House hacking the most dangerous city in America

[Justin Sheley]

Four years ago my wife and I took the plunge into real estate by househacking in the most dangerous city in America, and no @Joshua Dorkin it’s not Detroit. At the time we knew absolutely nothing about real estate and what to look for in a property. In full disclosure I would like to present my newbie card upfront because everyday we are learning more about this business. However, a real estate agent we just happened to meet at an open house presented us with the idea of buying a duplex and living in one half to offset our mortgage. I was instantly enamored with the idea and after showing us a few multifamily we bought our first home. A two-story brick home on a quiet street, just a block away from a golf course. Little did I know, we had just begun our journey investing in the most dangerous city in America.

Fast-forward to 2016 and we were still living in that two-story duplex, but that’s when we began to get serious about real estate. We repeated the process by buying another multi-family and living in one side, and during the last year we have grown to eight units total, including my families first single family, which is going to be a live-in flip for us. And we have chosen to plant our roots and do all this in the most dangerous city in America, Rockford Illinois.

There have been a few key moments in the last year where I have really had to stop and ask myself if I was crazy for leading my family down the real estate path in Rockford of all cities. Perhaps we should have relocated first, or invested out of state with a property manger. For those of you unfamiliar with Rockford, we just surpassed Little Rock, Arkansas as the most dangerous city in America with a population between 100,000-200,000 people. According the FBI, aggravated assault and robbery in Rockford have risen since 2013 by 30% and 22% respectively, with the murder rate only increasing slightly. Rockford does have a rich history, I mean we are the birth place of the sock monkey! And city was also known as a hard working manufacturing city, but many of those large organizations have long since left Rockford. Taking thousands of jobs with them, and leaving behind large industrial buildings that now sit vacant. Perhaps I should’ve taken my family to a more emerging city, perhaps I’m crazy for investing in a city with a high unemployment rate and a shrinking population. I understand that location, location, location is very important. So why the heck would I stay in Rockford, IL? Despite everything going against Rockford, this is why I love my city and don’t plan to leave.

1. I know Rockford

I grew up in Rockford, and I personally have a strong belief in investing in your own backyard. Maybe my opinion would change if I lived in San Francisco, but the ability to understand the area in which you are investing can be the difference between a good deal and a major headache. In Rockford, I have found that there is no shortage of 2% deals. And to the outside investor this may seem like a great opportunity. However, the difference of a couple blocks can make the difference between a 2% cash cow and a 2% money pit. If you don’t have boots on the ground to tell you which hospital is closing, what area the city is pouring money into next, or information on crime that Trulia can’t show you on a map; then I strongly advise you against investing in an area in which you are unfamiliar. Now I’m not saying it can’t be done, and I’m not saying someone isn’t making money in Rockford on streets I would’nt touch. I already present my newbie card at the beginning of this so one could argue against this, but my point is that you probably don’t know an area better than the city you grew up in. So before you jump in, you better know your area.

2. Rockford isn’t going anywhere.

Despite the struggles Rockford has endured, with a population of 148,278 it is still the third largest city in Illinois and isn’t going away anytime soon. In fact, as an investor I view Rockford as a hotbed of individuals who are consumers and will continue to rent. With the combination of the millennial generation buying fewer houses, and the local demographics leaning heavily towards renters, I feel very confident that we will continue to have a large pool of people to fill our properties.

3. I choose not to buy into negative hype.

I’m still a pretty young guy, but it blows my mind how social media shapes so many peoples perspectives today. There is so much white noise trying to tell us what to think, that we need to make a conscious choice to think for ourselves and come to our own conclusions. My conclusion about Rockford, it’s not as scary as people think. I have never once felt endangered in Rockford, and really it’s a matter of using common sense. Know your area, and don’t be in the wrong place when you shouldn’t be there, and protect yourself (go get some GO-Magnets). I know that may oversimplify the issue, but this is our home and as a whole, Rockford is a city that believes it can grow and improve. Our company is called “ReNew Rockford” and we want to be a part of the revitalization of our area. So if your doubting if your backyard is worth investing in, stop listening to the hype and determine where in your city you can make a difference while also making a wise investment.

Ultimately, househacking the most dangerous city in America has been the best experience of our lives for my wife and I. We are making our way towards financial freedom, and it’s so exciting to know that we can play a larger role in preparing for our future than dumping money in a mutual fund and hoping for the best. I would definitely suggest that any newbie consider househacking your first home. If you don’t know your city demographics well, you certainly will learn something about it during the process of selecting your home and selecting your neighbors. The househacking dynamic is not always an easy one, but you will learn so much about dealing with a tenant and understanding exactly the environment your tenants are living in. Hopefully this creates the foundation needed to become a great landlord moving forward.

So what are you waiting for? Most dangerous city in America? Who cares. Educate yourself throughout the process and jump into your first deal! I’ve never felt more confident in my future than I do now after committing to real estate. Take the word Rockford out of this article and apply it to wherever you are. Reject the negative hype and go out and make it happen. We’re certainly doing our best to do that here in Rockford, and I would love to learn about how you’re making it happen in your backyard. BiggerPockets has been such an encouragement and resource that I’ve decided to try to make a more conscious effort to share our story. I’m sure we will have many ups and downs, but ultimately I believe our efforts will be worth it. My family isn’t living “the dream life” yet, but we’re well on our way.