Immediate Benefits from Investing in Opportunity Zones
I don’t think those investors that are seeking “the next big thing,” in terms of total return and tax benefits, need to look far beyond what is by my estimation rapidly becoming an extremely attractive alternative investment class—Qualified Opportunity Zone Funds (QOFs). The bullish trend for the multi-family housing sector, in terms of rising rents and steady appreciation, continues to attract both retail and professional investors to the asset class, and when you add in the layer of tax advantages that QOFs offer, I think it just underscores why this investment proposition has seen such strong interest.
In fact, there have been a few stories of late of some notable money managers raising additional funds to increase their real estate holdings at the first sign of opportunity. For example, Blackstone Inc. (NYSE: “BX”), already the largest property owner in the world, has raised a combined $50 billion across funds in the U.S., Europe and Asia to pounce on domestic and foreign opportunities as they present themselves.
Rent.com, in its August 2022 “Rent Report” noted that rental unit prices were up month-over-month in July, with one-bedrooms rates increasing 4.1% to an average monthly rate of $1,770, and two-bedrooms rates increasing 2.8% to an average monthly rate of $2,106. The reported year-over-year rate increase was even greater, at 39.0% for one-bedrooms and 38.8% for two-bedrooms. Rent.com also noted that while some experts had anticipated price increases to moderate through the end of summer, that hasn’t played out, and prices and inventory remain strong while mortgage rates remain volatile.
Stocks in many multi-family residential real estate companies are rebounding sharply, as, I believe, investors are seeking to up their weighting in assets that provide an opportunity to hedge against inflation, as well as the possibility of stable income, and appreciation potential. The only thing that these stocks don’t provide is a slate of tax advantages; advantaged which I think can only be found by investing in QOFs. QOFs are the only investment opportunity that offer investors a way to defer capital gains realized during the past 180 days—out to December 31, 2026—and they just might be the perfect investment vehicle for an audience seeking shelter from 2022 capital gains taxes.
I believe such investors should consider reinvesting capital gains from the sale of capital assets, like stocks, real estate, a business, collectibles, etc. into a managed QOF, like Belpointe PREP, LLC (NYSE American: “OZ”), which includes tax benefits, the potential for tax-free growth and income and is a liquid investment opportunity.
Investing into a QOF, like Belpointe PREP (NYSE American: “OZ”), allows an investor to defer the tax payment on invested capital gains through tax year-end December 31, 2026. This is a generational chance not only for all accredited and non-accredited investors alike, but also for real estate investors in particular, because it provides an alternative to the 1031 like-kind exchange, and the requirement to buy another physical property within 180 days.
Plus, all the income and appreciation from the time one invests into a QOF through December 31, 2047 is potentially tax free. We spell out how this alternative can work for you in our updated white paper.
In terms of addressable markets, Belpointe PREP (NYSE American: “OZ”) is building and acquiring properties in Nashville, TN, Sarasota, FL and St. Petersburg, FL, and targeting growth markets like Austin, TX, Boise, ID and the Research Triangle, NC to grow their portfolio of Class-A multi-family properties.
There are a few very important features about Belpointe PREP that I believe differentiate it from the rest of the competition. While there are multiple QOFs to choose from, none are publicly listed and traded on a national securities exchange other than Belpointe PREP (NYSE American: “OZ”). And with Belpointe PREP, there is no risk of future capital calls, as spelled out in Belpointe PREP’s prospectus and SEC filings. Most other QOFs are illiquid or require early exit fees and can require investors to add additional capital to cover unexpected costs in the projects that they sponsor.
The chance to invest in opportunity zones—a government-created program designed to incentivize investing into some of the most essential segments of the broader real estate universe—is an opportunity for all investors not found in any other subset of the real estate universe.
Have questions about how Belpointe PREP (NYSE American: “OZ”) can provide opportunities for investment appreciation, and income and help you or your clients to defer or eliminate capital gains tax obligations?
Call or email us and we’ll take the time to answer all of your questions about Belpointe PREP (NYSE American: “OZ”) and how reinvesting capital gains in a QOF can be utilized to offset an investor’s tax obligation.
Cody H. Laidlaw
255 Glenville Road
Greenwich, CT 06831
T: (203) 883-1944
Disclosure: Cody H. Laidlaw is the Chief Investor Relations Officer. Cody is also an investment advisor representative with Seaside Advisory Services, Inc. (d/b/a Seaside Financial & Insurance Services), a SEC registered investment adviser offering advisory accounts and services, and holds a long position in Belpointe PREP, LLC’s Class A units.
Important Information and Qualifications
Belpointe PREP, LLC (“Belpointe PREP”) has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (SEC) for the offer and sale of up to $750,000,000 of Class A units representing limited liability interests in Belpointe PREP. You should read Belpointe PREP’s most recent prospectus and the other documents that it has filed with the SEC for more complete information about Belpointe PREP and the offering
Investing in Belpointe PREP’s Class A units involves a high degree of risk, including a complete loss of investment. Prior to making an investment decision, you should carefully consider Belpointe PREP’s investment objectives and strategy, risk factors, fees and expenses and any tax consequences that may results from an investment in Belpointe PREP’s Class A units. To view Belpointe PREP’s most recent prospectus containing this and other important information visit sec.gov or belpointeoz.com. Alternatively, you may request Belpointe PREP send you the prospectus by calling (203) 883-1944 or emailing firstname.lastname@example.org. Read the prospectus in its entirety before making an investment decision.
This communication, including any links embedded herein, may not be distributed in any jurisdiction where it is unlawful to do so. Nothing in this communication is or should be construed as an offer to sell or solicitation of an offer to buy Belpointe PREP’s Class A units in any jurisdiction where it is unlawful to do so.
Neither Belpointe PREP nor any of its affiliates provide investment or tax advice and do not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should consult their own investment and tax advisers concerning the U.S. federal, state and local income tax consequences, as well as any tax consequences under the laws of any other taxing jurisdiction, in relation to their personal tax circumstances, which may vary for prospective investors in different tax situations.
This communication may contain estimates, projections and other forward-looking statements, typically identified by words and phrases such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” or the negative of such words and other comparable terminology. However, the absence of these words does not mean that a statement is not forward-looking. Any forward-looking statements expressing an expectation or belief as to future events is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future events and involve risks, uncertainties and other factors beyond Belpointe PREP’s control. Therefore, we caution you against relying on any of these forward-looking statements. Actual outcomes and results may differ materially from what is expressed in any forward-looking statement. Except as required by applicable law, including federal securities laws, Belpointe PREP does not intend to update any of the forward-looking statements to conform them to actual results or revised expectations.
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