Biloxi

[ryanpal]

Any members investing in Biloxi? This has been a pretty big discussion within my REIA group and I'm curious if anyone on the board is investing there. Feel free to add in comments of why this is or isn't, in your opinion, a good place to invest.

ryan

 

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[Hoop]

Sorry, nothing specific about Biloxi, but I have heard from multiple sources that South of the Mason-Dixon and East of the Mississippi is the region to be looking....except Florida, of course.

I poked around Jackson, MS a bit myself but didn't make any moves.

Is Biloxi considered part of the "Go Zone"?

 

[Diane Kennedy]

I have clients investing in Biloxi. It seems phenomenal. And, the tax perspective makes it even better.

Where are you located? What type of investing are you doing?

 

[S928]

Biloxi is always an attractive option since many people from that region flock there due it's location and casinos. As far as determining whether it's a good location to invest in, that truly depends on your needs and resources.

During my visit in March, I did notice a ton of for sale signs everywhere I looked and that was throughout the immediate Biloxi area, including Gulfport. The whole landscape changed a lot after Katrina and there's construction and rebuilding everywhere. That being said, prices have gone up drastically due to supply and demand.

What are you looking for? Flip? Cashflow? New construction?

 

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[ryanpal]

Looks like my reply was never posted.

Diane, I'm located in NJ and I'm pursuing preforeclosures with the intent to get into APT buildings.

S928, I would be looking for positive cash flow.

Ryan

 

[Edge]

Seems like there are a lot of people pushing pre-construction in that area. Sounds like a good deal with the tax benefits and the casino construction. I just don't really know how to tell if it is already saturated with overbuilding yet or not. The condo deals that I have looked at are comparable to Florida from a $/ft.sq. perspective and I think most people feel that Florida prices still have some room to fall.

Dianne - For the case of a preconstruction project, do you take the "Go Zone" tax benefit the year you put it under contract with a down payment, or do you wait until you close.

 

[ryanpal]

ah what the hell. here's the email i received. what botheres me is you need approval from the developer in order to assign the contract (is this a standard for precontruction?)

------Details of an email I recieved------
All in one – A real estate investor should always ask what does this property have that others do not? For Bacaran Bay, it would probably be easier to ask what it doesn’t have. Bacaran Bay will include a 75,000 square-foot casino, an 87,000 square-foot convention center, a 40-lane bowling alley, six movie theaters with stadium-style seating, a 5,000 seat concert venue, a 20,000 square-foot spa and fitness center, seven restaurants, 4 acres of pool decks, an 18-hole off site Arnold Palmer golf course and a 500 seat club.

Multiple “driving forces” – As you know, one of the things we like the most is that Bacaran Bay is a casino. The ability to purchase a unit directly in a casino in a casino-driven market is a very powerful play. The biggest reason someone travels to Biloxi is to visit the casinos – and now we have fulfilled that powerful demographic immediately. On top of that, the development has a convention center. This brings in a whole new set of visitors. On top of that, it has a 5,500 seat entertainment venue. This again brings in an additional unique demographic: people who have come to see the entertainment (live boxing, concerts, etc). Finally, the complex itself is packed with a phenomenal amenity package. This brings in another demographic: families and tourists who are in the market and want to stay in the complex that will have the most to offer. When we can get this many driving forces working together inside one venue, we start to get really excited because it means the best occupancy rates in the market.

Prime location – With all those amenities, it’s not as if Bacaran Bay needs any external revenue generators, but located as it is on the point, along the proposed trolley that will circle the casino loop, few locations are more desirable. It is within walking distance to several casinos and also within Biloxi’s historical district. Water is not far away, whether it’s the Gulf of Mexico or the Back Bay, but who needs real water when we have 4 acres of pool decks?

Furnished units – This list is almost as long as the amenity package. Mr. Torguson spared no expense. The entire furniture package is valued at $42,000, including everything from flat-screened, high-definition TVs and king-sized beds down to silverware. All appliances are included and the bathrooms will have an oversized tub and separate shower. This is all included in the price.

The “Big Three” –:
Price Discount
Lower cash deposit
Contract assignable with developer approval

On Bacaran Bay: your total deposit is 10% instead of 20%(for the general public) and the contract is assignable with developer approval. Price is very discounted since the unit was reserved at the very beginning an it was the whole group of people. So for the developer it made sense to discount the unita significantly. All three of these combined puts us in the most ideal investment scenario.


Next steps on Bacaran Bay (recall: pronounced Buh-CAR-in-bay – just like the word “car”)…

The purchase agreement is scheduled to be ready in some time in January. At this point the remainder of your 10% down comes into the transaction. Bacaran Bay has a nice long build cycle of 2 years +, during which there are no payments due and no mortgage. After the contract is taken care of there is literally nothing to do but sit back and wait. This project is a perfect example of why we love pre-construction.

Please go to www.Bacaranbay.com and look at the project with pictures and description of the amenities.

Also it is extremely important to understand why Biloxi and what is happening in this market.

Devastated by Katrina gambling on land was allowed there. Major casino companies of Las Vegas type are building in Biloxi huge casino resorts. Bacaran Bay is one of them but the only one in this place that will have a condo hotel. It allows a small investor like me and you to capitalize on the fact that gambling in this place is an extremely successful business .

Not only gambling revenue but also hotel business in this place is going through the roof.

Currently Biloxi has 10 operating casinos on so called Casino Loop- the most valuable piece of real estate in Biloxi. In the next 5-10 years 12 more casinos are proposed for building by Major Casino companies. One of them is Bacaran Bay.

Unit that I have for an assignment is unit 139 A. It is located on the 4th floor(in reality the 14th floor) due to elevation of the building. The first 10 floors are parking garage. It is a studio unit. From an investment point of view studio units make most sense. They can start generating positive cash flow from day one. My unit has an inner court and pool view. These units are priced better that the units facing outside.

My price for the unit is $193,410. General public price for the unit is $219,900.

My assignment fee for the unit is $4,000.00.

All you have to pay now is $7,500(reservation fee. It is included and part of your 10% deposit) goes to the escrow account of the Law firm and My assignment fee.

When hard contracts come in you have to pay additional 10% $19,341 minus-$7,500(reservation fee)=$11,841. That's it. No more payments until construction of the resort is finished 2+ years. Your contract is fully assignable with developer's approval. So if the unit appreciates enough during construction cycle you can reassign it to the next buyer and get your fee. If it does not then you close on the unit and give casino management power to manage your unit for the guests. Hold for the next couple of years and then sell.

 

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[S928]

ah what the hell. here's the email i received. what botheres me is you need approval from the developer in order to assign the contract (is this a standard for precontruction?)

Would you be looking to assign the contract, or purchase for cashflow? The Go Zone does make Biloxi even more attractive. Yet, remember to also consider hurricane insurance when calculating total cost.

...If you were looking for cashflow, you'd be better off if the condo was a daily rental as higher paying jobs and long term tenants are harder to come by in that region, just my observation of being familiar with that region.

 

[Diane Kennedy]

Dianne - For the case of a preconstruction project, do you take the "Go Zone" tax benefit the year you put it under contract with a down payment, or do you wait until you close.

The property needs to be "in service." In other words, if it's a rental, it needs to be available for rent and then you get the benefits.

 

[ryanpal]

Would you be looking to assign the contract, or purchase for cashflow? The Go Zone does make Biloxi even more attractive. Yet, remember to also consider hurricane when calculating total cost.

...If you were looking for cashflow, you'd be better off if the condo was a daily rental as higher paying jobs and long term tenants are harder to come by in that region, just my observation of being familiar with that region.

i would be looking for cashflow. however, i don't like restriction in case i wanted to get my money out due to change of plans.

ryan

 

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