Article provided by: Galena Equity Partners
One requires a little research on the developers and managers who will manage an Opportunity Zone real estate fund. Ideally, you should hire a developer with enough experience in handling all kinds of planned projects. Inexperienced managers will save you the hurdles involved in holding an investment and the high fees that scathe most minority investors.
Who can invest in Opportunity Zone Funds?
Most investments have a six or five-figure dollar range. Currently, several funds exist in that range. The Treasury Department released new regulations in the later part of 2019, to stipulate who can qualify for the Opportunity Fund investments.
The final regulations of who can qualify for the fund depends on the specifics set by the management team. Typically, one should have a net worth of approximately $1 million or at an annual income of $200,000 for at least two consecutive years. A single tax filer or a married filer should have at least a $300,000 yearly salary. These numbers are reflective of the investments because most usually have returns of the six-figure range.
What are the fees associated with Opportunity Zones?
The fee structure of these funds tends to liken those of private equity or hedge fund. Investors should pay an annual fee of up to two percent in expenses and cover the cost for all excess returns that exceed the promised amount. The typical guaranteed rate of the return is between six and ten percent for those with a diverse portfolio in most real estate Opportunity Funds.
It is vital to note that these funds are not recommendable for the money you do not want to lose, such as college tuition or retirement savings. The primary purpose of the funds should be for the well-able investors who are savvy enough to maintain a consistent flow of multiple incomes. Therefore, anyone with a little experience of private equity is the right candidate for these investments.
Where can one invest with the Opportunity Zone real estate fund?
Traditionally, investors prefer an exciting and vibrant place that will fetch the most income within a given period. Some opt for the less developed commercial areas that indicate a constant state of change. This change is powerful enough to improve the lives of most investors and all real estate professionals involved in the project.
The reason the government created the Opportunity Fund is to make sure the more vulnerable parts of the American community receive the same chances of success as the urban areas. The real estate funds are somewhat a novel program that encourages real estate developers to allocate investment capitals into distressed regions with the benefit of several tax incentives.
You should always aim to hire a management company with enough experience in setting up projects in rural areas. This precaution ensures you will receive the most benefits over a given period and have a better chance of mitigating the most fumbling real estate risks. Galena delivers optimum returns for investors in the Intermountain Pacific area. We aim to become the best in the business and will ensure your income fetches sustainable growth over several decades or a lifetime.