Debunking Opportunity Zone Myths
Opportunity Zones aren’t just for institutions. Advisors who overlook this may be missing meaningful opportunities for their clients.
In this conversation, Capital Square’s executive vice president, co-head of development, Natalie Mason and executive vice president, distribution and national accounts, Jessica Correnti, discuss common myths surrounding the program and how OZ investing has expanded access to significant real estate opportunities, creating tremendous new possibilities.
Approximate Transcript:
Natalie: There are a lot of myths out there about Opportunity Zones. Can you share a couple of things that you’re hearing?
Jessica: One that comes up for both advisors and their investors is that the investors believe that in order to partake in the Opportunity Zone program, they need to be a developer themselves or an institutional investor.
Natalie: And it’s amazing that that perception is still out there after this program being around now for seven, eight years. But one of the reasons this program has been so effective and so successful is because anyone can partake in it. You don’t have to be institutional. You can be an individual. We call this program a “by-right program.” And unlike a lot of federal tax and other incentive programs where there’s discretionary government approvals and processes, this is by-right. As long as you follow the rules and set things up correctly, you automatically get the benefit.
And at Capital Square, we’ve really opened this up to our vast array of thousands of investors who we work with, with our other tax advantaged programs. But we’ve created opportunity zone funds so an individual that has an individual capital gain event, they can invest into a fund and have an overall ownership of a much larger institutional quality real estate investment.
But by no means is this program limited to institutions. And it certainly was never intended to be limited to anyone. It’s most successful if any and all investors can access the benefits of this program. That will make it more successful.
Jessica: So Capital Square really is aiding in the democratization of opportunity zone investing for all levels of people as long as they have capital gain to invest.
Natalie: I love that phrase, Jessica. I feel like we could shout it from the rooftops. I think what makes Capital Square really special with all of our tax advantage programs – so with the DSTs, our Delaware Statutory Trusts, and the Real Estate Investment Trust, REITs – we give investors the opportunity to have a fractional ownership of something that would otherwise be unreachable to them, a $100 million acquisition of a multifamily building or an $80 million development of a new mixed-use building. Those types of investments would typically not be reachable by individual investors, but our tax programs really do open up the real estate investing landscape to really anyone who has a capital gain, and it can be a relatively small capital gain. It doesn’t have to be millions.
Jessica: It can be as low as ten thousand, fifty thousand dollars or so to have access.
In Short:
OZs were designed to be accessible to a broad range of investors. How might opportunity zones fit your long-term strategies?
Connect with our team to learn more.
Additional Resources:
- OZs: Changing the World of Tax-Advantaged Investing (video)
- OZs: One of the Most Effective Economic Development Tools in History (video)
- OZs Are a Core Advisor Tax Strategy (video)
Disclosure: Securities offered through WealthForge Securities, LLC, Member FINRA/SIPC. Capital Square and WealthForge Securities, LLC are separate entities. There are material risks associated with investing in DST properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short-term leases associated with multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to see any securities. Please read the Private Placement Memorandum (PPM) in its entirety, paying careful attention to the risk section prior to investing. Private placements are speculative and illiquid. Diversification does not guarantee profits or protect against losses.
