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Since being destroyed by Hurricane Katrina in the summer of 2005, Biloxi, Mississippi has undergone significant economic growth. Biloxi's economy is better than it was prior to the storms. Thanks to a shortage of real estate -- and government incentives to investing the form of tax breaks (also known as the Gulf Opportunity Zone Act or "Go Zone" Act) -- Biloxi will continue to grow over the years.
A critical housing shortage
Hurricane Katrina destroyed Biloxi, gutting it of rental and residential real estate. The area was partially evacuated before and during the storm, but many residents returned. Currently, many people are living in FEMA (Federal Emergency Management Agency) trailers, but this is a temporary solution. The federal government has firm evacuation dates for the trailers. Other Biloxi residents are staying with friends or relatives, but they long to return to the area and have real estate to call their own.
Through generous government incentives and tax breaks, real estate rebuilding is continuing at a rapid pace in the Biloxi area. However, it is not happening rapidly enough. The demand for housing far exceeds the supply. Currently, residents of Biloxi are paying between $1,000 and $1,300 per month to rent in the area. These are rental rates that are competitive with some of the most expensive American cities. The number of people who want to own or rent homes far exceeds the number of vacant housing units.
Go Zone investing opportunities abound
The United States Congress passed a bill in December 2005 in order to address the real estate shortage. The Gulf Opportunity Zone Act proposes government incentives in the form of tax breaks to assist people in rebuilding the area. The US government is offering Go Zone Investors a total of $260 million in incentives to fuel continued real estate and economic growth in the Gulf Zone.
One of the most beneficial features of the Go Zone Act is a 50 percent bonus depreciation to build a new property for sale or rental. Another important benefit of investing in the Go Zone is the number of qualified private activity bonds that are tax-exempt, and can be used to build retail and other non-residential establishments.
Investors are able to build residential rental projects that accommodate low-income Biloxi residents in need of affordable housing. Mississippi residents are paying upwards of one thousand dollars a month to rent, and are facing government housing evacuation deadlines. Therefore, there will continue to be many renters in need of affordable and quality real estate.
Economic growth is skyrocketing, as well. The waterfront casinos in Biloxi that were destroyed by the storms have been re-built on dry land, and more casinos are expected to be added. There is a great interest in casinos as a tourist attraction -- for example, Jimmy Buffet's Margaritaville casino will attract large numbers of tourists once construction is complete. There is a shortage of tourist accommodations in Biloxi, and Go Zone tax breaks and incentives make it easy and affordable to build hotels and motels on that land. Over the next several years, tourism -- and, consequently, the demand for accommodations -- will only increase.
Biloxi's economy is soaring, as well. It will continue to grow over the years, and several factors are driving that growth. These include:
A critical housing shortage, which results in continued, steady appreciation of real estate values
Continued growth of casinos, and, in turn, toursim
A major military presence, including Keasler Air Force Base, which contributes significantly to the economy
Major companies in Biloxi, such as Dupont, GE Plastics, and Chevron seeking to hire many more quality employees
As more jobs come to the Biloxi area, more workers will follow. These workers are in need of affordable rental units. Therefore, building in the Go Zone is a profitable and sound financial undertaking.
Supply and Demand
A combination of economic growth, expanding tourism, and crucial housing shortages all contribute to a major demand for real estate in Biloxi. The current supply of housing and accommodations falls short of the demand. As a result, rental and real estate values are soaring, and more real estate must be built immediately.
The Go Zone act offers low-risk government incentives, allowing investors to help rebuild the Go Zone while acquiring real estate holdings guaranteed to increase in value for the foreseeable future. The media has devoted much attention to housing "busts," which are especially prevalent in many "hot growth" regions like California and Texas. Many people are reluctant to invest in real estate lately, fearing that when the "housing bubble" bursts, their real estate will depreciate significantly in value.
By contrast, analysts predict that growth in the Go Zone region will continue for at least five years, and likely longer. CNN Money has, in turn, declared Biloxi to be a "bust-free" market, meaning that growth is expected to continue without significant pause or downturn.
The decision to invest in Go Zone real estate is a mutually beneficial choice. Investors are improving their own financial situations, as well as the lives of Biloxi natives and residents. Because of the current rental unit shortage, real estate is sorely needed, and value appreciation is significant. The Gulf Zone Opportunity Act, which provides significant bonus depreciation and major loan forgiveness, makes investing in the rapidly growing Biloxi area a smart choice.
For more information on the Go Zone - please visit our informative Go Zone page on YAERD.org . For a complete run down of how to find the right Go Zone real estate brokerage, agent, broker, or developer, visit our Real Estate Investing website and browse our large database of free real estate investing news, information, and advice.
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