All Forum Posts by: Tanner Crawley

@Barak Hamdani
It depends on your goals. You won't get the cash flow in Denver that you can get in other markets. It is more of an appreciation play. There are other markets like Pueblo and Colorado Springs that have better cash flow.

Have you set specific criteria? Cap Rates? Debt Coverage Ratio? Cash Flow? How long are you looking to own the property?

These will help answer some of your questions

@Canesha Edwards
Happy to help!

Hi Kathy, 
Not just major institutions can become Opportunity Funds. You could register as a sole proprietorship, LLC, or Partnership.

Locating a property within an OZ is a simple process, the zones are clearly identified and maps are available. 
I'm involved with Opportunity Zones here in CO. Feel free to pm me with any more questions.

 Ha, that's fair. One more question.

How is depreciation treated at the end of a 10+ year investment? Is there still depreciation recapture? I have heard conflicting information on this.

Yes, to receive the deferral you must invest before 2026 because that is when the capital gain becomes due. The tax exemption going forward can last until 2047 as you mentioned. You can sell a property in a QOZ and the tax doesn't come due if you roll it into another QOZ property, but both have to be owned by the same Qualified fund.

@Raza Rizvi
Hey Raza, I just wanted to step in and clarify some things. You don't have to improve the property by the purchase price, just the building value. So the formula should look like this (Purchase price-land value=substantial improvement amount). The renovation amounts can come from capital gains, that is totally fine and probably simplifies things. 

The Deferral is also not for 10 years, the original gain will come due December 31, 2026, or upon sale of the property, (Unless you reinvest in another Qualified Fund as you mentioned). 

You can hold the property until the end of 2048 with all gains made after the Qualified investment being tax-free. 

@Kristen Bouvier Scoville

Definitely 1031 or invest in an Opportunity Zone. Both effectively allow you to defer capital gains. Opportunity Zones allow you to reduce your tax basis as well when it comes due and be exempt from further taxes.

@Natalie Kolodij
Thanks Natalie, I'd give you 40 votes if I could!

What are the other 3 methods just out of curiosity?

@John Vu It can be harder to find cash flowing assets in Denver. Most investors here are in it for appreciation. Have you tried looking in our tertiary markets like Colorado Springs?

Cash on Cash Returns have a lot to do with how much leverage you use. If barely put any cash down and have very little cash flow you can still achieve a lofty Cash on cash return. 
I personally don't focus on it as a metric.