3231 Pepper Ct

Rockford, IL 61114

$219,900B

3 bd · 2.5 ba · 2,045 sqft · Built 1967 · SingleFamily · Pending · 1 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,109/mo
• Mortgage (P&I): −$1,153
• Tax + insurance: −$538
• HOA: −$0
• Vac / Maint / Mgmt: −$653
• Net cashflow: $764/mo
• Annual: $9,173/yr
• Cap rate: 10.46%
• Cash-on-cash: 14.90%
• DSCR: 1.66
• 1% rule: 1.41%
• Cash to close: $61,572

Investor read

• This is a 3-bed/2.5-bath single-family listed at $220k.
• At list price, monthly cash flow is $764 ($9k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $220k).
• Only 1 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $7k 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.
• Market conditions: 74 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals leasing fast (median 13d on market — plan ~1-2 weeks tenant-placement turnaround); 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.
• 4 sale attempts since 9y 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 $108k; list at $220k implies a 104% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $62k cash investment doubles in ~8 years — after that, you're playing with house money.
• Cap rate 10.5% 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.

Questions for listing agent

• Built in 1967 — 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.
• 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.