All Forum Posts by: Michael Bowie

@Eric Fernwood What are your data sources? Or, examples of your data sources?

@Aaron K. Both. The wood, single pane windows are very leaky. Some of them don’t close or lock well either.

We have a combination of gas furnaces and electric condensers.

Has anyone installed magnetic windows inside inefficient historic windows?

Our historic overlay requires historic, single pane, wooden windows; however, they’re horrible for utilities.

Looking at options. Thanks!!

I'm a data scientist and interested to hear if anyone has any current projects going. 

@Dylan Mathias Yes, it can be revoked due to several issues not being met:

1) The Qualified Opportunity Fund (QOF) has a 90% AUM test every 6 months. This means that 90% of the AUM must be held in qualifying investments such as 1) Qualified Opportunity Zone Property (QOZP) or 2) Qualified Opportunity Zone Business (QOZB). 

2) The QOZB has a 70% AUM test. 

3) The "substantially improved" test not being met. For example, the additional investment in a property needs to be at least 100% of the basis of the property (the building minus the land).

4) The property is not sold before Dec. 31st, 2048. 

5) Capital gains must be invested into the QOF within 180 days of the gain. 

6) Funds from #5 must be invested into a QOZP/QOZB within 180 days. However, there is a 31 month safe harbor for working capital for QOZB. Meaning, funds could be held in a QOZB for 31 months before having to pass the 70% AUM test. 

Those are most of the main considerations to be aware of to insure you do not lose the tax advantages. 

***Also, Dec. 31st, 2019 is the deadline to have capital gains invested into a QOF if you want the 7 year step up.***

As always: I'm not a CPA. This is not tax advice. Consult your CPA and attorney. 

@Dylan Mathias Are you looking for a high level overview of the program, or? I've been heavily researching this area, and I'm currently putting together a potential OZone deal. There are a lot of ins and outs. 

Originally posted by @Tanner Crawley:

Originally posted by @Lynne Hart:

So........... is there any sort of qualification to create a fund? If I want to invest in an OZ, select and renovate my own properties, and then rent and hold them for 10 years, without anyone else involved in the fund or ownership of the property? Do the funds "manage" the renovation in any way (like with a 1031)? Can I invest money that is not a capital gain? For example if I sell a house this month, and its sales price is 100k, but only 30k of that is capital gain, can I put 100k into the fund? If I pull money out of an IRA to put into a fund (and that IRA was built up over 25 years) How do I identify the gains in that? I don't care about the tax deferring on that 70k, I just want the improvement and future gains in 2026 to be untaxed........Where can I go to get answers like this (that article above was very helpful -I need more nuts and bolts like the "Step 1" part. Where can I find step by step nuts and bolts instructions about how I can get started with this investment?

Million questions I know!  I've been scouring the internet and not able to find clear information! TIA!

 So there is a lot to answer here. First is that the tax benefits only apply to capital gains, you can receive any benefits on ordinary income. Even the 10 year exemption for future gains does not apply to ordinary income. So in your example, only the 30k would be tax exempted. So if you reinvest all 100k into one property, only the 30k portion gets preferential treatment. 

You CAN self certify as an opportunity zone and it is pretty simple to do so. You can certify a simple LLC and a "Qualified Opportunity Fund". You have 180 days to move capital gains into this fund, and then another 180 days to deploy the capital.

To clarify, the LLC cannot be a single member LLC. You have to have at least one more partner in the LLC to qualify for the tax advantages.

Hi Jay, Unless it’s 4 units or less AND the buyer is going to use one of the units as a primary residence, then the down payment is going to be around 20%, regardless. It seems that you are categorizing owner financing as negative. That’s not always the case. There are many reasons why an owner would be interested in owner financing. One of them being, it turns the property basically into an annuity, or a fixed monthly payment, without having to do any management or work. If the owner is older, this is common. I love looking at properties that offer owner financing as it offers much more flexibility in the deal. However, with all this being said, you definitely want to do your due diligence just like on any deal.

Post self-removed... already posted about. 

@Chuck Masters Check out Auto-Owners. They have consistently given me the best rate, beating out Proper. They also bundle the liability across properties so that's only incrementally more expensive for each additional property.