A RE newbie looking to invest in Rockford, IL

23 Replies

Hello all,

I'm an out of state newbie investor looking at a couple properties in Rockford, IL and would like to get some local insight and help before I pull the trigger. The properties i'm looking at look good in the pictures, buying cost and potential cash flow but a part of me is saying..."If it was this easy, EVERYONE would be doing it". The last thing I want to do is go in on a "good looking" deal that local folks here on BP could easily point out red flags in. I would love to be able to speak with a local Rockford, IL investor and share a couple minutes in a phone call. I know people have busy and demanding lives but any potential help or advice is greatly appreciated. Thanks for taking the time to read.

Chidi

Hi Chidi-

I will not pretend to be an "expert" in Rockford. (I live about 45 minutes east of there)

My first question to you, is why Rockford? Unless you know something I do not, there is likely no potential for appreciation. I have shown property in Rockford, there are some "slumly" areas, pardon the expression. I haven't looked at prices recently, but last time I checked there were houses selling for the price of a new Chevy.

Maybe tantalizing, but surely there are better areas nationwide!? Also as others will chime in, being a landlord of "C" or "D" class areas is tough enough. You want to do it as a newbie from 2000 miles away? WHY? haha

Thanks for responding Eddie. I was simply looking around the Illinois area...my Mom was originally from there and the prices looked attractive. The duplex I was looking at was in good condition according to the pics, the street looked neat and the price was favorable as well. It definitely didn't look D class to me...maybe it was C. Is my newbieness showing very strong right now?!? lol.

@Chidi Dillibe
Welcome to BP and best of luck in your real estate investing!
A great place to start is https://www.biggerpockets.com/meet which you can use to find like-minded people in your area.
You'll find some helpful tips at https://www.biggerpockets.com/starthere.
See you on future threads!

Hi Chidi,

I am local and can agree with Eddie for the most part.  There is virtually no appreciation in Rockford for several reasons including high property taxes and poor performing schools.  The city is trying to improve but it has been extremely slow with no defined path of progress.

There are a lot of nice looking houses selling at low prices with decent rents but they are low C or D class areas.  There will be a lot of drama and turnover on these properties so the choices for property managers in those areas are slim. 

Where I and other investors have found some value is just north of Rockford in Loves Park and Machesney Park.  There is more demand here because, in general, the schools are better and crime is lower.  It is one of the few areas attracting new business as well.  That demand also pushes the prices up of single families reducing the cash flow.   

Right now, and for the foreseeable future, northern Illinois in a pure cash flow market.  Meaning, don't buy anything unless it provides good cash flow the moment it is rent ready.

Craig

Thanks for responding Craig. When I was looking at and around the Illinois area it was purely from a cash flow perspective. I wish No. Illinois had my So. California appreciation effect! I'll definitely take a look at Loves Park and Machesney Park though. If I find something that catches my eye i'll definitely contact you.

@Chidi Dillibe - I agree with @Craig Wilcox about Loves Park / Machesney Park areas. I spent two weeks in that area last week scouting out the real estate opportunities, and there are a lot of rental properties, condo associations, mobile home parks, etc.

The nice thing about the area is that, although the state itself is having issues, Loves Park and Machesney Park still have quite a bit of business that won't be leaving any time soon. There are plenty of manufacturing facilities to keep jobs in the area, and good access to many of the major roadways. With a fairly strong job market, there is a lot of room for a rental market. That being said, there is also quite a bit of competition in the area for rental units.

If you're looking in the Rockford area, look to the outskirts where the properties are newer and the rental market is starting to grow.

Hi Chidi,

I am a local investor and invest in Rockford, Loves Park, Machesney Park as well as Belvidere and Winnebago (town of as this whole area is in Winnebago county).

Everyone is correct to one extent or another.  Do not buy for appreciation.  while prices have gone up recently, we are still BELOW the pre-bubble crash pricing.  All but about a dozen of my units are in Rockford and produce great cash flow.  There are areas that will have more drama, turnover and therefore costs but like everything, there are good and bad in all areas.

What street is your potential purchase on?  What is the closest intersection?  I can tell you if I would invest there or what my assessment of the area is, (A, B, C, D).  

Do you have a property manager already lined up?  Maintenance help?  Realtor? 

Tim

Hello Tim,

Thanks for chiming in. One property is on Elm St. between Central Ave. and Avon St. The other is on Blake St. almost on the corner of Central Ave. I don't currently have any manager, maintenance or realtor in place. Just simply looking at potential properties at this point. 

I've got one house in Rockford, and live out of the country, so when my husband looks at properties online he sees that they're super cheap and gets all excited. But then I tell him that, no, I won't buy in that area. He was really concerned about the schools, but our realtor told us that renters are already sending their kids to the schools; they're all about the same there.

We're staying on the east side of the city and then in surrounding communities. It took about two months to get it rented out, which was a bit disappointing, but our current PM seems to have high standards which we did agree with and he didn't have to lower the rent (which I almost asked about doing).

I'm not an expert, just getting started and planning to buy another in the next few weeks (while I'm in town).

Chidi, for what it is worth, here is my 2 cents.

Get a property manager first, then ask them about the home / area you are looking at.

I have 3 houses on Elm st, 1 on Central and others in that area.  I would rate that area a D area.  Low income, about 20%-30% homeowners and the rest rentals and home prices are stagnant, possible 1% growth per year.

My guess is that you will have higher than average turnover, higher than average repair /  maintenance, higher than average DRAMA, and higher than average collection issues.  Not to say that scenario is a guarantee but I would definitely plan on it and if it does not happen, enjoy the bonus.

Full disclosure, I am selling one of my houses on Elm on a contract, just evicted the tenant on Central and my other 2 Elm St houses are rented Section 8.

Some local property managers will not take homes in this or similar areas unless you have other, more desirable, units to bundle with it.  That is why i suggest getting a property manager first then working with them.

On the plus side, you can buy a turn key property in that area for $20-$30k and the rent will be approx $600-$650 for a 2 BR, $650-$750 for a 3 BR and $750+ for a 4BR depending on condition, amenities, utilities included and so on.  

Hope this helps.

Tim

Hello all, I am a newbie investor in Rockford also. I was surprised to see this discussion because it's the first I have seen regarding RE in the Winnebago County.

Rockford does have it good "patches" where you could buy properties for the cash flow. I found a duplex already occupied and the tenants were on 5yr leases. (Long term tenants = low turnover and guarantees cash flow), but someone bought it with cash and I lost that deal.

According to my preference, the duplexes are not priced to make much profit at the current rent. The quads may be the best investment. If you look at the east side of town (east of alpine) you would fine higher rents and long term tenants. Anything on the west side may require Section 8 to maximize the profits.

For those of you in the Rockford, are there any local events/meetings near by for RE?

Hi @Dwayne Wilson ,

Welcome to BP!

There are are a couple of Associations in the area including The Rockford Apartment Association and The Rockford Real Estate Investors Association.  You can go to their websites for more information on events.

I just posted a networking dinner meetup on July 31 at 6PM for the Winnebago Investors Network.  We are a group of active investors that get together to network and mastermind.  You can set up an alert for WIN EVENT and get notified when new events, including rehab tours, are posted here on BP.

See you around the network, Craig

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Respectfully, I could not disagree more with the comments - especially out of towners who do not live in our market. Ez to pick on the negative without having facts: Here are some things to ponder:

1.) Last month Rockford was rated # 1 in the State for adding jobs 6500 that is a staggering statistic

2.) Within the last 6-24 months there have been several thousand high paying jobs added to our market including airport mechanics . medical field ( 3 new hospitals being built or $80-500M dollar additions )  utility companies - high paying manf jobs etc...

3.) I cannot speak of the "west side _ which is considered west of the rock river not west of Alpine which as one post said is mainly C/D properties with little appreciation but great cash flow. I have 31 SFH and only one west of the river and I have has the same tenant for 5 years very nice clean prop.

4.) I'll take Rockford over any community for its conservative family values - amazing park districts  - downtown turn around and sure taxes are high - schools are improving. Love my city where I grew up and have grown our companies.

5.) I have mainly B and a few  B-C+ props and the posts regarding appreciation and values again is untrue. Eg... all but 3 of may purchases have been since 2015 and having just sold 2 this year the 2015 purchases ave appreciated nicely based upon my sales - somewhere in the 15-30% range. Im getting ready to list a home for 185 that appraised for 145 not quite 2 years ago - I'll take that all day every day! I have about 1/3 in the loves Park /Machesney park locations the rest in ROCKVEGAS!

6.) Cash flow on our props are STAGGERING unlike anything I have seen in the 38+ years we have been investing. Some of our averages of the 31 props we have : rent $1140 - cash flow $304/ month - Values 105K - vacancy rate since 1-1-2016 1.09% -70% LTV. These cash flows are based upon 7 year fully amortized loans and 15 year amortized loans. I suspect if we did 30 years we would be pushing close to $500/monthly cash flow.

Happy Hunting by now curious if you have made any purchases as it's been 10 months since this thread started.  

I'm a resident of Rockford, Illinois but I do not own any investments myself. I can tell you that there are good and bad areas of town for investment, and since you indicated you're from well out of town, you need to find yourself a good property manager to give you the ins-and-outs of the metro area. Prices are incredibly cheap, but that's a reflection of the overall job market. This area has been depressed ever since 1980,and while there has been some recovery at times, it lags well behind the national average. The schools aren't particularly good, though there are some decent private and religious schools in the area plus there is a magnet school which is aimed at academically gifted students. We are building another hospital which is expected to open sometime next year, and another one of our hospitals went through a major expansion,so there are definitely more jobs being created in health care.

I wouldn't invest here in hopes of appreciation, as prices have barely budged,and even higher percentage appreciation gains are relatively small in actual cash. But if you're looking for cash flow, and you do your due diligence on properties, there a a ton of hidden lucrative gems you can find in the area, particularly in the northeast and southeast parts of town.

Originally posted by @Patrick Huey :

I'm a resident of Rockford, Illinois but I do not own any investments myself. I can tell you that there are good and bad areas of town for investment, and since you indicated you're from well out of town, you need to find yourself a good property manager to give you the ins-and-outs of the metro area. Prices are incredibly cheap, but that's a reflection of the overall job market. This area has been depressed ever since 1980,and while there has been some recovery at times, it lags well behind the national average. The schools aren't particularly good, though there are some decent private and religious schools in the area plus there is a magnet school which is aimed at academically gifted students. We are building another hospital which is expected to open sometime next year, and another one of our hospitals went through a major expansion,so there are definitely more jobs being created in health care.

I wouldn't invest here in hopes of appreciation, as prices have barely budged,and even higher percentage appreciation gains are relatively small in actual cash. But if you're looking for cash flow, and you do your due diligence on properties, there a a ton of hidden lucrative gems 

Just so I'm clear you own nothing in our market and are giving advice? Thats absurd - you have no as in zero qualifications. I have lived here for 54 years and we are a big small town with ample opportunities. Do your homework about jobs next time you misquote Rockford - here are a few facts: Close to 1000 jobs created at our airport within the last 2 years / nearly 500-650 jobs added in the medical field  within the last 12 months / our electric company has added another 400-500 high paying jobs in our marketplace  within the last 18 months . All these jobs are high paying jobs most of which do not require a college degree. Our avg home this year sells for around 140,000 YTD back in 2010 it was around 90,000 - thats a 50% appreciation rate within the last few years. Rental rates are minimum $1/sf / month. All towns have issues ours included - non qualified rants like yours are uncalled for and irresponsible!

Yes I own ample properties in our market both City County and surrounding towns and am sold on ROCKFORD!

Actually, I want to respond to this post, as you're claiming I have no credibility since I don't currently own property in the area. I would answer that being a resident of Rockford and having grown up here myself makes me as qualified as you are to give advice about the housing and job market in this area. I even mentioned that we are creating more jobs in health care, and we are creating more jobs in aviation. However, most of the job creation in this area has been driven in low paying service occupations in retail and food/hospitality, and if you have paid any attention to retail in the past few years, you know a lot of stores are in great peril right now. We have already lost Bergner's, Kmart, and Toys R Us during the past year, and we are likely to lose Sears after the Christmas holiday. We also just lost two Servicom call center offices in the last month. I don't want to imply that Rockford is going to hell in a hand basket, but these losses of jobs do affect housing in the area including rentals. In addition, Rockford saw the highest percentage population decline since the 2010 census. I'm not telling anyone not to invest here; I'm just saying that anyone investing in this has to do their due diligence if they are planning on either investing for appreciation or cash flow. I personally believe cash flow is a better investment in this area.

@Chris Youssi Is completely correct, being a resident of Rockford doesn't make you qualified in any way to access the housing market. If that was the case maybe me and Chris should just ask our tenants how they feel about the housing market. We have lost Toys R Us just like every other city that had one lol, Bergner's has been closed for less than 30 days and the mall has already leased the bottom floor and construction has started. I could go on and on but you seem to have made up your mind. 

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