Looking for Insight into Investing in Rockford, IL

[Aaron Mikottis]

Hey everyone! I'm a newbie investor looking to get started with buy-n-hold rental properties in the Rockford area. I saw on a BP blog post that the area offers excellent cap rates so I am beginning to research the area. I'm going to be attending the Rockford Apartment Association meeting on the 15th of September but hopefully I can get a jump start on some insight from you, dear reader.

Here are some of the questions I'd like to ask at the meeting - if anyone could provide some answers, I would greatly appreciate it! If I am missing a key question, please let me know about that as well.

Who should I know?

What do you think of the Amerock Hotel Redevelopment?

Do you think that the Amtrack expansion will become a reality in the next five years?

What neighborhoods should I avoid?

What are the disadvantages to investing in Rockford?

Where do you see Rockford in the next five years?

[Craig Wilcox]

Hi @Aaron Mikottis,

Congrats on starting your journey.  You have some good questions but a little more specifics about your strategy would help as well.

Rockford is attempting to attract visitors through youth/amateur sports and tourism.  It is also getting locals downtown with the farmers markets and other special activities. The fact that investors are considering a hotel downtown is encouraging but more is needed to bring tourists especially with Chicago, Milwaukee, and Madison near by.

In my opinion, with the current Illinois debt and the conservative Governor's budget, the state is not likely to contribute much to the Amtrack expansion anytime soon.  That will at least effect the hotel timing but hopefully there is still enough potential to go forward.  There are investors betting on downtown already and rehabbing multiple buildings with retail on the main level and luxury lofts above.  Those units, whether for sale or for rent, are not turning very quickly.  

There have been some employment wins lately with the Woodward expansion in Loves Park, a new call center on State Street, and a aircraft mechanic school at the airport.  These help but there needs to be more opportunities to really make a difference in unemployment.

As far as cap rates, it will depend on your investment strategy. Currently, there is a low inventory of multi-family properties so it is difficult to find value, especially on the MLS. Single family foreclosures are consistently coming on the market in B class areas but are getting bought up quickly by investors so you need to move fast to get one but it is possible. There are a lot more available in C and D class areas but will obviously have higher risk and require more attention.

The biggest disadvantages are taxes and the lack of appreciation.  Property taxes are high in Rockford and a little better in surrounding Loves Park, Machesney Park, Cherry Valley, Roscoe, and Rockton.  Prices are currently around 2005 levels but have been increasing lately in the A and B class locations.  C and D class areas have been below 50k for decades.

This turned out much longer than I expected but I hope it helps.