In my years of due diligence and overall business in the Go Zone, I like to think I know what I am talking about. As a unique trait as a builder, I have a good website presence and am on e-mail list of many builders and marketing companies. If I had a nickel for every "Go Zone Preconstruction" "MDA SRAP" "FORGIVABLE LOAN" e-mail I received I would have a small fortune. The crazy thing is that many builders such as myself are not originally from Mississippi. Very few builders have put the same amount of due diligence into the market as we have. That said, there is a lot that is ignored and investors only knowing half of the facts, if any at all. I recenly was solicited by a cold call from a marketer and when I asked them a question regarding the MDA, they didn't even know what MDA stood for.
First things first. Investors need to know the facts. First, the go zone is not for everyone. Passive investors and real estate professionals are the easiest to qualify. Most W-2 earners cannot qualify for the Go Zone.
The MDA Small Rental Assistance Program is not guaranteed. In fact, we've been waiting nearly 8 months for their decision on the first round. Hopefully if you are reading this we are into the second round and things are going much more smoothe.
If you are south of Interstate 10 and building on slab, please get an elevation certificate and be certain your builder is elevating the slab at least 17 inches above the street lip. It would be to your advantage to build compliant to FEMA's Advisory Base Flood Elevation and you will only confirm this through an elevation certificate and verification on the revised FEMA maps. Fortunately our models of construction comply with all of this as we want to give the investors and homeowners the best exit strategy possible in the future.
Financing is another misconception. There is no 100% financing anymore and lenders that fund over 85% at this point are likely very expensive and the good faith estimate should be read thoroughly. It would behoove you as an investor to buy your loan down to 80% Loan to Value. The nice thing is that most preconstruction opportunity will appraise higher than what your contract price is for. Your loan to Value is based off of the appraisal, allowing you financing 80% at much less than 20% down. In most cases you will pay about 10% down plus closing costs.
There are many issues that have arisen in the Go Zone. I am finding that investors are getting so overwhelmed by e-mails and conflicting stories that they are talking themselves out of a fantastic investment opportunity. There is a realistic demand for tens of thousands of homes in the damaged areas of Mississippi. Having a unique location, location, location will help you achieve a solid investment purchase.
Please call us at (239) 872-5107 for a free consultation. Of course we would love your business as builders, but we would like to start with educating you on the area and referring you to the proper professionals to speak about personal qualifications for financing and Go Zone. Please visit our website and try the links provided in this article to browse updated news on the Go zone and other emerging markets. Remember, real estate is the biggest engine to creating wealth. It today's economy, Go Zone Investing is one of the best rental markets available for your portfolio.
About the Author
Scott Allan has become a quick success story in real estate. Starting at age 23, Scott has been recognized as one of Keller Williams Realty top 10 agents in 2005. In 2006 he was hired by TFS, one of the largest construction lenders in the construction where he was real estate acquisition director and consulted on the construction level. Now, at age 29, Scott is part owner of a construction company and serves as a national speaker and real estate
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