TIP239: Commercial Real Estate Investing w/ Ian Formigle
The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network
Stig Brodersen
4.6 • 3.6K Ratings
🗓️ 21 April 2019
⏱️ 43 minutes
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| 0:00.0 | You're listening to TIP. |
| 0:30.0 | You're listening to TIP. |
| 1:00.0 | All right, welcome everyone to the investors podcast. I'm your host Preston Pish and is always I'm accompanied by my kill host Stig Broderson and like we said in the introduction we're here with Ian for me Glee Ian great to have you here. Oh Preston stick thank you for having me back. It was a pleasure last time and I'm super happy to be back on the show today. |
| 1:18.0 | Well, it's great having you back on the show Ian. So let's jump right into the interview. We're talking about commercial real estate. |
| 1:25.0 | There are things called opportunity zones. Talk to our audience about this idea and what they are. I'd say to begin with opportunity zones were created with the passage of the 2017 tax and jobs cuts act. That's also or referred to as the TCJA. |
| 1:42.0 | Okay, after opportunity zones were created with this act, then the IRS went on to define them as their defined is economically distressed communities where new investments under certain conditions may be eligible for preferential tax treatment. |
| 1:56.0 | I think really what that means is that opportunity zones are meant to spur economic development and job creation in what are kind of quote unquote underserved communities and by providing strong tax incentives to investors. |
| 2:08.0 | So I would say that through this act, you know, each state, each individual state was then allowed to go out and designate up to 25% of its low income neighborhoods that met this criteria and they had to do it by June of 2018. |
| 2:21.0 | So what we saw there was at all 50 states, including all of our territories went out and made these designations. So the final designated list of opportunity zones, they have an average poverty rate of nearly 31% which is above the 20% eligibility threshold. |
| 2:37.0 | And they have an average family income median income of 59% of its area median and that was compared to 80% of the eligibility threshold when we add that all up and look across the whole country plus our territories. |
| 2:51.0 | There's about 8,700 certified opportunity zones all over the United States, like I said, and actually almost the entire island of Puerto Rico is included as well. |
| 3:00.0 | What was interesting to note that when we look across all these 8,700 designated opportunity zones is that they are located in both rural as well as vibrant urban areas. |
| 3:11.0 | It almost seemed to us when we took a look at it that some states seem to take advantage of the TCJA and designate some of its qualifying census tracks as opportunity zones, even though when you really look at them, they're questionably underserved. |
| 3:26.0 | I mean, for example, you've got some more noteworthy opportunity zones across the country that are located in popular secondary markets such as Philadelphia, Seattle, Oakland, and Denver. |
| 3:37.0 | You even have opportunity zones that are located in primary markets such as Washington, DC. If you Google opportunity zones map, you're going to find a bunch of websites that have mapping tools. |
| 3:48.0 | So you can see them all anecdotally. I tend to use the one that's provided by the accounting firm Nova Gratic. It seems pretty easy to navigate. |
| 3:55.0 | Tense of the question about opportunity zones on Crowd Street. Yes, we've had two deals so far on the marketplace in 2019. |
| 4:02.0 | The first was a ground up deal that was a flex industrial building. It was located on the northern edge of the Seattle Metro. |
| 4:09.0 | The second was a major renovation and repositioning of a dormant hotel in Redmond, Oregon, which is adjacent to Bend, Oregon. |
| 4:16.0 | Bend, Oregon is a popular outdoor recreational destination that we have here in Oregon. |
| 4:20.0 | And we have a third opportunity zone deal in our pipeline right now. That's a ground up hotel development in the Boston Metro. |
| 4:26.0 | And we expect to have at least a few more opportunities on deals throughout the course of 2019. |
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