There are no sure bets in real estate investing. Everybody knows that, but there are some basic principles that almost always work well.

For example, when most of the market is down or flat, look for counter-cyclical local "niche" markets that are at the very early stages of significant economic and population growth, and where land prices are relatively low.

One such area right now that's beginning to attract serious attention is Gulfport-Biloxi, Mississippi.

You may recall that it popped up out of nowhere in the latest quarterly federal home price survey numbers because average values there in the past year jumped by 6 percent, while much of the country was looking at negative numbers.

Well, it turns out there's something significant going in the Gulfport-Biloxi area two years after Hurricane Katrina -- namely economic growth powered by federal and state "Gulf Zone" investment and tax incentives, a major rebound in the casino industry, plus employment expansions at nearby military and NASA space research facilities.

Governor Haley Barbour says there's a need for at least 100,000 new, moderate cost houses in the area right now -- and as many as 300,000 over the next three to five years. And the good news for investors is that, despite the fact that the area now supports the second largest casino industry in the U.S. -- it's bigger than Atlantic City and second only to Vegas -- real estate is still cheap.

For example, you can buy a new 3 bedroom, 2 bath, 1,350 square feet home on a small lot in Bayside Park for $125,000, according to Michael Eadie of Gulfstream Realty and Development. As rentals aimed at the growing local workforce -- or even families finally getting out of their FEMA trailers -- Eadie says properties like these turn positive cash flows, qualify for special federal tax breaks, and have excellent long-term capital appreciation potentials.

Again, nothing is guaranteed in real estate. But the rebounding Mississippi Gulf Coast is definitely worth a close look.

Published: December 14, 2007

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.