Birmingham's older neighborhoods are full of small multifamily: brick fourplexes on Southside, early 1900s duplexes in Highland Park and Norwood, and quadplexes in Homewood near Samford. Prices per unit are low by national standards, and rents hold up.
In short: LendingStreet finances Birmingham duplexes, triplexes and fourplexes with DSCR loans that qualify on the combined rent of all units, with no W-2s or tax returns. Loans start at $150,000, purchases go up to 80% LTV and the minimum credit score is 620. Budget property taxes at Alabama's rental assessment class, which is double the owner-occupied ratio.
Southside and the Highland Park, Forest Park and Glen Iris neighborhoods have many brick fourplexes and small apartment houses from the early and mid 20th century, close to UAB and the medical district. They rent to students, residents and hospital staff.
Norwood, Crestwood, Avondale and the West End have older duplexes and houses converted to two or three units. In Homewood, duplexes and fourplexes near Samford University and along the Edgewood area rent to students and young professionals, usually at higher prices than in the city.
In the eastern and western suburbs, side-by-side duplexes built from the 1970s on appear in Irondale, Bessemer and Hueytown, often at the lowest prices per unit in the metro.
Each city in the metro has its own zoning code. In Birmingham, two-family and multifamily housing is allowed in some residential districts and not others, and many older buildings exist as legal nonconforming uses. Converted houses deserve a careful look, since some added units without permits.
Ask for permit history or a zoning verification letter, and confirm the unit count matches what the appraiser and the tax assessor show. An unpermitted unit may not count toward rent.
Historic districts add another layer. Parts of Highland Park, Forest Park, Glen Iris and Norwood are in local or national historic districts, where exterior changes may need design review. That can affect renovation plans and budgets on older fourplexes.
Alabama assesses owner-occupied homes at a 10% assessment ratio and most rental property at a 20% assessment ratio. A duplex where the seller lived in one unit may carry a partial owner-occupied classification that will not continue after you buy.
The difference is significant on a DSCR file. The worked example shows the same fourplex with both tax figures so you can see why the seller's bill is not the right number to use.
Millage also varies by city. A duplex inside Birmingham, Homewood or Bessemer carries a different combined rate than one in unincorporated Jefferson County, and school-district levies differ as well. Pull the actual bill from the assessor for each address.
This example is illustrative and not a quote. An investor buys a brick fourplex near UAB for $420,000. Each unit rents for $1,000 a month, for $4,000 in combined rent. Insurance is $230 a month.
At 80% LTV the loan is $336,000 and estimated principal and interest on a 30-year term is about $2,349. Using the rental-class tax figure of $390 a month, the payment is about $2,969 and DSCR is about 1.35x. Using the seller's lower owner-occupied figure of $195, the payment would look like $2,774 and DSCR about 1.44x, overstating the result.
| Item | Seller's tax bill | Investor tax bill |
|---|---|---|
| Loan at 80% LTV | $336,000 | $336,000 |
| Estimated principal and interest | About $2,349 | About $2,349 |
| Property taxes | $195 | $390 |
| Insurance | $230 | $230 |
| Total payment | About $2,774 | About $2,969 |
| DSCR at $4,000 rent | About 1.44x | About 1.35x |
UAB is one of the state's largest employers, and its students, residents and staff keep demand steady for one- and two-bedroom units within a short drive of the medical district. Units with off-street parking and updated kitchens lease fastest.
In Homewood, Samford students and young professionals pay more for walkable locations, but turnover is higher. Lenders use actual leases or market rent for each unit, so a complete rent roll helps.
Lease timing matters near campus. Many Southside and Homewood leases run on an academic calendar and turn over in late summer, so a property bought in spring may have several units coming open within months. Underwrite on rents you can re-lease at, not just the current leases.
Alabama's Uniform Residential Landlord and Tenant Act sets rules on deposits, notices and repairs, and the state has no rent control. That makes rents easier to adjust at renewal, but good screening and maintenance still drive returns.
Alabama charges a deed tax on transfers and a mortgage recording tax on the loan amount, paid at closing through the county probate office. Factor both into your cash to close.
Birmingham and several suburbs also require a business license for rental activity, and some cities run rental registration or inspection programs. Ask the city clerk before closing so you are compliant from the first lease.
Many Birmingham fourplexes are 60 to 100 years old. Insurers ask about electrical panels, plumbing material and roof age, and some will not write coverage until updates are made. Spring storms and tornadoes make wind coverage a larger part of the premium than many buyers expect.
Get a quote during your inspection period and include it in your ratio. Buildings on steep lots may also need drainage work that an inspection can uncover. Sewer line scopes are worth ordering on any building more than 50 years old.
Southside and Highland Park also have five- to eight-unit buildings, which are still residential for DSCR purposes, though maximum LTV can be lower and varies by program; see our Birmingham 5-8 unit page. Nine or more units is commercial multifamily.
If you own five or more small properties, a blanket portfolio loan can combine them. Send the address, price, rent roll, tax bill and insurance quote and LendingStreet will run the numbers. Call (877) 298-1001 or use the form below to get a quote.
Yes. The loan qualifies on combined rent from all four units, with no W-2s or tax returns. Purchases go up to 80% LTV.
Alabama taxes owner-occupied homes at a 10% assessment ratio and rentals at 20%, so an investor's bill is often about double.
Yes. Signed leases count, and a market rent estimate can be used for vacant units on many programs.
Only if the units are legal. Bring permit history or a zoning verification letter.
No. Rents can be adjusted at renewal under the terms of the lease and state law.
Yes. Rate-and-term and cash-out refinances are available, with cash-out up to 75% LTV. Seasoning rules vary by program.
No. Our investor loans are business-purpose loans on non-owner-occupied property, so the loan is only for rentals you do not occupy.
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