What if I told you there was a way for real estate investors to significantly reduce their existing capital gains tax liability? And eliminate ALL capital gains taxes from a property’s future appreciation? The dream is real, and it exists in the form of Qualified Opportunity Zones, a program included in the 2017 Tax Cuts and Jobs Act to encourage investment in low-income census districts. So, how does it work? And how can you take advantage of these opportunity zones to grow your business? We'll dive into all these and more!

Connect with Founders Club Host Oliver Graf on Instagram: @OliverGraf360

 

Andrew Greer is the CEO of Thomas Strafford Investments, a real estate investment company based in San Diego. Thomas Strafford manages investments in single and multifamily renovations as well as ground-up builds throughout Southern California. An expert in local zoning, Andrew believes that specialization is key in delivering predictable returns.

On this episode of Founders Club, Andrew joins Oliver to share the big-time tax benefits of investing in Qualified Opportunity Zones (QOZs) and explain how the program works. He discusses how to find the low-income census districts that qualify as QOZs, offering insight around which cities have the most upside potential for developers. Listen in for Andrew’s advice on learning about zoning and find out how brokers might market QOZs to grow their business!

Key Takeaways

[1:23] The fundamentals of Qualified Opportunity Zones

• Invest in one of 8,500 low-income census districts
• Capital gains tax deferred, reduced or eliminated

[4:23] How the opportunity zone program works

• Double basis in spend within 31 months
• Works best with ground-up development

[11:37] Why Andrew is developing microunits in these areas

• Much lower cost per square foot
• Reduce cost of parking stalls (public transport access)

[17:51] The cities with the greatest QOZ upside potential

• San Diego, LA and Oakland
• New York, Florida and Tempe, AZ

[20:40] The benefits of investing in opportunity zones

• Deferral on taxes through 2026
• Hold 7 years = no tax on 15% of gains
• Hold 5 years = no tax on 10% of gains
• Hold 10 years = no tax on appreciation

[31:15] How to find Qualified Opportunity Zones

• Resources on Andrew’s website
• Search by address or census district

[33:42] Andrew’s advice on learning about zoning

• Attend local planning committee meetings
• Network through Urban Land Institute

[45:44] The best resources to learn about zoning

• No universal tool available (local specialization)
• Use Scoutred, Google city name + zoning

[51:07] How to market for Qualified Opportunity Zones

• Educate property owners re: selling for max value
• Search for cash buyers in area

[57:07] Andrew’s top tools and apps

• Workep (Trello on steroids)
• Facebook ads

Connect with Andrew

Thomas Strafford Investments

Email [email protected]

Qualified Opportunity Zone Info

Connect with Oliver

Big Block Realty

Oliver on Facebook

Oliver on LinkedIn

Resources

IRS Opportunity Zones FAQ

Forbes Article on Opportunity Zones

Urban Land Institute

Scoutred

Los Angeles Zoning

Kent Clothier

Workep

How to Be a Real Estate Developer