| Well I must say that I was clearly disappointed in | | | | at the following pro forma: |
| the way the MS Development Authority handled | | | | Principal & Interest Amount: $1,500 |
| Rd. 1 of the SRAP (Small Rental Assistance | | | | Real Estate Taxes: $150 |
| Program). The MDA in my opinion was a little | | | | Insurance: $250 |
| overwhelmed, however they did recognize this | | | | Property Mgmt: $150 |
| and from what I am hearing from within, is that | | | | Total Operating Expenses: $ 2,050 Monthly |
| they are fully preparing for Rd. 2 and gearing it | | | | Your NET monthly rent in compliance with the |
| toward more time efficiency for all involved. This | | | | MDA SRAP rental limits and also taking into |
| Program is without a doubt one of the most | | | | consideration market rent for the area: $1,800 + |
| lucrative incentives offered by any governing | | | | - |
| bodies in the history of the industry. It shows | | | | Remember you have to hold this property for 5 |
| how motivated the state of Mississippi and HUD | | | | years. |
| are to revitalizing the gulf coast affected areas of | | | | Debt + Operating Expenses of $2,050 less your |
| Katrina. | | | | monthly rent of $1,800 equals $250which is your |
| Here is a very good pro form on how the SRAP | | | | monthly negative cash flow. |
| is going to work. This is based off our clients' | | | | Over 5 years or 60 months, your negative cash |
| GFE's (Good Faith Estimates) from their lending | | | | flow is $250 x 60 = $15,000. |
| source, the increased average rental according to | | | | So you are negative $15,000....You are obviously |
| HUD, in addition to our own due diligence on the | | | | subsidized a full $73,000 upfront so technically you |
| program. | | | | are not in the red. |
| ONCE APPROVED: The MDA/HUD will offer a | | | | At the end of 5 years and your negative cash |
| forgivable loan for $27,500 per 3 bedroom unit. If | | | | flow being subsidized by part of the $73,000, |
| the builder completes the unit(s) within 180 days | | | | your leftover funds after 5 years is $73,000 less |
| from pulling permit, you will be issued a completion | | | | $15,000 equals $58,000. |
| bonus in the amount of $9,000. Let's take a | | | | At the end of the 5th year, the subordinate lien is |
| duplex for instance. A duplex has 2 units, right? If | | | | forgiven and the investor gets to keep the |
| you build a duplex and each side has 3 bedrooms, | | | | remaining balance leftover. Of course if you want |
| your "funds" issued will total $73,000 if completed | | | | to put more money down out of pocket to |
| within given time parameters. $73,000 UPFRONT! | | | | reduce your principal balance upfront, you may, |
| Technically, you get half of the amount minus the | | | | which will ultimately get you a higher net margin |
| bonus at permitting. However, when the MDA | | | | over and beyond $58,000. |
| issues you the funds, they are going to place an | | | | Take this in addition to a Go Zone Accelerated or |
| immediate subordinate lein position on the | | | | Bonus Depreciation and you have yourself one |
| property. Many investors will make the mistake of | | | | heck of an investment. We were told yesterday |
| doing this. At completion and their lender assigns | | | | that approvals were likely this week or next |
| the mortgage to an end-loan provider, no lender | | | | which has now happened. We are looking forward |
| will take a property with a subordinate | | | | to working with the next round of investors who |
| lein....SO.....you must wait until completion to get the | | | | would like to apply for the Mississippi Small Rental |
| entire thing. | | | | Assistance Program. |
| If your mortgage amount is $220,000, let's look | | | | |