Opportunity Zones & Funds: Aligning Public and Private Real Estate Capital

Opportunity zone funds (OZFs) can help the neighborhoods that need it most, while also providing significant tax benefits for investors.

An Opportunity Zone is a designation created by the Tax Cuts and Jobs Act of 2017 allowing for certain investments in lower income areas to have tax advantages. The purpose of this program is to put capital to work that would otherwise be locked up due to the asset holder's unwillingness to trigger a capital gains tax.

An opportunity zone fund (OZF) is an investment vehicle that provides tax benefits for private capital to help revitalize economically distressed communities. Both operating businesses and real estate are eligible for investment.

A Qualified Opportunity Zone Fund is any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property (other than another qualified opportunity fund) that holds at least 90 percent of its assets in qualified opportunity zone property.

Many investor types may take advantage of opportunity zone funds:

  • Corporations– Also includes partnerships
  • Accredited investors– Defined as high net worth individuals, brokers, and trusts
  • Nonresident foreign investors– Only on capital gains earned in the U.S.
  • Retail investors– Through funds that have lower minimums, though options are more limited

In addition to their wide eligibility, OZFs have a number of potential benefits.


U.S. Apartment Rents Are Rising Fastest & Most Expensive In These Cities

The latest analysis of U.S. apartment rent was released from RENTCafé. The national average rent for an apartment increased 3%, reaching $1,474 in December 2019. Renters were paying $43 more per month for an apartment than in December 2018. New York City is the most expensive place in the country to rent with a tenant having to fork over $4,211 per month on average.

The research also analyzed the cities experiencing the biggest increases in rent with Phoenix in the first position. It saw a 9.6% spike between late 2018 and 2019 with the average rent now standing at $1,123. Las Vegas came second with 6% growth while Austin had the third-highest pace of growth with%.

Infographic: Where U.S. Apartment Rents Are Rising Fastest | Statista You will find more infographics at Statista

 

The U.S. Cities Where Apartment Rents Are Astronomical

San Francisco has the highest rents for apartments in the U.S. according to a report from Zumper. Prospective tenants searching for an accommodation in the Bay Area will need extremely deep pockets with the median rental price for a one-room apartment there running to $3,330 per month.

New York City isn't far behind on the list of astronomical rents. A one-bedroom flat in the Big Apple would cost $3,000 every month to rent while an extra bedroom would push that up to $3,400. Toledo, Ohio is at the very bottom of Zumper's list with a rental prices for a one-bedroom apartment flat coming to just $440.

 

Infographic: The U.S. Cities Where Apartment Rents Are Astronomical | Statista You will find more infographics at Statista

 


The affordability crisis that is breaking America

While the stock market may be hitting new highs. It doesn't have a direct correlation to the bigger issue we still face in America. The cost of living is actually becoming a bigger issue with the markets rise creating a bigger spread between those who can, and cannot, afford to keep up with the rising cost of living. The Affordability crisis is here. The cost of living, and access to affordable housing are still a significant and growing vs shrinking issue for most Americans. We have decided to take a new TruVest approach in moving beyond affordable housing to a "sustainable housing" approach. Which takes a contemporary holistic vs black and white approach to address the housing crisis in relation to the growing affordability crisis we are "all facing.

The following article is an in-depth look at a critically important socio-economic issue that's not getting enough light in relationship to the things that truly matter. We look forward to your thoughts in the comments. We want to hear about your relationship with the affordability crisis.

In one of the best decades the American economy has ever recorded, families were bled dry.

By  For The Atlantic

In the 2010s, the national unemployment rate dropped from a high of 9.9 percent to its current rate of just 3.5%. The economy expanded each and every year. Wages picked up for high-income workers as soon as the Great Recession ended, and picked up for lower-income workers in the second half of the decade. Americans’ confidence in the economy hit its highest point since 2000, right before the dot-com bubble burst. The headline economic numbers looked good, if not great.

But beyond the headline economic numbers, a multifarious and strangely invisible economic crisis metastasized: Let’s call it the Great Affordability Crisis. This crisis involved not just what families earned but the other half of the ledger, too—how they spent their earnings. In one of the best decades the American economy has ever recorded, families were bled dry by landlords, hospital administrators, university bursars, and child-care centers. For millions, a roaring economy felt precarious or downright terrible.

Viewing the economy through a cost-of-living paradigm helps explain why roughly two in five American adults would struggle to come up with $400 in an emergency so many years after the Great Recession ended. It helps explain why one in five adults is unable to pay the current month’s bills in full. It demonstrates why a surprise furnace-repair bill, parking ticket, court fee, or medical expense remains ruinous for so many American families, despite all the wealth this country has generated. Fully one in three households is classified as “financially fragile.”

Along with the rise of inequality, the slowdown in productivity growth, and the shrinking of the middle class, the spiralling cost of living has become a central facet of American economic life. It is a crisis amenable to policy solutions at the state, local, and federal levels—with all of the 2020 candidates, President Donald Trump included, teasing or pushing sweeping solutions for the problem. But absent those solutions, it looks certain to get worse for the foreseeable future—leaving households fragile, exacerbating the country’s inequality, slowing down growth, smothering productivity, and putting families’ dreams of security out of reach.

The price of housing represents the most acute part of this crisis.

In metro areas such as the Bay Area, Seattle, and Boston, severe supply shortages have led to soaring prices—millions of low- and middle-income families are no longer able to purchase centrally located homes. The median asking price for a single-family home in San Francisco has reached $1.6 million; even with today’s low-interest rates, that would require a monthly mortgage payment of roughly $6,000, assuming that a family puts down the standard 20%. In Manhattan, listings for sale now ask an average of nearly $1,800 per square foot.

The housing cost crises in the Bay Area and New York might be the country’s most obscene. But the problem is national, driven by a combination of stagnant wages, restrictive building codes, and underinvestment in construction, among other trends. Home prices are rising faster than wages in roughly 80% of American metro regions. In 2018, housing affordability declined in every one of the 160-some urban areas analyzed by the National Association of Realtors, save for Decatur, Illinois. Rising prices and housing shortages are squeezing families in RenoMinneapolis, and Phoenix.

The problem now even extends to rural areas, where income growth has lagged in the post-recession period. A recent report by the Pew Charitable Trusts found “sizable” increases in the number of households spending half or more of their income on housing in rural counties across the country. The housing crisis is hitting Bertie County, North Carolina, and Irion County, Texas, too.*

One central effect of the housing-cost crisis has been to turn the United States into a country of renters. The homeownership rate has fallen from a peak of nearly 70% in the mid-aughts to under 65 percent today; the numbers are more acute for Millennials, whose homeownership rate is 8 percentage points lower than that of their parents at the same age. Unable to buy, roughly 3.5 million younger families have kept renting—delaying the Millennial and Gen X cohorts’ wealth accumulation, thus consigning them to worse net-worth trajectories for the rest of their lives. And renting, for many families, is not affordable, either: Nearly half of renters are facing uncomfortable monthly bills, and the cost of renting has risen faster than renters’ incomes for a full 20 years now. >>> READ MORE HERE


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The Home Seller’s To-Do List for 2020

As the new year takes its first steps, the real estate business is closely analyzing 2019 to see what 2020 will bring. There were some pretty exciting developments last year, and they’ll definitely play a major role in the future. In fact, some trends, like those that SpendMeNot’s real estate market research noted, will be pivotal for anyone looking to sell this year.

So what will it take to turn the real estate market in your advantage as a property seller in 2020? Here’s a useful and to-the-point guide to tell you exactly that.

Prepare for Slow Growth of Home Prices

In line with the growth we’ve seen thus far, house prices should be increasing somewhat in the current year. This growth probably won’t be all that radical, measured at 2.8% by some estimations, but it will nevertheless impact the way you go about your job.

One consequence that you can look forward to is the fact that you’ll probably be making more of a profit. Though not an amazing rate, a bit shy of 3% is nothing to scoff at.

That said, you won’t be overjoyed when you hear that you probably won’t see as many offers as you could have in 2019. An increased price will unavoidably narrow down the amount of people that can afford to make an offer you’ll be satisfied with.

Overall, it’s a bit of a give-and-take situation where you need to take advantage of both the good and the bad. The best way to do that, in this case, would be to make your house stand out as much as you can. In the highly discriminating market we’re looking at right now, a property with more to offer will get a lot more attention from buyers.

Facts About Housing Data

  • 50% of buyers found their home on the internet
  • 5.34 million existing homes were sold in 2019
  • The US housing market was worth $33.3 trillion in 2018
  • Sales of existing homes will fall 1.8% from 2019
  • The cost of renting has gone up by 66%
  • 6% of younger millennials were first-time homebuyers

Cater to Today’s Main Buyers: MIllennials

Millennials (people born roughly between the 1980s and 2000s) currently represent the majority of home buyers. How large a majority? As many as 67% of all buyers come from this generation.

What does this mean for you? Well, it means that, if you want results, you will need to adjust the way you sell. Here are a few pointers to help you do that.

 

  • Highlight certain features that they’re on the lookout for. Garage storage, patio, laundry room, and hardwood front exteriors are among the popular home features for millennials, but there are plenty more, so don’t worry if your property doesn’t have those. Highlight the ones that it does have, though, and you’ll quickly see more interested parties.

  • Make sure that your online listings are high-quality. Practically everyone (especially millennials) relies on the internet to find whatever they need, and homes for sale are no exception. Therefore, anything you have about your property online should be updated and looking sharp - high-quality photos and a video recording of the place will get you a long way.

  • Emphasize qualities other than square footage. Nine times out of ten, given a choice between a large house and one that’s near good schools or has a good commute, millennials will choose the latter. As long as you make these perks a priority to emphasize, you’ll do great.

Expect Low Mortgage Interest Rates, but Don’t Count on Them

Last year, mortgage interest rates fell under 4% for common kinds of loans. For 2020, the trend will likely remain the same, and this rate shouldn’t go anywhere above 3.7%. That said, interest rates can fluctuate depending on economy shifts, so it isn’t a prophecy set in stone.

For you, a low interest rate will translate into more interest from people. It’s only logical, after all, since they will have to pay less overall in these conditions. But there’s little guarantee that the rate will stay as is, so be prepared for the opposite.

Should the interest rate rise, you’ll see plenty of prospects beginning to hesitate, so you’ll likely be in a bit of a bind if you’re pressed for time to sell that house of yours. It could theoretically swing either way, but the chances are that the rates will stick to their current estimates.


Affordable Housing Project Aims to Revitalize Jacobsville Neighborhood on 44 News

Our affordable housing collaboration officially launched in Evansville, Indiana with Mayor Lloyd Winnecke and Evansville Promise Zone. We are thrilled to have such amazing coverage by 44News on how we are making an impact on families quality of life by owning a TruHome.

The Promise Zone and a company called TruVest are partnering to not only create affordable housing in Evansville but also create homeownership opportunities for the people living there.

Instead of knocking down homes, and building new ones, TruVest is renovating blighted homes in the Jacobsville neighborhood. At the same time, those who need affordable housing will have the opportunity to actually own homes instead of renting them.

This partnership will help provide first-time homeowners with the tools they need to keep their credit up, continue to pay mortgage payments and all the other things that go into owning a home.

TruVest co-founder Peter Bordes says, “We’re going to find a balance between what we renovate, and then what we do helping the land bank taking those empty lots, and then developing new homes on them, but always with the idea that we’re not looking to gentrify neighborhoods, and we’re not looking to make the prices go up. We want to be able to keep them in line with the integrity of the neighborhoods.”

Mackenzee Pagett and her two children will be moving into this first house within the next few weeks. She tells 44News Evansville she’s very excited being a first-time homeowner.