By Michael D. Eadie
GulfStream Development Group, LLC.
August 13, 2007
In August 2005, the Southeastern coastal states of Mississippi, Louisiana, and Alabama were devastated by the worst natural disaster in the history of the U.S. These states are still digging out from effects of Hurricane Katrina. Storms like this are called “100 year storms” because they are thankfully rare. It has been two years since Katrina and the rebuilding of the Gulf Coast continues. To spur investment in the area several Congressional relief bills, among them one of the most powerful ever created for states dealing with redevelopment were passed and signed into law.
The Gulf Opportunity Zone — or “GO Zone” — Act, was signed into law on December 21, 2005. The Go Zone act contains significant economic incentives for investors to accelerate rebuilding the Gulf Coast and to attract new investments to the affected areas. One can clearly see the positive results of the GO Zone Act along the Mississippi Gulf Coast. The Go Zone act legislation offers investors substantial tax benefits. In fact you may be able to deduct 50% of the cost of building from your liability during the very first year. For more information on the GO Zone go to http://www.mississippi.org/content.aspx?url=/page/3020
There has been considerable progress in Mississippi yet there is much rebuilding to be done. The Governor has recently stated that there is a need for 100,000 homes to be built within the next year and others predict that there is a growing need for as many as 300,000 additional homes in the next 3-5 years due to the economic boom going on in this area.
The immediate demand is the result of the destruction of 64,000 homes and 47,000 rental properties. More than 101,000 Mississippians still live in FEMA trailers. In August 2007 FEMA is planning to evict 30,000 families from the trailers where they have been living since 2005. It is also estimated that 40,000 families are still living in temporary housing with family and friends because of the severe housing shortage. Do you think this might be an opportunity for residential real estate investors?
It gets even better. FEMA is now considering guaranteeing rents for displaced residents for up to two years. Payment will be made directly to the property owner if this comes to pass. Guaranteed rent you ask yourself? That is a pretty hard opportunity to pass up by an investor.
Serious Real Estate investors and advisors comb through massive amounts of regional data looking for that niche market, the diamond in the rough, the ground floor opportunity. The methodology and numbers crunching is not new. In today’s market the opportunities can seem rare. But there is opportunity out there and This is one I am directly involved in.
Mississippi is moving forward with reconstruction and economic development. One particular project that that I feel any serious investor should take a close look at and it is in Bayside Park, Mississippi. GulfStream Realty and Development. LLC (http//www.gulfstreamdevelopmentgroup.com) is offering a product directed at working class families. The Product is a 4 Bedroom, two bath, great room floor-plan and the lot with a Pre-Construction sales price of $135,880. The current appraised value of this home is $161,000. There is currently city sewer service and water service is provided from a private well. By all indications of the Due Diligence research the homes will rent for between $1300-$1400. At this NOI level it can be demonstrate that you can expect positive cash flow, instant equity and a long-term cash-on-cash return from this investment. This is the Diamond in the Rough many of you have been looking for.
This is not low-income housing but rather is designed for and marketed to displaced working class families. I stress affordable because this is NOT low-income housing. In addition to the great product that is in high demand and low supply there are many exciting market components to the Bayside Park story.
What is the first thing anyone should look at when investing in Real estate? Bayside Park, MS is located just minutes south of US-90 and I-10 and is centered directly between Biloxi MS and New Orleans LA. US-90 runs directly along the coast and services the booming Casino & Entertainment district as well as Kessler Air Force Base. I-10 leads directly to New Orleans. Each city is a 30-45 minute drive away. For displaced working class residents from either area this location offers a much closer commute than the 2 hour One-Way drive many are currently dealing with. It is also important to note that this is an area of high ground. The elevation is approximately 20 feet above sea level.
A few weeks after Katrina, Mississippi passed a law allowing floating casino barges to move ashore and build up to 800 feet inland -- a change designed to jumpstart the region’s economic recovery and protect the hotel resorts from future storms. The Casino and Entertainment industry will employ between 50,000-75,000 people within the next 12-18 months. In the long term consider this. The Mississippi Casino industry is second only to Las Vegas as a destination. Many believe that within 5 years it will surpass Las Vegas and become the #1 destination for Casino & Entertainment patrons. At this time many of the Casino’s and Hotels are housing many of the 50,000 current employees in house because of the severe housing shortage. Do you think there is an opportunity for the Residential Real Estate investor? Well again this is only part of this exciting story.
In addition to the Casino and Entertainment Industry expansion and the close proximity to New Orleans there are other economic market factors to consider. NASA's John C. Stennis Space Center (SSC), located in Hancock County near Bay St. Louis, Miss., (A 15 minute drive from Bayside Park) has grown over the past 30 years into NASA's premier center for testing large rocket propulsion systems for the Space Shuttle and future generations of launch vehicles. Additionally, the center has developed into a scientific community actively engaged in research and development programs involving space, oceans and Earth. For additional info on Stennis - http://www.nasa.gov/centers/stennis/about/index.html - The facility directly employs approximately 5000 high tech personnel. We are not talking about low income housing here. We are talking about affordable and available local housing for working class families.
Also there is Kessler Air Force base and Medical Facility. Keesler Air Force Base is the "Electronics Training Center of Excellence" for the United States Air Force. Located on the Mississippi Gulf Coast, the 81st Training Wing is host to 2nd Air Force, the 403rd Wing (AF Reserve) and home of the 2nd largest AF medical facility, Keesler Medical Center. Keesler trains 40,000 students annually in 500 courses, with an average daily student load of more than 3,500. Kessler is a lead Joint Training installation, instructing not only Air Force, but Army, Navy, Marine Corps, Coast Guard and other military and civilian federal agency personnel. According to the Economic impact statement for 2006 Kessler added 14816 new jobs to the area and has an extended affect on nearly 86,000 residents in the area. In terms of dollars the report states that the direct economic impact on the area in 2006 was to the tune of nearly $1.3 Billion.
Along with all of the major projects that you find you also need to consider the infrastructure business that will be required to provide goods and services to the growing population.
This is a very compelling opportunity for Real Estate Investors. GulfStream Development Group believes so much in the area that they have a controlling interest in 1000 buildable residential lots in Bayside Park and is planning on expanding their acquisitions activity in this area. GulfStream is building a new entrance to the Bayside Park neighborhood and a Community Clubhouse. GulfStream is also building a large warehouse to import and stage all building materials to avoid any materials shortages that other builders are experiencing. This is not a modular home or a manufactured home it is a site built structure.
So if you are looking for a great pre-construction opportunity in today’s real estate market you need to check out this pre-construction opportunity in Bayside Park Mississippi. To recap the opportunity you have;
Located directly between two major economic centers of activity
Located close to major roads and highways
Located in a thriving economic area of the U.S.
A high demand product in low supply
Positive cash flow
"GO Zone" tax incentives for investors
Instant Equity of over $20,000
Builder pays up to $2000 of interest payments during construction
Builder contributes up to $2600 in closing costs
Builder has a track record of success having built over 3000 homes in emerging markets
Builder has a property management division to make the opportunity turn-key
This may all sound to good to be true but I assure you it is the real deal. Do your homework and then get in touch with me to reserve your investment property.
Note: There is a limit of 2 homes per investor.
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Disclaimer: These reports reflect the views and opinions of the Advisors and are not necessarily the views and opinions of NARREIA.
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