Rockford and investing in property (Roscoe, Rockton: mortgage, real estate, insurance)

[tyblossom]

I was looking at some posts about how the west side isn't that great crime wise etc. I'm wondering though if buying a property on the west side to rent out would be a good idea. I saw online that starting this past October they are planning a 5 year economic plan that looks good. Rockford Area Economic Development Council | Helping Employers Retain and Create Quality Jobs. The schools would probably be west junior high and Auburn high school. I'm just wondering if investing might be a good idea. You can just buy so much. I also happened to drive there last week to the airport. First trip and was so impressed with the airport and compared to Ohare is great if you can find a flight that's going where you want to go. They don't fly too many places, but with all the security junk going on, this was great...no waiting and tickets cheap. I'm just thinking that where I live (Mchenry area) that we're now getting so populated that going to Rockford is a good thing and the bad areas will have to turn around a bit if it things turn around and it starts growing. I mean I saw someone talking about the other places around Rockford being so crowded. Just curious what others think about investing in Rockford. I know East is probably better, but West is so much more affordable for a landlord.

[kmwheel]

I would say to go for it as long as you know what you're getting into. Remember that your insurance premiums might be higher because of the crime rates. I would think that if you got a good family to rent the place that would be half the battle. Have you considered doing a rent-to-own option? I think that when renters have a vested interest in the property they tend to take better care of it. You might have to also look into getting the property qualified for Section 8. My husband worked in the Rockford area as a military recruiter and he was often in Auburn High School. He said that it's probably one of the worst in the district. They have a JROTC program though!

What I feel is, the only way things can improve is if people are willing to invest some time and money into the area, even though it's not the best now. It's really important to do your research, but I think you are doing that!

[Havasu]

Do your homework. No to be mean but i think there are better areas to invest in.I would keep an eye on the area and if it improves then maybe invest but i sure wouldnt do it until i saw improvements.

[Jeff Hill]

I work with several investors that are from the burbs that have their rentals in Rockford and I'll tell you what I tell them.
Every large (when I say large I mean over 100,000 people) city has diversified areas. Some areas may be riskier than others. A home that is 30K looks attractive to any investor but it's worthless if you can't find a tenant. After you look on-line at some properties that catch your attention, go drive through the neighborhood. Pay attention to how many "for rent" signs you see out front of other properties. If you see a rent sign on every block, you can bet finding a tenant will be a challenge.


Good luck

[tyblossom]

Thanks. I'm concerned about the crime. I mean if I need to go into this area to rent it out, is it super dangerous like people shooting like in some parts of the city of chicago? Maybe I should consider another low income area like freeport. We don't have a ton of money and that's why we really would need to stick with a town where things are cheaper.

[Havasu]

Invest your money elsewhere not a run down house. LIke the above said if you buy a cheap house its worthless if you cant rent it or even sell it. They are $30,000 for a reason. Check out other ways to invest your hard earned money.

[tyblossom]

Well the house isn't run down at all, but it's in a bad area. I've lost money in the stock market in the past and would rather not risk money there.

[Havasu]

Originally Posted by tyblossom

Well the house isn't run down at all, but it's in a bad area. I've lost money in the stock market in the past and would rather not risk money there.

To me a Bad Area with a nice house isnt worth to much. Dont forget if you need to or want to sell it, can you sell if for what you have in it? Check out Roscoe,Rockton areas you might be able to get a ok place for around $100,000 that might be out of your budget but you will be able to rent it and get $100,000 out of it when you sell. If you buy something for $25.000 you might not be able to rent it and most likely wont be able to sell it and then your stuck with it empty.Your renters in Roscoe,Rockton will be a bit more classy also which means they will care more about your house. Thats my 2 cents Good luck with it.

[Jeff Hill]

Hey Ty, don't let pretend investors scare you off.

Make sure your real estate investment portfolio is diverse.

There are 2 types of real estate investments. Short term gain and long term gain.

The long term gains are the ones everyone seems to narrow in on. These are the "higher end" homes that you simply try to take a wash on the rent. Most of the time, you'll even take a hit. However, these are the homes that appreciate over time and will sell for a higher profit in the long run. These are the properties Havasu is referring to.

Then there are the short term properties...like the ones you were originally looking at. When you buy one of these, you can not expect to sell the house for a huge gain down the road. In fact, when it comes time to sell, you will more than likely be selling to another investor and you should settle for the price you bought it for, maybe just a hair higher. These properties are your short term investments because the rent you are collecting is a profit over the mortgage.

Just like your stock portfolio, real estate needs to be the same way.

Do yourself a favor and drive through the neighborhood you were looking at originally and see how many "for rent" signs you see. If there aren't that many.....go buy that 30-35K property and rent it out.

[tyblossom]

Hi Jeff,
Your example is exactly what I"m looking at doing. I'm seeing two properties for 50k and can make $1000 a month profit. I won't have a problem holding the mortgage if I don't have a renter in them, but of course if I can't rent it...then that's the problem. One unit is already rented, so I'm hoping that's a good sign. Thanks for all the opinions.