Mississippi Gulf Coast Affordable Housing

Mississippi Gulf Coast Affordable Housing RE Investment Guide May 2007

Real Estate Investment Criteria

• Positive Cash Flow


• Appreciation Rate (15.9%)


• Job Growth


• Population Growth


• Affordability ($114,900)


• Zoning (Casinos)


• Lower risk towards the bottom of the market


• Buy & Hold (Profit OK)


• GO Zone


• Location


• Timing


• Rental Market


• Commercial Market


• Great for 1st time & seasoned investors!

The Mississippi Gulf Coast

• Hurricane Katrina devestated the area with the loss of 64,120 homes as well as over 47,000 rentals.


• Expanded Casino Zoning to Foster Recovery (extended inland 800’)
  –In Biloxi alone, casinos have acquired 125 acres since Hurricane Katrina
  –Record breaking casino revenues for 6 of the last 7 months; 2 are all time records
  –Area rivals Atlantic City… and then some


• The GO Zone is helping too


• Mississippi wants you there

The InvestmentOpportunity…

• Due to the present housing crisis combined with the huge casino expansion taking place, the MS Gulf Coast is expected to be one of the hottest markets in the country.


• There arequality stick built homes at the lowest price available in the entire Gulf Coast Region. (and we have realtors in the area who are marketing them)


• The realtors in the area will get you pre-approved for a construction loan, acquire your lot, assign a builder, find the lowest priced insurance and refer you to a property management company or help you sell your property.

Why Hancock County / Bay St. Louis / Bayside Park?

• Most affordable lots within densely populated areas
• Infrastructure in place - including sewer
• The area suffered the greatest loss of rental properties
• Convenient to major thoroughfares I-10 & US 90
• Convenient to 26 miles of spectacular beaches
• Close to major employers, development projects and newly created casino sites as a result of dramatic zoning changes
• Centrally located in western edge of Gulfport/Biloxi MSA and neighboring eastern edge of New Orleans MSA
• Hancock County is rumored to be the future home of a new international airport
• It’s important to know… Bayside Park is NOT in a flood zone

Our Realtor's Diligence Process

• Identify regional areas meeting investment critera
• Research the area first-hand!!!
• Make government contacts
• Locate lowest priced lots in major growth and/or populated areas
• Determine what to build with affordability in mind
• Select several capable local builders
• Secure investor construction financing
• Select the areas best real estate agents and property management companies
• Analyze potential investor exit strategies (Flip vs. Buy & Hold)
• Create marketing material and campaigns
• Provide investors with contact information and resource material for individual Due Diligence
• Implement land acquisition
• Implement order processing system
• Assign and train client transaction coordinator
• Continually monitor and adjust for optimal results
  

Notable Recovery Press…

• MONEY Magazine
  –Hurricanes come and go, but coastal markets only go up
  –A University of Florida natural disaster and impact on home values study determined “people aren't really scared off” by infrequent occurrence.
• The Journal of South Mississippi Business
  –Hancock recovery goes from 0 to 60 (Bay St. Louis bridge reopened in May 2007)
  lWLOK / abc channel 13
  –Governor announced an India pipe manufacturer will make its first U.S. venture in Hancock County. The state offered a $9 million incentive package.
• SunHerald
  –Biloxi Mayor Holloway attends Southern Gaming Summit and shared with its attendees… “Biloxi is the engine and the fuel is the 800 foot onshore gaming legislation passed by the legislature and signed into law by the governor.”

Area Facts & Assumptions…

• We feel there are two possibilities
  –The timing is perfect
  –Buying now will be slightly ahead of the curve
• When compared to other areas, such as New Orleans, the MS Coast is on a much faster recovery path.
• Land and property values are already beginning to rise
• Significant population and job opportunities have begun to notably rise as of fall 2006
• Casino expansion and dramatic zoning changes are primary considerations for anticipated appreciation and rental increases (2006 appreciation was 15.9%)
• The MS Gulf Coast is comprised of (3) MSA regions with a combined population of 455,959
• FEMA deadline for full temporary housing assistance is August 31, 2007. After this date, arrangements will need to be made to purchase FEMA trailer or begin sharing expenses
• There are approximately 25,000 FEMA trailers still occupied of the initial 45,000
• Bayside Park elevations are between 11’ and 16’. It’s important to know that this area is NOT in a flood zone
• Bayside Park is comprised of some 3,500 single family lots
• Bayside Park is in a transition period with strict zoning code enforcement… no more trailers will be allowed
• In our opinion, this is a minimum 3 to 5 year hold investment

Casinos & NewDevelopment Projects

• Virtually all area casinos have been rebuilt or reopened. Several have even announced expansion plans
• We are aware of 6 new casino projects in various stages of development (That’s about a 50% increase!)
• There are numerous single-family, condominium, marina and commercial projects that have been proposed or approved
• However, what appears to be lacking is an emphasis on affordable housing!

MS Gulf Coast is Not Just About Casinos…

• The Mississippi I-10 corridor is also known for it’s aerospace technology with such major employers as…
  –NASA’s Stennis Space Center
  –Boeing-Rocketdyne Propulsion and Power facility
• It’s one of the most significant shrimping and fishing communities in the world
• Naval and private ship building

Bayside Park Exclusive Floorplans…

• The Oakwood: 2 bed, 2 bath, 1117 sq ft: $114,900
• The Orchid: 3 bed, 2 bath, 1311 sq ft: $124,900
• The Beachwood: 3 bed, 2.5 bath, 1536 sq ft: $169,900

Projected Income and Expense Statement

Purchase Price (The Orchid) $124,900 (Appraised at $140,000 - Built In Equity)
Estimated Closing Costs $ 4,000
Estimated Construction Interest $ 2,500
Total Investment $131,400

10% Down 20% Down
Mortgage Amount $118,260 $105,120
Monthly Income $ 1,100 $ 1,100

Estimated Annual Expenses
Mortgage Payment (IO, 7.25%) $ 8,456 $ 7,517
Property Taxes $ 1,200 $ 1,200

Management Fee (10%) $ 1,320 $ 1,320
Insurance (Includes Flood Ins.) $ 1,900 $ 1,900
Total Expenses $ 12,876 $ 11,937

Estimated Net Annual Profit (Loss) $ 324 $ 1,263 (positive cash flow)


Summary

• The MS Gulf Coast has made tremendous headway in the recovery process
• Population and job growth
• Tremendous need for affordable housing and rental properties
• Casino expansion alone makes this area worthy of investment consideration
• FEMA programs unwinding
• Positive Cash Flow
• Strong Appreciation and potential
• Anticipated rental rate increases to pre-Katrina levels
• Lowest priced lots
• Good Location
• Good Timing
• GREAT Floorplans
• Good 3 – 5 Year “Buy & Hold” Investor Opportunity

Forward-Looking Statements

Sections of this material contain forward-looking statements that are based on expectations, estimates, projections and assumptions. Words such as “expect,” “anticipate,” “plan,” “believe,” “scheduled,” “estimate” and variations of these words and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of revenue, earnings, cash flow, appreciation, etc. These statements are not guarantees of future performance and involve certain risks and uncertainties. Actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, including and without limitation:

–Changes in real estate market conditions;
–Changes in rental markets;
–Unforeseen changes in interest rates, insurance, and taxes.
–Natural and unnatural disasters.

Anyone considering the purchase of real estate as an investment should consult their own advisor and perform their own due diligence.

If you would like to learn more about investing in Gulf Coast areas and would like to work with a Realtor who knows the area first hand, Would rather have positive or at least break even propositions while your property appreciates in value over 3 to 5 years, and would like to be a part of the rebuilding process. While you are at it, take some time to do some research on "go zone" - for full time investors you may be able to write off your profit for 15 years!

Please let us know a little more about yourself by filling out this informational form.

Thanks

Kim