52 OPPORTUNITY ZONE MAGAZINE | VOLUME 2 • ISSUE 1
Several factors affect how much you benefit from OZ investing , including ( but not limited to ):
• The amount of funds invested
• The length of the investment
• The overall return received from the QOF
OZ investing has provided a steroid shot to the tax benefits of real estate investing .
GOOD FOR INVESTORS , GOOD FOR COMMUNITIES
QOF investment opportunities clearly have some real tax advantages which make them an appealing investment strategy – specifically for patient , longer term investors . The reason the OZ program was created was to stimulate economic development and job creation in economically distressed communities by encouraging long-term investments in lowincome neighborhoods . Instead of relying on taxpayer dollars and government programs , the aim is to use private investments to conquer the task of revitalizing distressed neighborhoods . Placing capital in these communities feels good and provides community and social benefits and can provide investors a healthy return and tax advantages . targets to achieve across assets and geographical markets .
• Does the fund manager have a targeted strategy with a track record of investing in the product type and in the market ? If the answer is no , the manager has never invested in this asset class or geography , you may be taking on a greater risk in the investment .
• Alignment of interest with sponsor . Does the fund manager have significant capital of its own invested alongside yours ?
• Is the deal worth doing regardless of the tax advantages ? Remember no deal is worth investing in just for tax advantages , it has to make sense on its own merits .
Remember no deal is worth investing in just for tax advantages , it has to make sense on its own merits .
Since these investments can last 10 or more years , it is important to understanding the strategy behind a QOF to minimize any surprises .
DEFINING YOUR RISK PROFILE
So , we have established that there is a great deal of benefits to OZ investing , but what about the risks ? Like any type of investing , it is important for investors to do their research prior to signing those subscription docs .
Make sure to ask questions and assess your own appetite for risk . Here are a few things worth asking yourself as you consider OZ investing :
• What types of communities are most aligned with your investment goal ? Some investors are strictly looking to enhance returns , while others can be focused exclusively on improving the community and therefore may take more of a risk .
• Is the QOF diverse in assets and in geography ? Diversification hedges risk , so investors should pay special attention to the level of diversification that the QOF
Jeff Pintar ' s real estate career began with CBRE in 1992 . After spending his last four years of a 10-year career with the firm based in Australia leading its Asia Pacific region , Pintar repatriated back to California and joined Panattoni Development as its National Partner overseeing nearly 5 million SF of ground up commercial projects during his six years with the firm . During the Great Recession , Jeff turned his attention towards investing in single-family homes and formed Pintar Investment Company ( PIC ). Over the past 10 years , PIC has invested more than $ 2 billion in various SFR strategies . At its peak PIC owned and managed more than 10,000 homes across 15 states . Currently , PIC has roughly $ 200M in assets under management and is in the process of raising its second Opportunity Zone Fund with a continued focus on multiple SFR strategies .
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