Prices are a major limit in that market everything is high since demand is there.

High demand, little supply of available property for us to build on, and a permitting process that was to time consuming. 

That makes me (as an investor) nervous.That said, you'll know far more about the individual bases and can probably assess the trajectory of what's going on in Columbus, MS. 

I've seen a VERY large demand in smaller warehouses (5,000 - 10,000 sq ft).  

And as far as I know, there is no negotiation on price because of high demand.

He wants to acquire his neighbor's property which is a 17,000 sq. ft. lot with an existing 1,650 sq. ft. house and add two more houses, subdivide the lot into three parcels, and sell the houses off individually.  

There's just a lot of demand right now for larger multi-family properties because there is  good story there, a lot of people are syndicating it and you can get incredible financing on it.  

As long the rates are competitive they are great because you don't pay origination...and it doesn't show up any place as a liability since it is just a contract between two individuals.

I also chose zip codes that I was really knowledgeable about but also weren't areas that have top selling homes - those are higher demand and more costly.    

Your taxable income in Year 1 is in the top individual tax bracket, 39.6%.