1218 S State Ave

Freeport, IL 61032

$125,000C-

3 bd · 1.5 ba · 1,512 sqft · Built 1917 · Other · Active · 235 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,313/mo
• Mortgage (P&I): −$656
• Tax + insurance: −$206
• HOA: −$0
• Vac / Maint / Mgmt: −$276
• Net cashflow: $176/mo
• Annual: $2,110/yr
• Cap rate: 7.98%
• Cash-on-cash: 6.03%
• DSCR: 1.27
• 1% rule: 1.05%
• Cash to close: $35,000

Investor read

• This is a 3-bed/1.5-bath other listed at $125k.
• At list price, monthly cash flow is $176 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $125k).
• It's been on market 235 days — a 12% lower offer ($110k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $110k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $864 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#302 in IL) — a middle-class / working-renter tenant base. Strengths: cost of living A+, health & safety A+, housing A-; Watch: schools F, commute F, employment F.
• Freeport SD 145 (town): math 11% / reading 12% proficiency, ranked #565 of 620 in IL (top 91%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 65% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1917 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 205 active listings in the ZIP; 5 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; 7 units permitted in Stephenson County in 2024 (0 in 5+ unit buildings).
• Stephenson County population projected at -29% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 3 sale attempts since 2y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• Current owner paid $14k; list at $125k implies a 793% gain — meaningful room to come down on a strong offer.
• Cap rate 8.0% vs local median 5.8% in Freeport — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.

Questions for listing agent

• It's been on market 235 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1917 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.