Cap Rate in Birmingham, AL

2026 Market Overview for Real Estate Investors

Last updated: March 2026 • Sources: Census ACS, Zillow, Redfin, county assessor

Avg Cap Rate

8.5%

#7 of 50 markets

Median Home Price

$125,000

Purchase price

Median Monthly Rent

$1,100

$13,200/yr gross

Rent-to-Price Ratio

0.88%

Strong (1% rule range)

Cap Rate Rating

Very Good

Above average. Make sure the higher return is not masking higher risk or deferred maintenance.

Market Snapshot

Population	196,353
5-Year Population Growth	-1.0%
Median Household Income	$38,000
Vacancy Rate	9.0%
Property Tax Rate	0.43%($538/yr)

Investor Takeaway

Birmingham combines high cap rates with the lowest property taxes in the country. The UAB medical district anchors job growth and provides reliable tenant demand in surrounding neighborhoods.

Top Neighborhoods for Investors

Where to focus your search in Birmingham, AL:

Southside/UAB

Cash Flow

University of Alabama at Birmingham medical district. Strong medical professional and student tenant demand. Ultra-low property taxes amplify cash flow.

Avondale

BRRRR

Brewery district with active gentrification. Renovation projects see strong ARV appreciation. Best BRRRR opportunities in the Birmingham metro.

Crestwood

Mixed Strategy

Family-oriented neighborhood with good schools. Stable long-term tenants and low vacancy. Modest appreciation with reliable income.

Woodlawn

BRRRR

Emerging neighborhood east of downtown with very affordable entry. Early-stage gentrification creates value-add opportunity for patient investors.

Quick Math

Estimated annual numbers for a median-priced property in Birmingham, AL before financing:

Annual Gross Rent$13,200

Less Vacancy (9.0%)($1,188)

Less Property Tax (0.43%)($538)

Less Est. Insurance + Maintenance($2,500)

Estimated NOI$8,975

Implied Cap Rate7.2%

Estimates based on median values. Insurance + maintenance estimated at 2% of home value. Actual results vary by property condition, neighborhood, and management.