Opportunity Zones in the Real World

Opportunity Zones in the Real World: The Retail Coach and Manassas Capital Connect the Dots on Opportunity Zones

A lot of articles are written about Opportunity Zones; many confusing and some just wrong. The Retail Coach has partnered with experts on this subject – Manassas Capital and together we will answer some real-world questions. We will touch on the basics briefly and then give examples of how Opportunity Zones can be an opportunity for you. If you are looking for other investment options, you may want to try investing in VT markets.

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• Opportunity Zones were created as part of the Tax Cut and Jobs Act to encourage investment in low-income urban and rural communities nationwide.
• State governors designated the zones based on census tracts. There are more than 8,700 qualified Opportunity Zones across all states, territories, and the District of Columbia.

The mechanism to encourage investors to invest is a tax incentive. Looking for a guidance to focus well on your investment, then check out this finance mastermind here for great help!

Here’s how it works:

1. An investor sells an investment and receives capital gains.
2. He has 180 days to invest those gains in an Opportunity Zone Fund.
3. If, for example, he has a profit of $100K from the sale of his investment and invests that in an Opportunity Fund this year, he pays no tax on that $100K this year.
4. After five years his taxable amount is reduced by 10%. If he sells his shares in the Opportunity Fund, he pays taxes on $90K. If he stays in, the five-year mark just lets him know his 10% reduction in taxes has been earned.
5. After seven years he has earned a 15% reduction on the taxable amount. So, he pays tax on $85K. He writes a check to pay taxes at the seven-year mark. Now here’s where the tax incentives get really interesting. If the investor stays in the Opportunity Fund for 10 years then the profit made from the Opportunity Fund investment is tax free!

Here’s an example. One big focus for The Retail Coach is revitalizing downtowns. Many cities have
downtowns and many of those are historic districts. There are vacant, older buildings that need
refurbishing, bringing up to code and modern amenities.

1. An Opportunity Fund buys one of these buildings for $100K. Then fund managers Sydney fixes it up within three years (The law requires you spend as much on refurbishing as you spent on the building, minus the value of the land.)
2. Retail tenants and restaurants move into the building and start paying rent. Maybe apartments are built on the upper floors and residents start paying rent.
3. It increases in value to $300K in 10 years.
4. It is sold after 10 years.
5. That $300K is tax free!

Distressed areas normally have a tough time attracting investment. Opportunity Zones encourage investors to make a difference and invest in their community, region or state without the investment being only charitable in nature. The tax incentive helps make the return from these investments higher. But the project still needs to make sense even if these incentives were not available. If you want to learn some other modern tricks that will help you raise and protect your investments profits, find some help with James Dooley.

Another quick example.

A small town has a low-income, blighted area with some boarded up buildings in a designated Opportunity Zone.

1. An investor who owns some apartments sells his apartments and receives capital gains.
2. He decides to buy a McDonalds franchise because he has received market research from The Retail Coach that tells him this would do well in this town.
3. He sets up an Opportunity Fund.
4. The fund buys one of the buildings, fixes it up according to the requirements already mentioned in the previous example.
5. It becomes an income producing business.
6. The investor receives the tax incentives.
7. The investor can sell building and the Opportunity Zone business in 10 years. The profit on
   both is tax free.

There are creative ideas and solutions to make Opportunity Zones work. Many of these Opportunity funds will be small groups of state, regional and local investors. As in the example above, it might be one investor.

Other examples of Opportunity Fund investments include building a strip center from the ground up, a convention center, ball fields, schools, co-working spaces, incubators, workforce housing and much more.

The Retail Coach and Manassas Capital consult with cities, investors, developers, retailers, businesses, chambers and EDOs to educate and provide guidance to take advantage of this exciting opportunity. The consulting includes identifying projects, finding investors, helping cities develop a plan for projects, advice on layering incentives, setting up Opportunity Funds and helping manage those funds.

The Retail Coach, founded in 2000, is a national retail consulting, market research and development firm that combines strategy, technology, and creative expertise to develop and deliver high-impact retail recruitment and development strategies to local governments, chambers of commerce, and economic
development organizations. They have experience in leading municipalities in over 500 communities in 35 states.

Manassas Capital serves as an investment advisory firm assisting investors and local governments to develop a strategic plan to capitalize on their Opportunity Zone designation.  Manassas also provides developers and investors with fund raising and fund management services and serves the investment community as a critical source of proprietary investment opportunities that will create long term capital appreciation due to the unprecedented tax advantages created through the Opportunity Zone program.

For more information on The Retail Coach, visit www.theretailcoach.net or call 662.844.2155 in Mississippi or 662.844.2155 in Texas.

For more information on Manassas Capital, visit www.manassascapital.com or call 469.623.0589 in Texas.