Biloxi Go Zone Preconstruction Investing... 

Now that everyone knows about it, still good?

Without a shadow of a doubt, Biloxi Go Zone real estate investing is a hot topic among message boards, marketing companies, etc.  As builders, we are constantly in the area and have come to a sad realization that the integrity is being stripped out of the investment due to several reasons. 

First, focusing on one confine area, and its subdivision has been my biggest concern.  Bayside Park is an up and coming community with tremendous potential.  More and more builders, intrigued by the attention are also starting to advertise and beg marketing companies to include them on their high traffic websites.  We came, we saw, and now we are moving on from Bayside Park.  We are going to service and complete the contracts we certainly have but we feel that right now, we have fulfilled our goal in providing affordable rental units for those that need it.  Time to move on and I think it would be wise for other developers to consider the same.

Biloxi took a tremendous loss of homes during Katrina.  That was nearly 3 years ago though!  So how long can we possibly talk about the Go Zone for?  Well lets look at the impact the financing industry has taken.  Had we been in the same situation about 4 years ago, I would say that saturation would have already mounted up.  Thank goodness banks smartened up and decided to pull the reins on subprime lending and required an investor to actually qualify for investment property.  That is controlling the redevelopment along the MS Gulf Coast.  Although it may be that 100,000 homes are needed there, it is certainly not all needed at the same time.  This is an estimate that could be needed over the next 3 years.  In defense, that is still a ton of homes. 

As more and more locals move back into Mississippi, we need housing to keep them here.  With over 50% of the MS Gulf Coast being renters, it a unique market just because of that.  So if you are asking if you missed the boat, I doubt it.  I highly do.  Mississippi will be a phenomenal place to invest your money for years. 

We are looking into smaller niche markets, closer to amenities and bargaining with sellers on land to get the land acquisition way less than MLS inventory.  We have also lowered our prices accordingly as cost of drywall has come down significantly.  Market value for a 3 bedroom 2 bath rental unit is $1050 per month in our new area.  With our pricing in conjunction with our lending reference, you only need $900 per side just to break even. 

Let's discuss lending for a sentence or two.  Investors looking for 100% financing need not apply.  It doesn't exist and for those that say it does, you are likely setting yourself up for a future foreclosure because it may be hard money at high rates and fees.  Therefore your acquisition plus your purchase fees will price you much higher than market value or what the real estate is truly worth.  Today, buying your loan to value (LTV) down to 80% is quite achievable.  Due to lenders basing the LTV off of the appraised value rather than the purchase price, your down payment to achieve 80% LTV is much less than 20% down.  Contact us by filling out the form on the left for a consultation on creative financing.  What does buying your loan down to 80% do?  Sure it pays off some principal so your debt service is naturally lower.  More importantly you will not be required to pay mortgage insurance, a killer in today's markets.  Due to the credit crisis, many mortgage insurance lenders have either cancelled their program or gone out of business.  The ones that still do exist, you may as well saw off your arms and legs and give that to them because that is about what they charge you.  On a purchase price of $230,000, if you buy your loan down to $200,000, most of the time that will achieve 80%, you will be saving nearly $200 per month in cash flow!  Just by putting down a few more dollars!

Bottom line, don't get caught up with what you read.  Over 1,000 websites offer an opportunity in the Go Zone, usually marked up well over builders retail price.  Marketing companies are now asking in the ballpark of 10% and higher in trying to make up an annual salary in just one sale.  I have to agree that marketing companies do a lot of work.  Building a website and achieving the rankings they have is hundreds of hours of work.  Builders should recognize that and pay them accordingly, but a happy median should be met for the sake of the buyer on the hook.

Investing in the go zone can be quite lucrative.  Know your markets.  Let's all work together to help the Mississippi Gulf Coast reach its economic goals.  See our product page for suggestions on what we are building in the area.