All Forum Posts by: Scott Allan

John Zehr,
I get your e-mails about your whitepaper and with all due respect I believe that your whitepaper is only a solicitation. You are farming the area of Jackson because that is where you are from. I have done work with FEMA, MEMA, and International Aid. I think if you took a ride down to the coast and interviewed people looking to rebuild the hardest hit areas of Katrina they would share my theory that the TRUE Go Zone incentive is to rebuild the coast. Not saying jackson is not a good market, but the efforts, infrastructure money, and direct focus is on the coast to re-establish stability which I must say, as a team of builders we are doing a pretty good job. This is the reason they extended the Go Zone incentive to 2010 in only our area.

Your white paper references "ill advised" information on the Go Zone. I would HOPE that nobody goes forward with the Go Zone, expecting the tax write off without talking to their CPA's. In fact, most marketing companies, not all, have a disclaimer to discuss with the attorney. I am a builder, not much of a marketer, but that is the truth. Your homes that you have in Jackson may be a good idea. I have no idea.

But your white paper, to me, is none other than a solicitation to try to divert people's attention to your property just because you have an official "white paper." Sorry for being blunt, but understand I am not referencing your properties, just the way you wrote the last e-mail.

Redfish,
Thanks for your response. Out of state investments are like brunettes. Some love them and some hate them. I personally love them as it offers some diversity to my portfolio. I am not a huge investor with 150 rental properties or anything like that but I have about 5 in Florida, 3 in New Jersey, 2 in Mississippi and one in Colorado. I have learned some hard lessons but have made money in the meantime with them. I have good property managers and I put my trust in them. I guess that's the risk when investing in real estate.

You face the same risk if it's even down the road from your own house. Trust me, I know! I own 2 rental properties in my subdivision where I live. One tenant is awesome. The other unit I had to evict one tenant before finding the right one. The way the law is, you can only do so much. Looking forward to your response.

Scott Allan

I am a builder in the Go Zone, specifically in Ocean Springs which is in Jackson County, and Bay St. Louis which is Hancock County. Both counties have been extended to 2010 for the Go Zone incentive. The Go zone is a very good, some say the best income tax incentive ever offered. You are basically putting your tax money toward real estate.

Although I agree with some of your points, Primo, I don't agree that Rule of Thumb is owning real estate within 60 miles. Definately helps, but what if you are paying $100k in taxes and to offset them with real estate you have to buy 1000 miles away, or for the UK investor, more than that? It's tough to really compromise that and impossible to justify. I ran the construction division for a large bank until last year and I have met hundreds of very succesful investors who invest outside the 60 mile radius.

I am very disturbed on how people market the Go Zone. It is obvious realtors and marketing companies, even builders are hurting for work. To justify their scope of work, realtors will partner with builder to bring in buyers and tack on a commission. Whatever happened to the 6% commission days? I have had numerous marketing companies and realtors call me wanting 10-15%. That's more than I make for building the darn thing AND having total liability during construction! That said, I do not work with those companies. I will gladly pay 6% but am capped at that no matter if they can bring 10 buyers or 10,000 buyers. Integrity in the real estate industry has crumbled and this is one of the reasons: GREED.

To the original poster: It appears you are from outside the U.S. From what I know, and for you to offset your taxes, you would need a U.S. based business, LLC, profits from the U.S where you pay U.S tax dollars. if you have passive income from other properties in the U.S, you are a golden qualifier. I don't know how international financing works, but those that say the down payments are high, it is no more than your traditional 10% down, typically. I believe foreign investors are capped at an 80% LTV and with the banks tightning up these days, the LTV could be at 75%, possibly.

In conclusion, I am the builder. My price is Cost + 10% + 2% Contingency. I am very educated on Go Zone and the other incentives available and would be happy to discuss with whoever has questions. Just my 2 cents, but overall the market is still good. I don't believe in the condo market out there, just the affordable home market, the most important issue.

Scott Allan
Royalty Homes

I have a place in Leland, NC which is near the seaport in Wilmington and one in Greenville. Greenville is very cheap. You can get a brand new home with a 2 car garage in a nice development for about $135,000 maybe even less. There is a new hospital there which is one of the biggest in the Carolinas, a new dentist school, etc...It is projected that 800 doctors are going to be moving into the area for their business. It's a huge medical field. History says that each doctor brings in 6 additional people for admininstration, jr. doctors, etc...

Leland is also a good time right now. Prices are higher than Greenville but the potential is just as good with the seaport experiencing a major expansion that is expected to bring in over 40,000 new jobs to the area.

Rental rates for Greenville are right around $1000 per month, sometimes a little less. Leland I am getting $1450 on my home...They are annual leases on both of them. Vacation lease wouldn't be a bad idea for Leland. A good friend of mine is with ERA Realty in Wilmington and he keeps his eye open for me.

I've got a single family home rented in North Carolina, Mississippi, and other states. I have a property manager on each of them and they are happy to take my $75 per month to drive by once in a while on their way to work and send me my rent check. No property manager will turn down business especially in the stagnant national market we are in. I don't own multi-family in some places either. If you have 20-30K to utilize, it is going to be tough to make numbers work in your area unless you utilize seller financing or something to that nature. What about a rehab loan in your local area. If you are in Boston, there have to be plenty of rehab stuff to do. Although we are not licensed to finance rehabs in MASS, I know a great rehab lender out of NY who finances MA. You can do those with little money out of pocket also. Plus, it's something you can be a little more hands on with.

I understand the difficulty in maintaing property. Do you think investors invest solely in their own market? If so you better be a real door knockin machine! Ever hear of a property manager? Sorry for the sarcasm...I just had a cup of coffee...If you have the right property manager, which you can find out in a conversation with them over the phone, you will never have to worry about who is watching your house.

When you say Pensacola, do you mean Panama City? It sounds like it. Yes, they are supposed to start the new airport on 10,000 acres next year. There is a big problem with mitigation on the parcel with bald eagles and such and the start date keeps getting pushed back. True, that the housing market is projected to appreciate over the next 5 years by about 50%, but false that it is in the condo market. I was recently in Bay County and met with Panama City Beach's city planner. You will throw up your lunch if you knew how many of those condo's and preconstruction condos were investor owned and/or reserved. It's pretty scary. investors who bought a year and 2 ago are facing either foreclosure, HUGE negative cash flow, or cancelling contracts and forfeiting their 20% deposits. Those with deep pockets can afford to hold off. Don't get me wrong, it's a beautiful place but as everywhere the condo market is horrible. I am highly motivated to build a development in the Rosemary Beach section of Bay County and target affordable housing about 2 miles from the coast. Land is a problem out there because a certain entity owns most of it. Single lots are very expensive...too expensive for investor purchase in my opinion. I refuse to throw myself into the fire of that market. My business model is trying to undercut the market with our resources at our bank who owns my firm and modular home manufacturers. I can't make it happen there yet. I'm hunting though!

What I would suggest is to enter into an emerging market and buy affordable rental property. I do sales in the entire south and I am the real estate arm of a large construction lender, therefore we have some resources others may not. We are seeing the best deals right now in Mobile, Alabama for single family homes. They make great rental properties and are in the go-zone region, so depending on your tax bracket, this may put you in a unique position. In Mobile, AL, 10 days ago a German company called Thyenn Corp Group or somehting like that announced they are going to be building the biggest steel plant facility in the country, and will likely be the biggest in the world. It is supposed to bring in over 50,000 new jobs over the next 5 years which is quite significant. Not to mention Dale Earnhardt Jr. is expected to build a 6 track speedway surrounded by a dozen hotels and numerous restaurants. Cost is currently cheap out there and you can find some very good buys on preconstruction. Multi-family with 20K down, you may have to look for seller financing for some of it.

Are you dealing with Ocala National Bank or National City? I think I know what program you are talking about. You did a preconstruction deal with a realtor/builder and intended on the selling or renting at completion with the intent that you would have a house valued higher that what you paid for it. Welcome to the club in Florida. Almost everyone that got caught up in the preconstruction craze after 2005 is likely suffering. The market took a nosedive and no one is responsible for that. Investors are aware of the risks in the market. Should the person who sold this to you knew the market was taking a downturn? Probably not....There are thousands upon thousands of agents that used 2003-2004 statistics to sell a property in 2005. Young realtor speed-talkers that are used car salesman at best. What I can tell you is that even if you would have thought about putting a clause in the contract about the appraisal, the bank/builder would not have accepted that. You did a construction to permanent loan, right? So you owned it prior to completion. That is now your home and you have to explore your options. This is one of the reasons FL has a very high rate of foreclosures. My real estate firm is owned by a large lender, but I don't think we would be able to help refinance you. That is actually what you are likely going to need. I can suggest a lender to you outside of my sources. His name is Mike and you can reach him at [email protected]. He is a mortgage broker but has a very good relationship with Ocala Nat and Nat City. He handles most of their refi's. All I can recommend is for you to call him to see what you can do. If you go directly to your own lender that portfolio'd your construction, they will put you on the backburner and tell you that if you do not modify very soon, they will strip the house from you.

Go-Zone Real Estate...Anything that has to do with it...I am not hear to offer my product unless you ask, but why wouldn't you invest even in preconstruction in the go-zone at this time? NEVER in the US History has this been issued and it is going to last only a couple of years where investors can deduct up to 50% of the house depreciation off of their income taxes after the first year of ownership....I do investment real estate all over the southeast, but I can't get focused on anything besides go-zone property right now. Anyone likely to owe the IRS a lot of money next year?? You'd be killing yourself without go-zone property. But hey..what do I know? Just my 2 cents. Do some due diligence on it...at least give yourself that opportunity.

LOL...Well I can honestly say that I never attended those meetings and seminars. There is a local guru in my area that all of you probably know who I know very well and I can't look at him with a straight face and hide the expression of "What the heck are you doing to these people?"

BUT, stuff in their books that you can get for just a few dollars is pretty interesting with the low money down stuff.

I heard that is true though r2d2 if you in fact go to those. I'll bet there are people on the forum who have gone...Anyone want to share that story and tell us how pumped up you were after you left, thinking you were the next millionaire?