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How to Find the Best investment opportunities in go zone investment real estate

By: Clint Jhonson

In determining the best go zone investment real estate, tactical decisions need to be made along with thorough research and understanding of go zone investment tax incentives, rental incentives and economic factors.

Step 1 – What Is the Go Zone Investment Act & how does it benefit investors

The U.S. Congress responded to the devastation caused by hurricane Katrina in December 2005 by passing the Gulf Opportunity Zone Act of 2005 (the "GO Zone Investment Act") that provides support to individuals and businesses struck by hurricanes Katrina, Rita and Wilma. This act also offers tax and other financial deductions for investors taking part in the regional process of rebuilding and restoration.

The Congress had previously passed in September 2005 the Katrina Emergency Tax Relief Act of 2005 (KETRA) that provided several tax code changes to benefit Hurricane Katrina victims and the taxpayers who helped the disaster victims. The GO Zone Investment Act has extended a large number of the KETRA provisions to the victims of Hurricane Rita and expanded some benefits to businesses that had been impacted by both hurricanes. GO zone investment real estate companies and investors have also been offered several tax and financial deductions for offering their support in this area.

Step 2 – Areas for investment when considering go zone investment opportunities

New Orleans has definitely received the biggest share of news coverage in the aftermath of Hurricane Katrina, but we need to understand that other areas of the Gulf Coast have also been hit just as hard.

The governor of Mississippi has described the Biloxi area as an American version of the atomic bombing of Hiroshima. Thus, a big part of the GO zone investment real estate has concentrated on rebuilding the casino barges that were literally lifted out of the water and the Biloxi-Ocean Springs Bridge that was practically destroyed.

Biloxi, Gulfport and vicinity areas are thus staging a dramatic and well-planned comeback and as the reconstruction is starting from almost zero (90% of the ocean front buildings have been destroyed) there are a large number of GO zone investment opportunities.

In the Biloxi area, an estimated number of 75,000 new homes need reconstruction over the next few years, and sadly less than 10,000 of these homes have been built in the present.

The rebuilding of an entirely new oceanfront for a city is unprecedented in modern history. This is definitely a rare chance for GO zone investment real estate businesses that now have the possibility to create a brand new home in a rapidly growing area without having to pay burdensome taxes.

Step 3 – Investment factors for various go zone investment real estate opportunities

In any real estate investment, timing is crucial. The ideal time to purchase real estate is at the start of an upswing cycle. Factors to consider are the number of people coming into the area, job creation, economic incentives, location and future growth prospects. It is our opinion that the investment characteristics of the Biloxi and Gulfport area are the most attractive in the entire go zone investment region due to the following reasons:

In Migration – By far the best rates of in migration are in Biloxi and Gulfport today. The ability to build casinos on land versus previously on barges has changed the dynamics of the industry. Casinos in Biloxi today are generating more revenue than they did prior to Katrina, and at least 8 additional casinos are in planning and building stages. This area has the potential to be the second largest casino and gaming destination in the country.

Job Creation - However, it’s not just about casinos. NASA, aerospace, defense, military, airforce, shipbuilding, steel and tourism are just a few of the industries that have strongholds in the area. Were it not for NASA at Stennis, the job loss during the months following Katrina would have been far worse. Job growth is currently sizzling – just the casinos are expected to generate an additional 20,000 jobs over the coming months. The growth of various business sectors combined with go zone investment incentives for real estate investing create a unique once in a decade opportunity for investment.

Economic Incentives – The federal go zone investment incentives being offered are the most attractive in the three county area of Hancock, Harrison and Jackson, all coastline counties where the devastation was greatest. Go Zone investment rental incentives for quick build homes currently range from $27,500 to $40,000 in the form of cash credits and forgivable grants. This is one of the best incentives offered by the federal government to investors in the past 25 years.

Rental Demand – The need for rental housing is dire. Casinos are trucking in employees on hour long drives because they cannot locate housing near the casino areas. Renters have been forced to stay in FEMA trailers due to the lack of rental units. It is for this reason that the government is offering the go zone investment incentives for investors to come in and provide rental housing units. The sub prime crisis will only exacerbate the situation, creating and accelerating the need for housing.

Location & Future Prospects – Job growth, population growth and in this case go zone investment incentives are the precursors of economic growth and property appreciation. It is widely expected that Biloxi and Gulfport have the opportunity to become the Las Vegas of the south in the coming years. Proximity to New Orleans creates the likelihood that a megalopolis will emerge in a few years and an ideal location for investment opportunities is the area between Gulfport and New Orleans.

Pricing & Cash Flows – Any investment at the end of the day comes down to pricing and cash flows. Investment activity has been particularly robust in the single family home market, with three bedroom single family homes being snapped up by investors for under $125,000. Go zone investment incentives create an upfront cash back opportunity of up to $40,000. Equity in these homes versus appraisal has been ranging around 15 to 18% below market value. Appreciation in the area is expected to be 50% over the next 5 years according to industry experts. And the rental rates generate monthly positive cash flow creating an incredibly unique go zone real estate investment opportunity.

Article Source: http://www.articlesinsight.com

Additional information about go zone investment and go zone investment opportunities is available at the Real Estate Investment Alliance website.

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