All Forum Posts by: Philip Ma

Unfortunately the OZ rules do not allow a related party transaction where you purchase the OZ property now without an eligible gain, either in your name or with an LLC controlled by you, and then later acquire it from yourself with an eligible gain in a QOF entity. You should talk to an attorney or CPA and see if there is a way to work around it.

I've invested in a QOF and set up my own QOF to acquire properties with eligible gain. Feel free to reach out if you have specific questions.

If you are looking for commercial properties, go to loopnet.com.  Within their search criteria, they have a filter for whether the property is in an Opportunity Zone or not. It comes in really handy.  There are a couple of other ways to do it if you have a specific property in mind and want to check if it's in an OZ or not.  The site eig.org has an OZ interactive map where you can put in an address or gps coordinates and it will show if it's in an OZ. Also if you know the census tract # of the property, then there is an IRS or US Treasury web site which has a list of all the OZ census tracts - it's downloadable into a spreadsheet.  You can check your census tract against that list.  Hope that helps. 

I researched the pearl fund when they first launched and spoke with one of the principals.  They seem like legitimate early stage investors.  However, my belief is that it will be very challenging to grow a start-up to typical venture fund returns under the constraints of the OZ rules.  I think that a traditional real estate syndication type fund is easier to manage under the OZ rules and a safer investment.  I have invested in a real estate OZ fund and can share that with you if you PM me.  

You can hire a CPA to do a cost segregation study which will divide the cost between the land and the building value based on some algorithm which takes into account comparables, market conditions and other factors.  My CPA says that he has his own software to do it, but I haven't seen the results yet.  I acquired some new construction OZ properties in FL in my QOF, and the actual cost of the land to the builder was quite low (like 13% of the total acquisition cost).  I'm sure there are variations according to the area of the country the property is in.  In the SF Bay Area, land value is quite high compared to building value. 

I agree and am facing the same issue. I set up my QOF and paid cash for my first set of OZ properties. Now I want to cash out refi on those properties and cannot use Fannie/Freddie type lenders who will only lend to an individual (and you're right, most of them don't understand the OZ rules). So I am targeting commercial type lenders who will lend to my QOF LLC entity, but they charge substantially higher interest rates.

You can lease a Model 3 now for about $5K down and $399/mo for 36 months (quoted on tesla.com). Apparently there is no buy-out option at the end, but I would seriously consider the lease option. With battery technology improving rapidly, you avoid getting locked into old technology.  If you are a realtor, you would be writing off your lease payment as a business expense, right? Turn that baby in after 3 years and get the latest electric vehicle that's in vogue.

Did anyone close a refi with CoreVest yet?  Those fees look steep.

I came across CoreVest too from this article. 

https://fitsmallbusiness.com/investment-property-loans/ 

They seem to specialize in commercial lending. It looks like the interest rate and fees are quite high. I'm going to get a quote as well on some SFR acquisitions that I want to make from an LLC. Let me know if you ended up using them.