All Forum Posts by: Tim Hoffman

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

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

Matt,  Call me when you get some time.  I am the VP of the Rockford Apartment Association.  You can get my number there since BP will not allow me to put it here for you.

Tim, 

@Elbert D., I have been able to buy right so my CCR is infinite or VERY high. The last home I bought was a 2 BR in Loves Park, Il (a town just N of Rockford separated only by a Railroad track. I paid $22k, spent about $10k siding the garage, new roof on garage and updating the kitchen. When done, it appraised at $55k. My bank allows me to borrow 70% of appraised value so I was able to borrow all $32k invested. Now I own and manage with none of my own cash involved. (I generally do not take any cash out even if available. I want to own some day.) . This home rents for $775, taxes are about $1,500/yr, mortgage on a 20yr am is roughly $220/mo, insurance is roughly $500/yr, tenants pay all utilities. I set aside about $150/mo for repair/maint/vac/capital.

The house before that was purchased for $32k, invested about $1,500 and it appraised for $42,500.  That one rents for $725, $1600 taxes, $200 mtg, $450 ins and again, $150 set aside for rep/maint/vac/cap.  I have about $4k of my money in this home (including bank fees related to the mortgage).   Both of these houses are in what I consider middle to lower middle working class areas.

The last home I bought in an upper middle area was Dec 2015.  I paid $75k, put about $5k in and it appraised for $109k.  Rents for $1,200/mo, taxes are $3600, insurance is $550, mortgage is $525, tenants pay all utilities.  This one has gone up to about $115 in the last year so a bit of appreciation on top of the cash flow.

Like I said, Rockford is not such a bad place to invest.

Tim 

Hi all, I already messaged with @Antwaun Johnson and thank you for the shout out @@Charlotte Edwards.

I just wanted to answer @Elbert Dockery about the market in Rockford.  I am basically a buy and hold investor since 1999 and Rockford is a great place to invest.  Like every city, there are good, bad and ugly issues but overall things are good if you are looking for CashFlow.  Appreciation has been low or non-existant the past few years but that is changing and home prices are really picking up.  

If you want to be in low income you can buy a home all in for $20-$30k and rent for $600-$750 .

In the lower mid range you will be all in at $30-$50k and $700-$850 rent. 

In the Mid to upper mid range you will be all in $50-$75k and rent for $800-$1000

Finally in the lower part of the upper price range you will be all in $80-$100k and rent for $1,100-$1,300 per month.

Not bad compared to a lot of areas.  

Tim

Try Tom Howard at Superior Property Management.  

He is a good guy and very professional.  Tell him Tim Hoffman sent you.

I am an investor in Rockford.  What type of lawyer are you looking for?

Where is the property located?  So many questions.  Do you have a property manager?  Can they point you in the right direction?

Tim 

welcome to BP.  Besides this site, find a local group and get involved.

What if you participate in a split of the profits for managing it? 

If you wait until you inherit it, then you will get it at the stepped up basis.  You could then sell and owe no capital gains, or you could start to depreciate at the higher (assumed) value. 

In the meantime, your dad gets the depreciation benefits, you use cash flow to continue paying down, then split the profits anyway you decide.  Maybe he only needs $500/mo and the rest is yours.  

Just a few thoughts.

Tim

accountant, controller of a small manufacturing company.  I am / was a CPA so numbers just come naturally.