All Forum Posts by: Mark Elliott

Man @Natalie Kolodij calling out my accountant! 

Agree with you now that second tranche of regs were released Single Family Residence is a fine investment. Prior to that (and at the time of my original post) consensus was that it was not 100% clear if Single Family Residence would actually qualify. Also, while not as common as commercial leases, any house Triple Net Leased would not qualify as the government wants to see an "active trade or business" for the OZ fund (see link below).

That is unfortuantely one of the many issues with releasing a program as large is this in 3 parts over an almost 18 month period. It creates uncertanty and multiple contradicting opinions. The good news is I think most everyone now at this point is on the same page. I'm very excited to see what the OZ program can do for our communities!

Anyone interested in reviewing the new regs, here is a phenominal summary:

https://www.novoco.com/notes-from-novogradac/clarity-provided-second-tranche-treasury-regulations-incent-more-investment-opportunity-zones 

Hi Kathryn,

I think you can do it!

Here is how:

1. Ensure you had a taxable event (capital gains) from selling, real estate, stocks or a company within 180 days of your purchase. 

2. Put the money into your OZ Fund (must be a partnership or corporation, an LLC can be set up to be taxed like a partnership), you will need to self certify using form IRS form 8996.

3. OZ Fund has 180 days to find a property to invest in and make improvements.

3. The fund must own equity in the property, 90% of the fund must be invested in the Opportunity Zone.

4. Search Zones here to ensure the property is actually in the zone:https://esrimedia.maps.arcgis.com/apps/View/index....

5. If you paid $100k for the property and $40k is land value and $60k is building value. You must invest $60k+$1 into the property to improve it.

6. Improvement must be made into the property within 180 days OR if you come up with a project plan with drawdowns you can have up to 30 months to complete renovations.

7. Note: taxes on the original capital gains must be paid on Dec 31st 2026.

8. Can hold the asset for 10 years and then sell it tax-free!

9. Or the program runs until the year 2048... You could compound your initial investment for the next 27 years and get it all back tax-free!

Opportunity funds can invest in real estate, stock in a private company and even new businesses!

Other things to note:

- The law is not 100% baked at this time but the lanes are there and funds are being set up, if you are not doing anything too exotic you are good to go!

- Currently, there is no basis for which land needs to be improved. The law is not intended for folks to buy land and hold it for 10 years without improving it. If you are going to buy land I'd say follow the above and improve within 30 months with a plan!

- Current law states you cannot invest in 1 single family home, they want multifamily investment. I'd advise on making multiple investments into multiple properties. A BRRR strategy starting with a few units might work out very well in OZ's!

- If you already own land in an OZ and have not met the 180-day timeframe above or purchased the land before Dec 31st, 2017 the only thing you can do to take advantage of this is to take on a partner and own less than 20% of the asset.

That should get everyone started hopefully. I always recommend consulting with your accountant and legal counsel before deciding to do anything with Opportunity Zones as everyone has different circumstances. 

Hi folks,

I'm looking at purchasing some lots in downtown Greenville, SC. Most are in old mill villages so the neighbors homes are comping at $25-$40k. 

How can I put homes on these lots efficiently? Manufacturered housing?

Also is there maybe a HUD program available for something like this? Any and all advice is appreciated.

Thank you!

-Mark

Anyone know of any good mobile home movers in the Greenville, SC area?

Probably going to have to do over 30 moves in the next year or so.

Hello BP folks,

I recently took over a mobile home park. A tenant purchased a mobile home from the previous owner there. I guess last year someone stole electricity from this mobile home when it was unoccupied.

Duke power is now saying that the owner of the land should pay for the stolen power ($1900 worth) before they allow the new tenant to have electricity? 

I don't think Duke notified the previous owner of the park of the stolen electricity or gave them an opportunity to correct the issue. I'm not sure how a land owner would even know if power was being stolen or paid for?!?

Duke will not budge, how can I get this issue resolved? 

Hello everyone,

I am turning around a trailer park and have removed about 15 old trailers and have a total of 25 spaces open. Now the challenge of finding good used mobile homes. Does anyone have a source around Greenville, South Carolina?

I'm not sure if there are "Finders" for this type of things but I was thinking about hiring a house inspector to essentially do my legwork for me and I’d send him to the under $5k ones I see on Craigslist… Any other thoughts?

Thank you all again!

Hi all!

Thank you for all of the wonderful ideas! You certainly gave me a lot to think about. I am trying to turn this park around and rebrand it and in the end the easiest quickest way to do that was to just have someone start tearing them down. I wanted to summarize all of the great ideas submitted though, below is a summary-

- Put them on Craigslist from @Mat McCourry- I liked this one I ended up not getting any good hits but always worth a shot.

- Just Crush them from @John Arendsen- This was a hard one for me as there is perceived value still left in the trailers but it will not be worth rehabbing all of them. And you were also right that I could not relocate the trailers.

- Try JunkDrs from @Chris Martin- This was a good lead Chris, they are primarily based in NC so their quote came in at $30k as well, still solid lead, thank you for that!

- You can’t even move the homes from @Bill Florence- Bill you are right they are “Grandfathered in” I guess and were not able to be moved so it was either crush or rehab!

- Fix them up @Mark Brogan- Great thought Mark, the trailers were too far gone unfortunately to do this, rehab costs of $5k+ for each one!

- Burn and Bury them From @Bryant Bagley- This would have been an optimal solution but the trailers are too close and the land too hilly, I like the thought though!

- I should be paying less to have the trailers removed from @Chris Martin- Chris this was a great thought I ended up negotiating the guy down to the low 20’s thanks to you!

- Call the Fire Department From @Patrick Connell- Patrick this was an awesome idea, our local fire department was not interested but they did say they have done that in the past so great call!

- Sell them for $500 each to handymen from @Keith Richard- I went back and forth on this one, a great idea for sure. The time to get the park up and running would have been longer and for me it was worth taking them down so I could maximize the revenue.

- Talk to a mobile home moving company- Rachel H. – I really liked this idea, I didn’t have any success with it but I believe it could have work had I reached the right contact.

- Being that I am in the south I also added contact a “Demolition Derby” to see if they would want them for shows but they are done for the season.

UPDATE:

So the trailers are being crushed and hauled off over the next two weeks, now the big challenge is where do I find 25 used Singlewides cheap? I was thinking about hiring a house inspector to essentially do my legwork for me and I’d send him to the under $5k ones I see on Craigslist… Any other thoughts?

Thank you all again!

I have probably 10 run down mobile homes and some mobile home frames that I need to do something with. Options are:

1. Fix them up, was told only 1 was worth fixing at a cost of $5k. Granted the guy was from a town an hour away so I'm sure that factored in.

2. Have them torn down and removed cost of close to $30k.

Homes are around Travlers Rest, South Carolina and are from the 70's and 80's.

Would love to hear other options or ideas on what to do with them?

Thank you,

Mark