohio: 4.3%
- Miami, Florida: 4.2%
- New York, New York: 3.4%
- Cleveland, Ohio: 3.4%
- Salt Lake City, Utah: 3.1%
Realtor.com senior economist Hannah Jones said of the report:
“Seven of the metros—Memphis, Birmingham, Kansas City, St. Louis, Pittsburgh, Columbus, and Cleveland—are classic cash-flow markets where affordable entry prices, climbing rents, landlord-friendly tax environments, and durable renter demand attract investors. Miami and New York are outliers driven by big investors buying in because prices are expected to keep rising and it’s easy to sell later, rather than to earn steady rental income.”
Be Careful Picking Your Investment Location in Birmingham
Bolstering Birmingham’s credibility as a solid investment are its robust healthcare system, a large, recurring student base (the University of Alabama), and financial institutions. Unsurprisingly, neighborhoods close to major employers are in high demand.
For investors, the cash flow sweet spot is solid B- to C+ areas. According to Spartan Invest, these areas are:
- Center Point/Roebuck (ZIP code 35215): A staple single-family turnkey area
- Bessemer (ZIP code 35022): The Amazon fulfillment center and industrial distribution are major employers.
- Hueytown and Pleasant Grove (ZIP codes 35023, 35127): West of the city center, a working-class suburban neighborhood with long-term tenants.
- Pinson/Grayson Valley (ZIP codes 35126, 35235): Slightly pricier, more upscale neighborhood with affordable suburban living. Likely less cash flow, but fewer headaches too.
- Emerging/hybrid areas: Appreciation plus cash flow. These areas, sometimes priced below $100K, offer cash flow but at a cost. The areas are gentrifying and will take five to 10 years to stabilize, so property management could be more labor-intensive.
Stable B+ Cash Flow/Growth Hybrid Markets
Houses here cost between $180,000 and $250,000. If you don’t mind trading lower cash flow and modest appreciation for better-quality tenants, investing here will put the passive in passive income and is good for long-term holds:
- Fultondale & Gardendale (ZIP codes 35068, 35071)
- Alabaster & Pelham (Shelby County; ZIP codes 35124, 35007, 35114, and 35144 )
Other Markets in Alabama Worth Considering
If you’re wary about the investor gold rush occurring in Birmingham but like the Southern climate and low property taxes and income taxes in Alabama, other cities you might consider investing in include the following.
Huntsville
Houses here are more expensive (according to Zillow, they average $290,453), but there is a solid employment base in aerospace, defense, engineering, and technology supporting high-income residents. Axios reported in July that defense manufacturer Redwire plans to extend its Huntsville operation by 164,000 square feet, adding 150 new skilled jobs.
Make no mistake: Huntsville is a long-term investment play, not a short-term one.
Mobile
Further south, Mobile offers a different take on investing in Alabama. Gulf Coast industries such as manufacturing, shipbuilding, and the Port of Alabama, and affordable prices (the median price for a single-family home is around $199,226) below the acquisition costs of other expanding Sunbelt metros, with rents of roughly $1,293, put this market in neutral territory cash flow-wise but dip into negative numbers when storm-related insurance and maintenance are factored in.
Montgomery
This benefits from employment in government, the military, and education. Again, affordable home prices (a median single-family home is just over $152,082, and average rents are $1,347) put this in possible positive cash-flow territory.
Investing here is about finding modestly priced properties in decent neighborhoods near a reliable employment and tenant pool. It’s less of a stampede than Birmingham but requires a more nuanced approach.
A Look at Memphis and Mississippi for the Closest Southern Comparisons to Birmingham
Memphis, Tennessee, and Mississippi are also well worth considering along with Birmingham if you like the idea of investing in markets away from the colder Northeast and Midwest.
Realtor.com ranked Memphis second behind Birmingham for net investor buying, with a median listing price of only $167,000. There’s not much to choose between the two cities. For landlords, the final selection might come down to neighborhood-level taxes, insurance, crime, and other day-to-day management costs, as well as the quality of the housing stock.
Mississippi is also reasonably affordable (median house prices are around $196,333). It has recently enjoyed high appreciation, although the added cost of coastal insurance is a big deciding factor in whether to invest here.
Final Thoughts: Resist the Hype and Make Sure the Numbers Work
It’s not difficult to see why investing in Birmingham is so appealing. In a market where very few of the numbers add up, Birmingham is a cash-flowing ray of sunshine.
But it is already a very investor-heavy city, and over 14% of its investors have sold to other investors. Why? Birmingham is not known for high appreciation, so if the cash flow is so great, why sell?
Often, boots-on-the-ground investing stories are very different from those written from the luxury of a laptop in an office. Investors have to consider things that don’t show up on an economist’s calculations: the cost of utilities, the officiousness of Section 8 and city property inspectors, and crime, along with the customary costs of vacancies, taxes and insurance, and repairs.
Running the numbers meticulously and comparing different neighborhoods, neighboring cities, and states will give you a clearer overall picture of which Southern city is best for parking your investment dollars.
One thing’s for sure: Birmingham should be in the conversation.
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