Opportunity Zones - Is anyone investing in these?

Question

I see that there have been a few posts on this topic but I'd like to know if anyone has set up (or planning to) an OZ fund?  If so, do you have any reliable resources you can direct me to?

Cody L. · Answer

Yes and no.  Yes I'm investing in those areas, no I'm not doing so via the new tax structure.   Just like I've bought properties, sold them at a profit, and rolled those profits into a new building.  Yet never did a official 1031

Since I don't often sell, I don't often have profits that I'm able to use to take advantage of these tax breaks.  What I end up doing with my "Profit" is pull it out via refinance.  Which puts $$ in my pocket to buy more property w/o having a tax event (since its a loan and not income).   I find this to be better (at least for me) as I don't have to mess with the various government process (which tend to make me ill)

Tim McClary · Answer

I've invested in Old Town, Maine.  It's an Opportunity Zone.  With the mill opening back up and 120 new jobs headed that way, I think it's ready for a moderate boost.

Steve Morris · Answer

I know a few guys and then there are whales doing OZ funds.  The rules are pretty rigorous and more than just buying something in the right ZIPcode.

In sum, you need to make some pretty substantial improvements (like almost razing the original building).

Tim H. · Answer

Hi Tamara - did you ever put together some resources on this topic? I'm looking to start an OZ Fund. I think I can raise about $500K to start investing in early 2021. But I could use some direction on structure and legals.

William B. Wingfield · Answer

@Tamara Glass send me your email in a private message and I will pass along information for the December 7th event!

Tamara Glass · Answer

@Anthony Andrew Young thank you, this is interesting information that I was not aware of.

Anthony Andrew Young · Answer

The most amazing thing that I've read about opportunity zones is that you can use them for any type of business venture (if I understand it correctly anyways). Although we all do real estate on this forum, sometimes it might not make sense to buy a property in an OZ, but it might make a great deal of sense to try out one of your other business ideas. I believe that most people on here are of the entrepreneurial mindset and would benefit greatly from starting another dream business in one of these Opportunity Zones.

Tamara Glass · Answer

Thanks @Drew Reynolds.  Very helpful information and I have an appointment

with my CPA next week.

Drew Reynolds · Answer

Setting up a QOZ Fund is not all that difficult.  IRS guidance allows for self certification.  A QOZ Fund simply needs to fill out paperwork and include it with their annual federal tax filing.  Note, however, that if you are attempting to raise capital from other investors, a QOZ Fund is classified as a security, not a real estate interest - it is highly recommended to consult your CPA and attorney before raising capital from others.

If you invest in a QOF fund that does not adhere to the up-front or on-going requirements, an investor potentially opens themselves up to taxes on the previously deferred capital gains/recapture and potentially to penalties.  This may be especially problematic if the funds are now tied up in an illiquid real estate project.

Like an investment, doing your upfront due diligence is key.

Shane Dawkins · Answer

Im in investing in OZ’s however I renovate and refi out of the propertyies instead of selling. I’m going to buy as much as I can because this pretty much means a lot of these areas will be developed and that’s just going to help my property value long term along rents raising as well.

Opportunity Zones - Is anyone investing in these?

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