Tuesday, January 22nd, 2019

GO Zone Preconstruction Investing Pitfalls

Most of the people wanting to sell GO Zone Preconstruction (developers and agents) and even people investing in GO Zone Preconstruction will tell you that it is a sound investment…one of the best you can make right now. They will go on and on about how Katrina destroyed the housing stock, casinos are being built and a limited supply of land. While most of this is true…..you must take your time and ask alot of questions before signing a contract on your GO Zone Preconstruction investment. When chosen carefully with professional help and due diligence Preconstruction can be a high quality investment. Resourceful investors who scour the Internet looking for quality information about the GO Zone call us every day. I would venture to say 90% of them have been talked into investing in GO Zone Preconstruction, but are wary of who they are dealing with and or information they have been told.

Unfortunately, like walking through the forest in the dark, the world of GO Zone Preconstruction Investing can be a difficult world to navigate just like any other real estate opportunity. Inexperienced investors looking to put their money into the GO Zone often end up with more questions than answers and throw
up their hands in despair:

-Where do I start?
-Do I qualify for the GO Zone Bonus Depreciation?
-Where can quality GO Zone Preconstruction investments be found?
-Should I have representation?
-How can I know if these investments will actually return any money?
-What laws are necessary to know?
-What are the tax implications?

Every question is one more potential stumbling block for the new GO Zone investor… and a way for a less-than-honest person to scam that new investor. Investors who are new to the GO Zone Preconstruction real estate market should feel concerned about who they do business with because there are many ways that scam artists can take advantage of them.

GO Zone Gateway likes to expose the problems and pitfalls of the GO Zone Preconstruction investment industry and talk about how the inexperienced investor can overcome them with improved information and resources.

What kinds of pitfalls exist ? Here is a sampling of some of the most common:

1. The Preconstruction developer whining and dining you, while asking you to pick a floor plan, doesn’t have a license to build in that state. (Many of the developers building in the GO Zone are developers that came after the Southwest Florida boom. Since sales dried up in Florida they think they can make a quick buck off of you!)

2. The developer claims that he will build to the Mississippi Development Authority (MDA) Small Rental Assistance Program (SRAP) guidelines, but he doesn’t even know them! (We have seen this with many developers. The amount of rooms, roof specs, appliances, height of the home, etc must meet the guidelines if you want to get approved.)

3. The agent/developer claiming that you “no doubt” qualify for the GO Zone Bonus Depreciation. (I got news for you folks, not everybody qualifies, but many do. You must analyze your situation and see if you do, but if you don’t there are ways to put yourself in position to qualify very easily.)

4. The agent presenting you with a GO Zone Preconstruction opportunity doesn’t prepare a pro-forma for you. (How can you buy an investment property if you don’t even know how it is going to perform?)

5. Bunk Insurance quotes. (One of the dirty little secrets of GO Zone Preconstruction is to hide the true insurance numbers until it’s time to close. Most stick built and modular homes have very high insurance premiums. That is why GO Zone Gateway tries to help investors purchase concrete homes if at all possible.)

6. Obscene closing costs. (I’m talking about 7-9% of the purchase price! Most developers don’t have their own money so they must borrow hard money and the interest they must pay is high. Guess who they pass that off to? That’s right, you. Nobody says anything until it’s time to close and you are already in contract. Don’t let that happen to you, attain a Good Faith Estimate up front (GFE). This is standard operating procedure for GO Zone Gateway clients.)

We have heard many more GO Zone Preconstruction Investing horror stories, for the people who have called we have helped them out the best we can, but sadly for some it was too late. If you are thinking about investing give us a call first to see our opportunities or for a free consultation.