GO Zone Warnings

There are a number of common issues that we have seen in the GO Zone.  We try to educate investors and how to avoid problems.  Some issues that we have seen recently are:

False Pro Forma’s

• Assumed equity is off base from a false appraisal (below) or inflated “market value”;
• Tax & Insurance numbers stated wrong thus providing optimistic cash flows;
• Inflated rent estimates based on “comps” but not current data

False Appraisals

• “Appraised Value” may be very outdated;
• “Appraised Value” may be guided;
• If an appraised value is stated, ask for a complete copy of the appraisal report;
• This can lead to overly optimistic estimates of equity.  Let’s face it, builders are willing to provide “some” real equity but if the real equity is too high, they would rather do a quick fire sale to locals.  We have seen some claims of equities between $20,000 and $50,000 for a single family home and when investigated, usually find that the real equity is far from those values.

Incorrect Rental Amounts

• The rental market is always evolving….. you need rental data from what is happening now;
• What about number of units?  As the number of units increase past demand, rents drop.  Be careful if building around a lot of other investors.

Less Than Desirable Areas

• Like your home town, each go zone area has good places, and not so good places to live which impact your resell value.
• Pretty marketing material is not always the best judge.
• If possible, learn the area (see our TOURS) and then make a decision.