What is an Opportunity Zone?
Essentially, an Opportunity Zone is an area that the IRS has approved funding for to spur economic growth within the zone. The government is offering tax breaks to companies who invest in the Opportunity Funds to help kickstart the economy in low-income communities.
Why Is This Important to Property Owners?
These zones are being redeveloped by large corporations and businesses who are investing in the refurbishment of communities and neighborhoods within approved zones. The companies are held to IRS guidelines put in place to improve the overall quality of life in the zones (IRS) by providing jobs, essential services such as grocery stores (which also provides more jobs), and updated, comfortable housing.
Now, the average property owner wouldn’t qualify for the government funds to become part of the official Opportunity Zone program, but the amazing news for landlords is: all of the people that will be moving into these zones to work for the companies who are part of the program are going to need places to live! (Bigger Pockets)
The goal of the program is to update, modernize, and improve the standards of living in impoverished, underdeveloped, and outdated communities. This could be rural or urban, depending on where the zone is located, but the location doesn’t matter as much as the companies who are moving in.
The government funds are aimed at large companies who can afford to expand and hire the occupants of the qualifying zone to be part of their team. Once the people already living in these zones are given the opportunity to earn better wages and their communities start to develop, more people from outside the zones are going to want to move into these locations.
That’s Where Property Owners Come In
Your mission now, as property owner, should you choose to accept it, is to find these Opportunity Zones and invest in properties located within them. Remember the types of locations you’re getting into, though. Some of these properties may need a little extra TLC to get them on the market, but it will all be worth it once the areas start to develop and expand.
With the expansion, over time, your properties will only increase in value. It seems to go without saying that buying multiple properties would be ideal. As the unemployment rates in the zones fall, and the median household incomes rise, the demand for well-maintained rental properties will also rise.
This PDF gives a wonderful breakdown of what all the program is offering to businesses and how it’s changing the economies of zones all around Mobile, specifically.
It does a wonderful job of highlighting all of the major areas that communities and neighborhoods will start to see (and have already seen) major growth and impact on the quality of living in these zones. Not only is the program funding these Opportunity Zones creating more job opportunities, but they’re also developing better, more modern infrastructure that makes living within the newly developed zones even more convenient and comfortable.
Progress is consistently being made within the Opportunity Zones, so much so that Mobile, as a whole is seeing benefits within and outside of the zones. Page 27 of the above mentioned PDF shows Healthcare as Mobile’s largest industry. Opportunity Zones are quickly developing not only physically, but they are also allowing the people living there a chance to afford an educational degree to become part of the workforce in places like hospitals, cancer centers, and dentist offices.
These are the types of job opportunities that create movement. Landlords with properties in these now flourishing areas will have the chance to house current residents as well as those who choose to move to the zone in order to become part of the workforce in one of the major economic and social contributors, such as hospitals or even transportation and shipping.
You Don’t Have to Do This Alone
If you’re a new property owner looking to get in on the rental property boom,
Revitalize Realty has options that can make renting out your new space (or spaces!) a breeze.
If you’re a seasoned property owner looking to increase your fleet of spaces for rent, Revitalize Realty offers high quality property management services for reasonable prices to ensure you’re getting the best possible tenants for your spaces, long-term, and to keep your properties in the best condition for those tenants. It’s worth checking out our website with the link above to see what we can offer you in terms of managing your Opportunity Zone properties!
