226-228 Smith Ave

Rockford, IL 61107

$150,000B-

6 bd · 2.0 ba · — sqft · Built 1900 · MultiFamily · Pending · 33 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,794/mo
• Mortgage (P&I): −$787
• Tax + insurance: −$272
• HOA: −$0
• Vac / Maint / Mgmt: −$587
• Net cashflow: $1,148/mo
• Annual: $13,780/yr
• Cap rate: 15.48%
• Cash-on-cash: 32.81%
• DSCR: 2.46
• 1% rule: 1.86%
• Cash to close: $42,000

Investor read

• This is a 2 × 3-bed/1.0-bath units multifamily listed at $150k.
• At list price, monthly cash flow is $1k ($14k/yr) — positive. Per door: $574/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $150k).
• It's been on market 33 days — a 3% lower offer ($146k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $146k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 62/100 on livability (#876 in IL) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: schools F, crime F, amenities F.
• Rockford SD 205 (urban): math 12% / reading 16% proficiency, ranked #533 of 620 in IL (top 86%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 73% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+5.9%/yr); 157 active listings in the ZIP; 1 comparable units currently listed for rent nearby; solid renter incomes; 285 units permitted in Winnebago County in 2024 (0 in 5+ unit buildings).
• Winnebago County population projected at -20% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 2 sale attempts 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 $30k; list at $150k implies a 400% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 5.9% rent growth), your $42k cash investment doubles in ~4 years — after that, you're playing with house money.
• Cap rate 15.5% vs local median 6.1% in Rockford — 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.
• This rent runs 43% of the median local income ($79k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• It's been on market 33 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1900 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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?
• Crime grade is F in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• 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.