Birmingham, AL — Rental Investment Analysis
🟢STRONG— excellent cash flow marketData: HUD FMR FY2024 + Zillow ZHVI April 2026 + Freddie Mac rates. Last updated June 2026.
Investment Summary
As of 2026, Birmingham, AL has a median cap rate of 8.4%, making it one of the top cash-flowing rental markets in the United States.
Birmingham is one of the strongest cash flow markets in the data. With a median home price of $136,372, entry costs are low — making it accessible for beginning investors or those buying multiple properties. With 3-bedroom rents around $1,400/month, the 8.4% cap rate tells the story. Expect around +$199/month cash flow after mortgage, taxes, insurance, and reserves.
The market passes the 1% rule (1.02%), which is increasingly rare and signals strong rent-to-price fundamentals. DSCR of 1.31 means the property's income comfortably covers debt service — DSCR loans should be easy to qualify for here.
Bottom line: Buy here if you want reliable monthly income. Birmingham is a cash flow market — don't expect rapid appreciation, but the checks come in every month.
Data sources: HUD Fair Market Rents (FY2024), Zillow Home Value Index (April 2026), Freddie Mac Primary Mortgage Market Survey.
Cap Rate
8.4%
Above average
Monthly Cash Flow
+$199
After all expenses
Price-to-Rent
8.2
Investor-friendly
DSCR
1.31
Passes lender test
Key Metrics
- Median Home Price
- $136,372
- Average Rent (3BR)
- $1,400/mo
- Price-to-Rent Ratio
- 8.2(good)
- 1% Rule
- 1.02%(passes)
- Cash-on-Cash Return
- 8.5%
- Vacancy Rate
- 8.0%
Market Strength
- Unemployment Rate
- 2.8%(-1.5% vs national)
- Rent Growth (YoY)
- +2.9%(national avg)
- Population Growth
- -0.2% YoY
Property Tax Rate
0.39%
of assessed value (AL avg)
Median Income
$56,956
household (AL avg)
Rent-to-Income
29.5%
Affordable
Section 8 Max Rent
$1,400/mo
3BR voucher payment
AL Investor Climate
Landlord Friendly
8/10
State Income Tax
Has state tax
Property Tax
0.39% effective
Population Trend
-0.2% (3yr)
Population Movement (Tax Year 2021→2022)
Net Migration
-630 households
SHRINKING
Total Inflow
231,866
households moved in
Avg Income (New Residents)
$106,055
per household
Where they're coming from:
Where residents are leaving to:
Net outflow may indicate weakening demand — but can mean lower prices and higher cap rates.
Best Zip Codes in Birmingham for Investors
All Zip Codes in Birmingham
| Zip | Cap Rate | Cash Flow | Home Price | Rent (3BR) | DSCR |
|---|---|---|---|---|---|
| 35221 | 21.3% | +$755 | $60,817 | $1,420/mo | 3.33 |
| 35207 | 19.5% | +$628 | $57,645 | $1,240/mo | 3.05 |
| 35218 | 16.6% | +$617 | $72,661 | $1,350/mo | 2.60 |
| 35204 | 15.7% | +$543 | $70,254 | $1,240/mo | 2.45 |
| 35208 | 15.7% | +$631 | $81,583 | $1,440/mo | 2.45 |
| 35211 | 15.5% | +$573 | $75,622 | $1,320/mo | 2.42 |
| 35061 | 14.6% | +$674 | $98,283 | $1,630/mo | 2.29 |
| 35206 | 12.7% | +$551 | $104,400 | $1,530/mo | 1.99 |
| 35130 | 11.9% | +$468 | $100,897 | $1,400/mo | 1.87 |
| 35234 | 10.7% | +$354 | $98,375 | $1,240/mo | 1.68 |
| 35063 | 10.1% | +$331 | $107,793 | $1,290/mo | 1.58 |
| 35006 | 9.1% | +$303 | $136,372 | $1,490/mo | 1.42 |
| 35212 | 8.3% | +$199 | $121,398 | $1,240/mo | 1.31 |
| 35235 | 7.5% | +$170 | $186,439 | $1,740/mo | 1.17 |
| 35023 | 7.2% | +$118 | $171,100 | $1,550/mo | 1.13 |
| 35205 | 5.3% | -$204 | $229,764 | $1,640/mo | 0.83 |
| 35062 | 5.2% | -$172 | $180,054 | $1,270/mo | 0.82 |
| 35233 | 5.2% | -$308 | $312,209 | $2,190/mo | 0.81 |
| 35172 | 5.0% | -$211 | $182,137 | $1,240/mo | 0.78 |
| 35031 | 4.5% | -$319 | $198,279 | $1,240/mo | 0.70 |
| 35049 | 3.8% | -$481 | $222,192 | $1,240/mo | 0.59 |
| 35203 | 2.1% | -$1,140 | $322,485 | $1,260/mo | 0.34 |
| 35243 | 1.9% | -$2,190 | $584,108 | $2,130/mo | 0.30 |
| 35242 | 1.9% | -$2,119 | $563,946 | $2,050/mo | 0.29 |
| 35222 | 1.8% | -$1,515 | $395,118 | $1,400/mo | 0.28 |