Mississippi Economy
- Economy finally starting to recover after Katrina
- As of late 2006, 5,000 to 10,000 living in tents, 30k-40k in trailers, 100,000 families displaced
- Gross state product and employment have surpassed pre-Katrina levels
- Reconstruction boom anticipated for the next 5 years

NASA adding a research facility, shipyard coming in with several thousand jobs

What do 9-11, Hurricane Katrina and Hurricane Andrew have in common?

Two out of the three created short term price corrections followed by a boom in economic activity. 9-11 and Hurricane Andrew turned out to be major buying opportunities for real estate investors

What do the Mississippi Riverfront, Hoboken and Jersey Riverfront, Dumbo and Brooklyn have in common?

The lesson to be learnt from Hoboken and these other towns is that no city develops just on one side of the river. These small towns benefitted tremendously over the past 10 years by virtue of proximity to New York City and have seen booming values. A similar unfolding of events is likely in Mississippi primarily because the U.S. government has a vested interest in ensuring that the port of Mississippi survives and commerce thrives in the area.

The U.S. government has a vested interest in reviving the area as the Mississippi is the gateway to delivering goods to the Midwest and Eastern states

Hurricane Katrina wiped out over 70,000 homes in the area

Sad to say, thousands of residents are currently living out of FEMA trailers, tents, or have been displaced and are commuting long distances to their job

There is a dire need for affordable housing

Affordable housing in the area that renters can afford to pay rents on and investors can cash flow are in the $120,000 - $140,000 range. Floor plans range from 1100 - 1400 sq ft and 3 to 4 bedrooms.

Rental Assistance program details

The governement has designated $250 million in rental assistance for investors that assist in rebuilding the Gulf Coast of Mississippi. Thee out of the four counties they have designated are Hancock, Harrison and Jackson counties.

The rental assistance program pays investors $30k in cash at or before certificate of occupancy, and the $30k rental assistance grant will be forgivable after 5 years.

If an investor decides to sell prior to 5 years, $10k will be forgivable if the renter holds for 18 months, another $10k at the 36 month period and the final $10k at 5 years.

The developers attorneys file the paperwork. We expect most buyers that can show some level of past experience or familiarity with real estate investment to be accepted.

In addition, the government will set caps on the amount that can be charged for rent to prevent price gouging desperate renters, with better incentives available to those investors that purchase multiple units.

Rents can be expected to average $1050-$1100 per month for 2 or more units, lower if only one unit is purchased.

Go Zone Depreciation Benefits in Year 1

The Go Zone act allows for accelerated depreciation in the first year of 50% of the depreciable value of the property. The benefit to investors in this scenario would be roughly $50-60k in depreciation allowable in year 1.

This depreciation can be offset against income on your taxes and can result in a significant reduction in tax liability. For investors is states with local, state and federal taxes, this benefit may result in as much as a $20,000 reduction in taxes due. Please consult your CPA to confirm your particular savings.

Gulfport is amongst the fastest appreciating cities in the country

Since the depressed prices over the past couple of years, Biloxi-Gulfport have had some of the fastest rates of appreciation in the country the past few months

Turnkey Property Management

For 10% of rents, property management is available to take care of all the necessary leasing and management requirements.

Preferred Lenders

The developer is offering a turnkey package for financing as well. Closing costs can be rolled into the loan amount thereby reducing the down payment requirement.

Insurance Taxes

Insurance Annual $1800 - $2500 depending on unit size and location
Taxes estimated to be $1500 per year

Since properties are located in non-flood areas, insurance rates are lower.

Down Payment

10% or less, depending on credit