Dallas, TX · Member since 2015 · 14 posts · 7 votes
I just found out a small 9 unit multi-family that I own is in an Opportunity Zone. I've owned it for 7 years. The reason I found out it is in an opportunity zone is because I was thinking about adding 24 units to the property (over 5-10 years) and went to the city to see if they would allow and/or offer any incentives. They told me about the opportunity zone. So it got me to thinking maybe instead of investing more in the property I could just sell it. The property is on "main street" in a town being revitalized. And is adjacent to the metro train station that connects a major university and downtown.
I realize it doesn't benefit me now. However, when I get ready to sell it, does being in an Opportunity Zone increase the value? How would I market it correctly to reach investors looking to purchase in an Opportunity Zone? I'm thinking MLS isn't going to reach this potential buyer pool.
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
5y
The opportunity zone benefit does not increase the value of property it only enhances the benefit of a good deal but the deal needs to be good on its own merits first. The best way to market the property is MLS and with a broker who handles these types of properties.
Rental Property Investor · San Carlos, CA · Member since 2013 · 29 posts · 17 votes
5y
I am a QOF investor so hopefully can provide some insight on your question. You are right that if your property is located in a QOZ, then it will be attractive to a QOF investor. However, if it is an existing property, it has to have significant value add opportunity to make sense because to get the tax benefit, the investor has to "substantially improve" the property (under the tax rules that means doubling the basis in the building) within 30 months after acquisition. I see sellers marketing their property that is fully rehabbed as being located in a QOZ. I quickly move on because if it's already rehabbed or added to, I would have to spend even more to double the basis in the building. Only if it is brand new construction where a builder built it on vacant land would I be interested because then I can take the position that the property is "original use" under the tax rules and therefore does not have to be substantially improved. The fact that you were investigating adding 24 units to your property is a great selling point to a QOF investor (as long as you don't actually do the addition). In terms of MLS vs other channels, I would definitely post the property on LoopNet because they have a search parameter box that one can check as to whether the property is located in a QOZ or not. I'm guessing they have census tract data in the database that can automatically determine that. As a QOF investor, I can set up alerts on LoopNet to notify me when a property in a certain city or county that is also in a QOZ is listed. I haven't found any MLS's or free listing web sites that have that as a search parameter. For an MLS search, a realtor can get close by using zip codes, but the QOZ's are defined by census tract, so that is the most precise way to search. Hope that helps you in marketing your property to QOF investors.